public policy

This is one of the worst wildfire seasons in American history. But it won’t be for long.

PNRJ current events, inequality, market failure, public policy , , , , , , , , , , , ,

Oct 22, JDN 2458049

At least 38 people have now been killed by the wildfires that are still ongoing in California; in addition, 5700 buildings have been destroyed and 190,000 acres of land burned. The State of California keeps an updated map of all the fires that are ongoing and how well-controlled they are; it’s not a pretty sight.

While the particular details are extreme, this is not an isolated incident. This year alone, wildfires have destroyed over 8 million acres of land in the US. In 2015, that figure was 10 million acres.

Property damage for this year’s wildfires in California is estimated at over $65 billion. That’s more than what Trump recently added to the military budget, and getting close to our total spending on food stamps.

There is a very clear upward trend in the scale and intensity of wildfires just over the last 50 years, and the obvious explanation is climate change. As climate change gets worse, these numbers are projected to increase between 30% and 50% by the 2040s. We still haven’t broken the record of fire damage in 1910, but as the upward trend continues we might soon enough.

It’s important to keep the death tolls in perspective; much as with hurricanes, our evacuation protocols and first-response agencies do their jobs very well, and as a result we’ve been averaging only about 10 wildfire deaths per year over the whole United States for the last century. In a country of over 300 million people, that’s really an impressively small number. That number has also been trending upward, however, so we shouldn’t get complacent.

Climate change isn’t the only reason these fires are especially damaging. It also matters where you build houses. We have been expanding our urban sprawl into fire-prone zones, and that is putting a lot of people in danger. Since 1990, over 60% of new homes were built in “wildland-urban interface areas” that are at higher risk.

Why are we doing this? Because housing prices in urban centers are too expensive for people to live there, but that is where most of the jobs are. So people have little choice but to live in exurbs and suburbs closer to the areas where fires are worst. That’s right: The fires are destroying homes and killing people because the rent is too damn high.

We need to find a solution to this problem of soaring housing prices. And since housing is such a huge proportion of our total expenditure—we spend more on housing than we do on all government spending combined—this would have an enormous impact on our entire economy. If you compare the income of a typical American today to most of the world’s population, or even to a typical American a century ago, we should feel extremely rich, but we don’t—largely because we spend so much of it just on keeping a roof over our heads.

Real estate is also a major driver of economic inequality. Wealth inequality is highest in urban centers where homeownership is rare. The large wealth gaps between White and non-White Americans can be in large part attributed to policies that made homeownership much more difficult for non-White people. Housing value inequality and overall wealth inequality are very strongly correlated. The high inequality in housing prices is making it far more difficult for people to move from poor regions to rich regions, holding back one of the best means we had for achieving more equal incomes.

Moreover, the rise in capital income share since the 1970s is driven almost entirely by real estate, rather than actual physical capital. The top 10% richest housing communities constitute over 52% of the total housing wealth in the US.

There is a lot of debate about what exactly causes these rising housing prices. No doubt, there are many factors contributing, from migration patterns to zoning regulations to income inequality in general. In a later post, I’ll get into why I think many of the people who think they are fighting the problem are actually making it worse, and suggest some ideas for what they should be doing instead.

When are we going to get serious about climate change?

PNRJ development economics, futurism, market failure, public policy , , , , , , , , , , , , , , ,

Oct 8, JDN 24578035

Those two storms weren’t simply natural phenomena. We had a hand in creating them.

The EPA doesn’t want to talk about the connection, and we don’t have enough statistical power to really be certain, but there is by now an overwhelming scientific consensus that global climate change will increase hurricane intensity. The only real question left is whether it is already doing so.

The good news is that global carbon emissions are no longer rising. They have been essentially static for the last few years. The bad news is that this is almost certainly too little, too late.

The US is not on track to hit our 2025 emission target; we will probably exceed it by at least 20%.

But the real problem is that the targets themselves are much too high. Most countries have pledged to drop emissions only about 8-10% below their 1990s levels.

Even with the progress we have made, we are on track to exceed the global carbon budget needed to keep warming below 2 C by the year 2040. We have been reducing emission intensity by about 0.8% per year—we need to be reducing it by at least 3% per year and preferably faster. Highly-developed nations should be switching to nuclear energy as quickly as possible; an equitable global emission target requires us to reduce our emissions by 80% by 2050.

At the current rate of improvement, we will overshoot the 2 C warming target and very likely the 3C target as well.

Why aren’t we doing better? There is of course the Tragedy of the Commons to consider: Each individual country acting in its own self-interest will continue to pollute more, as this is the cheapest and easiest way to maintain industrial development. But then if all countries do so, the result is a disaster for us all.
But this explanation is too simple. We have managed to achieve some international cooperation on this issue. The Kyoto protocol has worked; emissions among Kyoto member nations have been reduced by more than 20% below 1990 levels, far more than originally promised. The EU in particular has taken a leadership role in reducing emissions, and has a serious shot at hitting their target of 40% reduction by 2030.

That is a truly astonishing scale of cooperation; the EU has a population of over 500 million people and spans 28 nations. It would seem like doing that should get us halfway to cooperating across all nations and all the world’s people.

But there is a vital difference between the EU and the world as a whole: The tribal paradigm. Europeans certainly have their differences: The UK and France still don’t really get along, everyone’s bitter with Germany about that whole Hitler business, and as the acronym PIIGS emphasizes, the peripheral countries have never quite felt as European as the core Schengen members. But despite all this, there has been a basic sense of trans-national (meta-national?) unity among Europeans for a long time.
For one thing, today Europeans see each other as the same race. That wasn’t always the case. In Medieval times, ethnic categories were as fine as “Cornish” and “Liverpudlian”. (To be fair, there do still exist a handful of Cornish nationalists.) Starting around the 18th cenutry, Europeans began to unite under the heading of “White people”, a classification that took on particular significance during the trans-Atlantic slave trade. But even in the 19th century, “Irish” and “Sicilian” were seen as racial categories. It wasn’t until the 20th century that Europeans really began to think of themselves as one “kind of people”, and not coincidentally it was at the end of the 20th century that the European Union finally took hold.

There is another region that has had a similar sense of unification: Latin America. Again, there are conflicts: There are a lot of nasty stereotypes about Puerto Ricans among Cubans and vice-versa. But Latinos, by and large, think of each other as the same “kind of people”, distinct from both Europeans and the indigenous population of the Americas.

I don’t think it is coincidental that the lowest carbon emission intensity (carbon emissions / GDP PPP) in the world is in Latin America, followed closely by Europe.
And if you had to name right now the most ethnically divided region in the world, what would you say? The Middle East, of course. And sure enough, they have the worst carbon emission intensity. (Of course, oil is an obvious confounding variable here, likely contributing to both.)

Indeed, the countries with the lowest ethnic fractionalization ratings tend to be in Europe and Latin America, and the highest tend to be in the Middle East and Africa.

Even within the United States, political polarization seems to come with higher carbon emissions. When we think of Democrats and Republicans as different “kinds of people”, we become less willing to cooperate on finding climate policy solutions.

This is not a complete explanation, of course. China has a low fractionalization rating but a high carbon intensity, and extremely high overall carbon emissions due to their enormous population. Africa’s carbon intensity isn’t as high as you’d think just from their terrible fractionalization, especially if you exclude Nigeria which is a major oil producer.

But I think there is nonetheless a vital truth here: One of the central barriers to serious long-term solutions to climate change is the entrenchment of racial and national identity. Solving the Tragedy of the Commons requires cooperation, we will only cooperate with those we trust, and we will only trust those we consider to be the same “kind of people”.

You can even hear it in the rhetoric: If “we” (Americans) give up our carbon emissions, then “they” (China) will take advantage of us. No one seems to worry about Alabama exploiting California—certainly no Republican would—despite the fact that in real economic terms they basically do. But people in Alabama are Americans; in other words, they count as actual people. People in China don’t count. If anything, people in California are supposed to be considered less American than people in Alabama, despite the fact that vastly more Americans live in California than Alabama. This mirrors the same pattern where we urban residents are somehow “less authentic” even though we outnumber the rural by four to one.
I don’t know how to mend this tribal division; I very much wish I did. But I do know that simply ignoring it isn’t going to work. We can talk all we want about carbon taxes and cap-and-trade, but as long as most of the world’s people are divided into racial, ethnic, and national identities that they consider to be in zero-sum conflict with one another, we are never going to achieve the level of cooperation necessary for a real permanent solution to climate change.

The temperatures and the oceans rise. United we must stand, or divided we shall fall.

How can we stop rewarding psychopathy?

PNRJ ethics, market failure, public policy , , , , , , , , , , , , ,

Oct 1, JDN 24578028

A couple of weeks ago The New York Times ran an interesting article about how entrepreneurs were often juvenile delinquents, who then often turn into white-collar criminals. They didn’t quite connect the dots, though; they talked about the relevant trait driving this behavior as “rule-breaking”, when it is probably better defined as psychopathy. People like Martin Shkreli aren’t just “rule-breakers”; they are psychopaths. While only about 1% of humans in general are psychopaths, somewhere between 3% and 4% of business executives are psychopaths. I was unable to find any specific data assessing the prevalence of psychopathy among politicians, but if you just read the Hare checklist, it’s not hard to see that psychopathic traits are overrepresented among politicians as well.

This is obviously the result of selection bias; as a society, we are systematically appointing psychopaths to positions of wealth and power. Why are we doing this? How can we stop?

One very important factor here that may be especially difficult to deal with is desire. We generally think that in a free society, people should be allowed to seek out the sort of life they want to live. But one of the reasons that psychopaths are more likely to become rich and powerful is precisely that they want it more.

To most of us, being rich is probably something we want, but not the most important thing to us. We’d accept being poor if it meant we could be happy, surrounded by friends and family who love us, and made a great contribution to society. We would like to be rich, but it’s more important that we be good people. But to many psychopaths, being rich is the one single thing they care about. All those other considerations are irrelevant.

With power, matters are even more extreme: Most people actually seem convinced that they don’t want power at all. They associate power with corruption and cruelty (because, you know, so many of the people in power are psychopaths!), and they want no part of it.

So the saying goes: “Power tends to corrupt, and absolute power corrupts absolutely.” Does it, now? Did power corrupt George Washington and Abraham Lincoln? Did it corrupt Mahatma Gandhi and Nelson Mandela? I’m not saying that any of these men were without flaws, even serious ones—but was it power that made them so? Who would they have been, and more importantly, what would they have done, if they hadn’t had power? Would the world really have been better off if Abraham Lincoln and Nelson Mandela had stayed out of politics? I don’t think so.

Part of what we need, therefore, is to convince good people that wanting power is not inherently bad. Power just means the ability to do things; it’s what you do that matters. You should want power—the power to right wrongs, mend injustices, uplift humanity’s future. Thinking that the world would be better if you were in charge not only isn’t a bad thing—it is quite likely to be true. If you are not a psychopath, then the world would probably be better off if you were in charge of it.

Of course, that depends partly on what “in charge of the world” even means; it’s not like we have a global government, after all. But even suppose you were granted the power of an absolute dictatorship over all of humanity; what would you do with that power? My guess is that you’d probably do what I would do: Start by using that power to correct the greatest injustices, then gradually cede power to a permanent global democracy. That wouldn’t just be a good thing; it would be quite literally and without a doubt the best thing that ever happened. Of course, it would be all the better if we never built such a dictatorship in the first place; but mainly that’s because of the sort of people who tend to become dictators. A benevolent dictatorship really would be a wonderful thing; the problem is that dictators almost never remain benevolent. Dictatorship is simply too enticing to psychopaths.

And what if you don’t think you’re competent enough in policy to make such decisions? Simple: You don’t make them yourself, you delegate them to responsible and trustworthy people to make them for you. Recognizing your own limitations is one of the most important differences between a typical leader and a good leader.

Desire isn’t the only factor here, however. Even though psychopaths tend to seek wealth and power with more zeal than others, there are still a lot of good people trying to seek wealth and power. We need to look very carefully at the process of how we select our leaders.

Let’s start with the private sector. How are managers chosen? Mainly, by managers above them. What criteria do they use? Mostly, they use similarity. Managers choose other managers who are “like them”—middle-aged straight White men with psychopathic tendencies.

This is something that could be rectified with regulation; we could require businesses to choose a more diverse array of managers that is more representative of the population at large. While this would no doubt trigger many complaints of “government interference” and “inefficiency”, in fact it almost certainly would increase the long-term profitability of most corporations. Study after study after study shows that increased diversity, particularly including more equal representation of women, results in better business performance. A recent MIT study found that switching from an all-male or all-female management population to a 50-50 male/female split could increase profits by as much as forty percent. The reason boards of directors aren’t including more diversity is that they ultimately care more about protecting their old boys’ club (and increasing their own compensation, of course) than they do about maximizing profits for their shareholders.

I think it would actually be entirely reasonable to include regulations about psychopathy in particular; designate certain industries (such as lobbying and finance; I would not include medicine, as psychopaths actually seem to make pretty good neurosurgeons!) as “systematically vital” and require psychopathy screening tests as part of their licensing process. This is no small matter, and definitely does represent an incursion into civil liberties; but given the enormous potential benefits, I don’t think it can be dismissed out of hand. We do license professions; why shouldn’t at least a minimal capacity for empathy and ethical behavior be part of that licensing process?

Where the civil liberty argument becomes overwhelming is in politics. I don’t think we can justify any restrictions on who should be allowed to run for office. Frankly, I think even the age limits should be struck from the Constitution; you should be allowed to run for President at 18 if you want. Requiring psychological tests for political office borders on dystopian.

That means we need to somehow reform either the campaign system, the voting system, or the behavior of voters themselves.

Of course, we should reform all three. Let’s start with the voting system itself, as that is the simplest: We should be using range voting, and we should abolish the Electoral College. Districts should be replaced by proportional representation through reweighted range voting, eliminating gerrymandering once and for all without question.

The campaign system is trickier. We could start by eliminating or tightly capping private and corporate campaign donations, and replace them with a system similar to the “Democracy Vouchers” being tested in Seattle. The basic idea is simple and beautiful: Everyone gets an equal amount of vouchers to give to whatever candidates they like, and then all the vouchers can be redeemed for campaign financing from public funds. It’s like everyone giving a donation (or monetary voting), but everyone has the same amount of “money”.

This would not solve all the problems, however. There is still an oligopoly of news media distorting our political discourse. There is still astonishingly bad journalism even in our most respected outlets, like the way the New York Times was obsessed with Comey’s letter and CNN’s wall-to-wall coverage of totally unfounded speculation about a missing airliner.

Then again, CNN’s ratings skyrocketed during that period. This shows that the problems run much deeper than a handful of bad journalists or corrupt media companies. These companies are, to a surprisingly large degree, just trying to cater to what their audience has said it wants, just “giving the people what they want”.

Our fundamental challenge, therefore, is to change what the people want. We have to somehow convince the public at large—or at least a big enough segment of the public at large—that they don’t really want TV news that spends hours telling them nothing and they don’t really want to elect the candidate who is the tallest or has the nicest hair. And we have to get them to actually change the way they behave accordingly.

When it comes to that part, I have no idea what to do. A voting population that is capable of electing Donald Trump—Electoral College nonsense notwithstanding, he won sixty million votes—is one that I honestly have no idea how to interface with at all. But we must try.

A tale of two storms

PNRJ current events, development economics, ethics, public policy , , , , , , , , , , ,

Sep 24, JDN 2458021

There were two severe storm events this past week; one you probably heard a great deal about, the other, probably not. The first was Hurricane Irma, which hit the United States and did most of its damage in Florida; the second was Typhoon Doksuri, which hit Southeast Asia and did most of its damage in Vietnam.

You might expect that this post is going to give you more bad news. Well, I have a surprise for you: The news is actually mostly good.

The death tolls from both storms were astonishingly small. The hurricane is estimated to have killed at least 84 people, while the typhoon has killed at least 26. This result is nothing less than heroism. The valiant efforts of thousands of meteorologists and emergency responders around the world has saved thousands of lives, and did so both in the wealthy United States and in impoverished Vietnam.

When I started this post, I had expected to see that the emergency response in Vietnam would be much worse, and fatalities would be far higher; I am delighted to report that nothing of the sort was the case, and Vietnam, despite their per-capita GDP PPP of under $6,000, has made emergency response a sufficiently high priority that they saved their people just about as well as Florida did.

To get a sense of what might have happened without them, consider that 1.5 million homes in Florida were leveled by the hurricane, and over 100,000 homes were damaged by the typhoon. Vietnam is a country of 94 million people. Florida has a population of 20 million. (The reason Florida determines so many elections is that it is by far the most populous swing state.) Without weather forecasting and emergency response, these death figures would have been in the tens of thousands, not the dozens.

Indeed, if you know statistics and demographics well, these figures become even more astonishing: These death rates were almost indistinguishable from statistical noise.

Vietnam’s baseline death rate is about 5.9 per 1,000, meaning that they experience about 560,000 deaths in any given year. This means that over 1500 people die in Vietnam on a normal day.

Florida’s baseline death rate is about 6.6 per 1,000, actually a bit higher than Vietnam’s, because Florida’s population skews so much toward the elderly. Therefore Florida experiences about 130,000 deaths per year, or 360 deaths on a normal day.

In both Vietnam and Florida, this makes the daily death probability for any given person about 0.0017%. A random process with a fixed probability of 0.0017% over a population of n people will result in an average of 0.0017n events, but with some variation around that number. The standard deviation is actually sqrt(p(1-p)n) = 0.004 sqrt(n). When n = 20,000,000 (Florida), this results in a standard deviation of 18. When n = 94,000,000 (Vietnam), this results in a standard deviation of 40.

This means that the 26 additional deaths in Vietnam were within one standard deviation of average! They basically are indistinguishable from statistical noise. There have been over a hundred days in Vietnam where an extra 26 people happened to die, just in the past year. Weather forecasting took what could have been a historic disaster and turned it into just another bad day.

The 84 additional deaths in Florida are over four standard deviations away from average, so they are definitely distinguishable from statistical noise—but this still means that Florida’s total death rate for the year will only tick up by 0.6%.

It is common in such tragedies to point out in grave tones that “one death is too many”, but I maintain that this is not actually moral wisdom but empty platitude. No conceivable policy is ever going to reduce death rates to zero, and the people who died of heart attacks or brain aneurysms are every bit as dead as the people who died from hurricanes or terrorist attacks. Instead of focusing on the handful of people who died because they didn’t heed warnings or simply got extraordinarily unlucky, I think we should be focusing on the thousands of people who survived because our weather forecasters and emergency responders did their jobs so exceptionally well. Of course if we can reduce the numbers even further, we should; but from where I’m sitting, our emergency response system has a lot to be proud of.

Of course, the economic damage of the storms was substantially greater. The losses in destroyed housing and infrastructure in Florida are projected at over $80 billion. Vietnam is much poorer, so there simply isn’t as much infrastructure to destroy; total damage is unlikely to exceed $10 billion. Florida’s GDP is $926 billion, so they are losing 8.6%; while Vietnam’s GDP is $220 billion, so they are still losing 4.5%. And of course the damage isn’t evenly spread across everyone; those hardest hit will lose perhaps their entire net wealth, while others will feel absolutely nothing.

But economic damage is fleeting. Indeed, if we spend the government money we should be, and take the opportunity to rebuild this infrastructure better than it was before, the long-run economic impact could be positive. Even 8.6% of GDP is less than five years of normal economic growth—and there were years in the 1950s where we did it in a single year. The 4.6% that Vietnam lost, they should make back within a year of their current economic growth.

Thank goodness.

Building a wider tent, revisited

PNRJ core principles, ethics, public policy , , , , , , , ,

Sep 17, JDN 2458014

At a reader’s suggestion, I am expanding upon the argument I made a few weeks ago that political coalitions are strongest when they are willing to accept some disagreement. I made that argument with numbers, which is likely to convince someone like me; but I know that many other people don’t really think that way, so it may help to provide some visuals as well.

60% of this rectangle is filled in red.

Rectangle_1

This represents the proportion of the population that agrees with you on some issue. For concreteness but to avoid making this any more political than it already is, I’m going to pick silly issues. So let’s have this first issue be about which side of the road we should drive on. Let’s say your view is that we should drive on the right. 60% of people agree that we should drive on the right. The other 40% think we should drive on the left.

Now let’s consider another issue. Let’s say this one is about putting pineapples on pizza. You, and 60% of people, agree that pineapples should not be put on pizza. The other 40% think we should put pineapples on pizza.

For now, let’s assume those two issues are independent, that someone’s opinions on driving and pizza are unrelated. Then we can fill 60% of the rectangle in blue, but it should be a perpendicular portion because the two issues aren’t related:

Rectangle_2

Those who agree with you on driving but not pizza (that would include me, by the way) are in red, those who agree with you on pizza but not driving are in blue, those who agree with you on both are in purple, and those who disagree with you on both are in white. You should already be able to see that less than half the population agrees with you on both issues, even though more than half agrees on each.

Let’s add a third issue, which we will color in green. This one can be the question of whether Star Trek is better than Star Wars. Let’s say that 60% of the population agrees with you that Star Trek is better, while 40% think that Star Wars is better. Let’s also assume that this is independent of opinions on both driving and pizza.

Rectangle_3

This is already starting to get unwieldy; there are now eight distinct regions. The white region (8) is comprised of people who disagree with you on everything. The red (6), blue (4), and green (7) regions each have people agree with you on exactly one issue. The blue-green (3), purple (2), and brown (5) regions have people agree with you on two issues. Only those in the dark-green region (1) agree with you on everything.

As you can see, the proportion of people who agree with you on all issues is fairly small, even though the majority of the population agrees with you on any given issue.

If we keep adding issues, this effect gets even stronger. I’m going to change the color-coding now to simplify things. Now, blue will indicate the people who agree with you on all issues, green the people who agree on all but one issue, yellow the people who agree on all but two issues, and red the people who disagree with you on three or more issues.

For three issues, that looks like this, which you can compare to the previous diagram:

Rectangle_4

Now let’s add a fourth issue. Let’s say 60% of people agree with you that socks should not be worn with sandals, but 40% think that socks should be worn with sandals. The blue region gets smaller:

Rectangle_5

How about a fifth issue? Let’s say 60% of people agree with you that cats are better than dogs, while 40% think that dogs are better than cats. The blue region continues to shrink:

Rectangle_6

How about a sixth issue?

Rectangle_7

And finally, a seventh issue?

Rectangle_8

Now the majority of the space is covered by red, meaning that most of the population disagrees with you on at least three issues.

To recap:

By the time there were two issues, the majority of the population disagreed with you on at least one issue.

By the time there were four issues, the majority of the population disagreed with you on at least two issues.

By the time there were seven issues, the majority of the population disagreed with you on at least three issues.

This despite the fact that the majority of the population always agrees with you on any given issue!

If you only welcomed people into your coalition who agree on every single issue (the blue region), you wouldn’t win election if there were even two issues. If you only welcomed those who disagree on at most one (blue or green), you’d stop winning if there were at least four issues. And if there were at least seven issues, you couldn’t even win by allowing those who disagree on at most two issues (blue, green, yellow).

Now, this argument very much does rely upon the different opinions being independent, which in real politics is not the case. So let’s introduce some correlations and see how this changes the result.

Suppose that once someone agrees with you about driving on the right side of the road, they are 90% likely to agree on pizza, Star Trek, sandals, and cats.

Rectangle_9
That makes things look a lot better for you; by including one level of disagreement, you could dominate every election. But notice that even in this case, if you exclude all disagreement, you will continue to lose elections.

With enough issues, even with very strong correlations you can get the same effect. Suppose there are 20 issues, and if you agree on the first one, there is a 99% chance you’ll agree on each of the others. You are still only getting about half the electorate if you don’t allow any disagreement! Due to the very high correlation, if someone disagrees with you on a few things, they usually disagree with you on many things; yet you’re still better off including some disagreement in your coalition.

Rectangle_10

Obviously, you shouldn’t include people in your coalition who actively oppose its core mission. Even if they aren’t actively trying to undermine you, at some point, the disagreement becomes so large that you’ve got to cut them loose. But in a pluralistic democracy, ideological purism is a surefire recipe for electoral failure. You need to allow at least some disagreement.

This isn’t even getting into the possibility that you might be wrong about some issues, and by including those who disagree with you, you may broaden your horizons and correct your mistakes. I’ve thus far assumed you are completely correct and in the majority on every single issue, and yet you still can’t win elections with complex policy mixes unless you include people who disagree with you.

Building a wider tent is not compromising on your principles

PNRJ core principles, current events, public policy , , , , , , , ,

August 20, JDN 2457986

After humiliating defeats in the last election, the Democratic Party is now debating how to recover and win future elections. One proposal that has been particularly hotly contested is over whether to include candidates who agree with the Democratic Party on most things, but still oppose abortion.

This would almost certainly improve the chances of winning seats in Congress, particularly in the South. But many have argued that this is a bridge too far, it amounts to compromising on fundamental principles, and the sort of DINO (Democrat-In-Name-Only) we’d end up with are no better than no Democrats at all.

I consider this view deeply misguided; indeed, I think it’s a good portion of the reason why we got so close to winning the culture wars and yet suddenly there are literal Nazis marching in the streets. Insisting upon ideological purity on every issue is a fantastic way to amplify the backlash against you and ensure that you will always lose.

To show why, I offer you a simple formal model. Let’s make it as abstract as possible, and say there are five different issues, A, B, C, D, and E, and on each of them you can either choose Yes or No.

Furthermore, let’s suppose that on every single issue, the opinion of a 60% majority is “Yes”. If you are a political party that wants to support “Yes” on every issue, which of these options should you choose:
Option 1: Only run candidates who support “Yes” on every single issue

Option 2: Only run candidates who support “Yes” on at least 4 out of 5 issues

Option 3: Only run candidates who support “Yes” on at least 3 out of 5 issues

For now, let’s assume that people’s beliefs within a district are very strongly correlated (people believe what their friends, family, colleagues, and neighbors believe). Then assume that the beliefs of a given district are independently and identically distributed (each person essentially flips a weighted coin to decide their belief on each issue). These are of course wildly oversimplified, but they keep the problem simple, and I can relax them a little in a moment.

Suppose there are 100 districts up for grabs (like, say, the US Senate). Then there will be:

(0.6)^5*100 = 8 districts that support “Yes” on every single issue.

5*(0.6)^4*(0.4)*100 = 26 districts that support “Yes” on 4 out of 5 issues.

10*(0.6)^3*(0.4)^2*100 = 34 districts that support “Yes” on 3 out of 5 issues.

10*(0.6)^2*(0.4)^3*100 = 23 districts that support “Yes” on 2 out of 5 issues.

5*(0.6)^1*(0.4)^4*100 = 8 districts that support “Yes” on 1 out of 5 issues.

(0.4)^5*100 = 1 district that doesn’t support “Yes” on any issues.

The ideological purists want us to choose option 1, so let’s start with that. If you only run candidates who support “Yes” on every single issue, you will win only eight districts. Your party will lose 92 out of 100 seats. You will become a minor, irrelevant party of purists with no actual power—despite the fact that the majority of the population agrees with you on any given issue.

If you choose option 2, and run candidates who differ at most by one issue, you will still lose, but not by nearly as much. You’ll claim a total of 34 seats. That might at least be enough to win some votes or drive some committees.

If you want a majority, you need to go with option 3, and run candidates who agree on at least 3 out of 5 issues. Only then will you win 68 seats and be able to drive legislative outcomes.

But wait! you may be thinking. You only won in that case by including people who don’t agree with your core platform; so what use is it to win the seats? You could win every seat by including every possible candidate, and then accomplish absolutely nothing!

Yet notice that even under option 3, you’re still only including people who agree with the majority of your platform. You aren’t including absolutely everyone. Indeed, once you parse out all the combinations, it becomes clear that by running these candidates, you will win the vote on almost every issue.

8 of your candidates are A1, B1, C1, D1, E1, perfect partisans; they’ll support you every time.

6 of your candidates are A1, B1, C1, D1, E0, disagreeing only on issue E.

5 of your candidates are A1, B1, C1, D0, E1, disagreeing only on issue D.

5 of your candidates are A1, B1, C0, D1, E1, disagreeing only on issue C.

5 of your candidates are A1, B0, C1, D1, E1, disagreeing only on issue B.

5 of your candidates are A0, B1, C1, D1, E1, disagreeing only on issue A.

4 of your candidates are A1, B1, C1, D0, E0, disagreeing on issues D and E.

4 of your candidates are A0, B1, C1, D0, E0, disagreeing on issues E and A.

4 of your candidates are A0, B0, C1, D1, E1, disagreeing on issues B and A.

4 of your candidates are A1, B0, C1, D1, E0, disagreeing on issues E and B.

3 of your candidates are A1, B1, C0, D0, E1, disagreeing on issues D and C.

3 of your candidates are A1, B0, C0, D1, E1, disagreeing on issues C and B.

3 of your candidates are A0, B1, C1, D0, E1, disagreeing on issues D and A.

3 of your candidates are A0, B1, C0, D1, E1, disagreeing on issues C and A.

3 of your candidates are A1, B0, C1, D0, E1, disagreeing on issues D and B.

3 of your candidates are A1, B1, C0, D1, E0, disagreeing on issues C and E.

I took the liberty of rounding up or down as needed to make the numbers add up to 68. I biased toward rounding up on issue E, to concentrate all the dissent on one particular issue. This is sort of a worst-case scenario.

Since 60% of the population also agrees with you, the opposing parties couldn’t have only chosen pure partisans; they had to cast some kind of big tent as well. So I’m going to assume that the opposing candidates look like this:

8 of their candidates are A1, B0, C0, D0, E0, agreeing with you only on issue A.

8 of their candidates are A0, B1, C0, D0, E0, agreeing with you only on issue B.

8 of their candidates are A0, B0, C1, D0, E0, agreeing with you only on issue C.

8 of their candidates are A0, B0, C0, D1, E0, agreeing with you only on issue D.

This is actually very conservative; despite the fact that there should be only 9 districts that disagree with you on 4 or more issues, they somehow managed to win 32 districts with such candidates. Let’s say it was gerrymandering or something.

Now, let’s take a look at the voting results, shall we?

A vote for “Yes” on issue A will have 8 + 6 + 3*5 + 2*4 + 4*3 + 8 = 57 votes.

A vote for “Yes” on issue B will have 8 + 6 + 3*5 + 2*4 + 4*3 + 8 = 57 votes.

A vote for “Yes” on issue C will have 8 + 6 + 3*5 + 4*4 + 2*3 + 8 = 59 votes.

A vote for “Yes” on issue D will have 8 + 6 + 3*5 + 3*4 + 3*3 + 8 = 58 votes.

A vote for “Yes” on issue E will have 8 + 0 + 4*5 + 1*4 + 5*3 = 47

Final results? You win on issues A, B, C, and D, and lose very narrowly on issue E. Even if the other party somehow managed to maintain total ideological compliance and you couldn’t get a single vote from them, you’d still win on issue C and tie on issue D. If on the other hand your party can convince just 4 of your own anti-E candidates to vote in favor of E for the good of the party, you can win on E as well.

Of course, in all of the above I assumed that districts are homogeneous and independently and identically distributed. Neither of those things are true.
The homogeneity assumption actually turns out to be pretty innocuous; if each district elects a candidate by plurality vote from two major parties, the Median Voter Theorem applies and the result is as if there were a single representative median voter making the decision.

The independence assumption is not innocuous, however. In reality, there will be strong correlations between the views of different people in different districts, and strong correlations across issues among individual voters. It is in fact quite likely that people who believe A1, B1, C1, D1 are more likely to believe E1 than people who believe A0, B0, C0, D0.

Given that, all the numbers above would shift, in the following way: There would be a larger proportion of pure partisans, and a smaller proportion of moderates with totally mixed views.

Does this undermine the argument? Not really. You need an awful lot of pure partisanship to make that a viable electoral strategy. I won’t go through all the cases again because it’s a mess, but let’s just look at those voting numbers again.

Suppose that instead of it being an even 60% regardless of your other beliefs, your probability of a “Yes” belief on a given issue is 80% if the majority of your previous beliefs are “Yes”, and a probability of 40% if the majority of your previous beliefs are “No”.

Then out of 100 districts:

(0.6)^3(0.8)^2*100 = 14 will be A1, B1, C1, D1, E1 partisans.

Fourteen. Better than eight, I suppose; but not much.

Okay, let’s try even stronger partisan loyalty. Suppose that your belief on A is randomly chosen with 60% probability, but every belief thereafter is 90% “Yes” if you are A1 and 30% “Yes” if you are A0.

Then out of 100 districts:

(0.6)(0.9)^4*100 = 39 will be A1, B1, C1, D1, E1 partisans.

You will still not be able to win a majority of seats using only hardcore partisans.

Of course, you could assume even higher partisanship rates, but then it really wasn’t fair to assume that there are only five issues to choose. Even with 95% partisanship on each issue, if there are 20 issues:
(0.95)^20*100 = 36

The moral of the story is that if there is any heterogeneity across districts at all, any meaningful deviation from the party lines, you will only be able to reliably win a majority of the legislature if you cast a big tent. Even if the vast majority of people agree with you on any given issue, odds are that the vast majority of people don’t agree with you on everything.

Moreover, you are not sacrificing your principles by accepting these candidates, as you are still only accepting people who mostly agree with you into your party. Furthermore, you will still win votes on most issues—even those you felt like you were compromising on.

I therefore hope the Democratic Party makes the right choice and allows anti-abortion candidates into the party. It’s our best chance of actually winning a majority and driving the legislative agenda, including the legislative agenda on abortion.

Our biggest oil subsidy is called the Interstate Highway System

PNRJ market failure, public policy , , , , , , , , ,

August 13, JDN 2457979

In last week’s post I proposed an infrastructure project that probably sounded quite expensive. $410 billion for maglev lines? We’ve never spent anything like that on infrastructure, have we?

Actually, we have. The Interstate Highway System, in inflation-adjusted dollars, cost $526 billion. Of course, road is a lot cheaper than maglev rail, so that covers a lot more miles than the maglev system I’m proposing.

Of course, the maglev system would produce a lot less carbon emissions and be a great deal safer; while the Interstate Highway System has about 60% (91 log points) fewer traffic fatalities than the road system that came before it, the Shinkansen high-speed rail system in Japan has not had a single passenger fatality in over 50 years and 1 billion passengers. No system built by humans will ever be perfect, but the Shinkansen comes about as close as we’re ever going to get.

Assuming we could even get close to that level of safety, replacing the highway system with high-speed rail would save about 2,000 American lives every year. (Of course, we’d still lose over 30,000 Americans every year to non-interstate car accidents.)

But what I really want to talk about this week is how the Interstate Highway System is in fact an implicit oil subsidy. We currently spend over $140 billion per year in public funds to maintain highways (about one-fourth of which is specifically the Interstate Highway System). For those of you playing along at home, that’s about half what it would take to end world hunger.

The choice to spending this money maintaining highways instead of bike lanes, rail lines, or subway systems makes this spending an implicit subsidy for the car industry and the oil industry.

Of course, that’s only half the story; there’s also the gasoline tax, which is a pretty obvious tax on the oil industry. But the federal gasoline tax only raises about $35 billion per year, and state taxes add up to a comparable amount; so only about half what we spend on highways is actually covered by gasoline taxes. This means that even if you never drive a car, you are paying for the highway system.

Even including the gasoline tax, this means that this implicit oil subsidy may be the largest oil subsidy in the United States. Standard estimates of oil subsidies in the US range around $30 to $40 billion per year. Assuming that 3/4 of the benefit from the $140 billion in highway spending goes to the oil industry (the other 1/4 to the car industry), and then subtracting the roughly $70 billion paid in gasoline taxes leaves about $35 billion per year in net oil subsidy from the Interstate Highway System—which is to say about as much as all other oil subsidies combined.

Moreover, when you do drive on the highway, you usually don’t pay. You pay for gasoline, but that’s quite cheap, especially if your car is at all fuel-efficient; and most of us (in an entirely economically rational way) avoid toll roads when we have the time. Most of what you spend on driving is paying to buy, insure, and maintain your car—because cars are extremely complicated and expensive machines that take an awful lot of knowhow to build. The annual cost of driving a typical midsize sedan 15,000 miles per year is about $8,500. Of that, about $3,000 is depreciation (I’m assuming half the depreciation was inevitable, and the other half was due to mileage), registration fees, and finance charges that just come from owning the vehicle and would still happen even if you hardly ever drove it. This means that your marginal cost of driving is only about $0.36 per mile. (This makes the $0.54 per mile deduction the IRS will give small business owners actually quite generous.) You have a strong economic incentive not to drive at all, but in many places it’s hard to even get by without a car; and once you have one, a substantial portion of the cost is already sunk and you may as well drive it.

Compare this to how we fund public transit. Most of the spending on public transit is privatized, and federal funds for public transit are about 1/6 of federal funds for interstate highways. Then we charge every single passenger for every single trip. Except for the recent transition to transit cards instead of cash, this whole system almost seems designed to minimize the salience of the cost of driving and maximize the salience of the cost of public transit.

We also spend far more on our public transit projects than is really necessary, because corruption and excess bureaucracy in the subcontracting system dramatically raises the price. This is actually rather strange, as overall the US has less corruption than Spain or France, yet we pay substantially more for our infrastructure than they do. Indeed, capital costs per kilometer for US urban rail lines consistently rate above all but the most expensive European projects—notably, usually above that $100 million per mile threshold I estimated for maglev rail done right.

This combination of high prices and low funding means our public transit system provides far worse service. Combined with the fact that the rent is too damn high, this gives Americans some of the longest commute times in the world.
What we should actually be doing of course is taxing the oil industry, at the social cost of carbon—the monetary value of the marginal ecological damage done by extracting and burning oil. If we did this, it would raise the price of gasoline by about $0.20 per gallon; since the $70 billion in gasoline taxes is currently raised by a tax of about $0.50 per gallon, that means we would raise an additional $30 billion from gasoline alone (not quite, as people would reduce their gasoline consumption a little). This means that by not doing this, we are effectively subsidizing oil by an additional $30 billion—making our total oil subsidies over $100 billion per year.

Of course, there is a case to be made that this is not the largest US oil subsidy after all. There is one quite plausible candidate for US oil subsidies that might actually be larger, and that is US military spending. Obviously not all military spending is an oil subsidy; but when you include both the absurd amounts of fuel that tanks and fighter jets consume (the DoD accounts for 93% of all US government fuel consumption!) and the fact that several of our most recent wars were at least partly about securing oil reserves, it’s not hard to see how this might be benefiting the oil industry. Estimating this effect quantitatively is very difficult, but if even 5% of the US military budget amounts to an oil subsidy, that’s over $25 billion per year—just shy of the Interstate Highway System.

What will we do without air travel?

PNRJ futurism, market failure, public policy , , , , , , , , , , , ,

August 6, JDN 2457972

Air travel is incredibly carbon-intensive. Just one round-trip trans-Atlantic flight produces about 1 ton of carbon emissions per passenger. To keep global warming below 2 K, personal carbon emissions will need to be reduced to less than 1.5 tons per person per year by 2050. This means that simply flying from New York to London and back twice in a year would be enough to exceed the total carbon emissions each person can afford if we are to prevent catastrophic global climate change.

Currently about 12% of US transportation-based carbon emissions are attributable to aircraft; that may not sound like a lot, but consider this. Of the almost 5 trillion passenger-miles traveled by Americans each year, only 600 billion are by air, while 60,000 are by public transit. That leaves 4.4 trillion passenger-miles traveled by car. About 60% of US transportation emissions are due to cars, while 88% of US transportation is by car. About 12% of US transportation emissions are due to airplanes, while 12% of US passenger-miles are traveled by airplane. This means that cars produce about 2/3 as much carbon per passenger-mile, even though we tend to fill up airplanes to the brim and most Americans drive alone most of the time.

Moreover, we know how to reduce emissions from cars. We can use hybrid vehicles, we can carpool more, or best of all we can switch to entirely electric vehicles charged off a grid that is driven by solar and nuclear power. It is theoretically possible to make personal emissions from car travel zero. (Though making car manufacturing truly carbon-neutral may not be feasible; electric cars actually produce somewhat more carbon in their production, though not enough to actually make them worse than conventional cars.)

We have basically no idea how to reduce emissions from air travel. Jet engines are already about as efficient as we know how to make them. There are some tweaks to taxi and takeoff procedure that would help a little bit (chiefly, towing the aircraft to the runway instead of taking them there on their own power; also, taking off from longer runways that require lower throttle to achieve takeoff speed). But there’s basically nothing we can do to reduce the carbon emissions of a cruising airliner at altitude. Even very optimistic estimates involving new high-tech alloys, wing-morphing technology, and dramatically improved turbofan engines only promise to reduce emissions by about 30%.

This is something that affects me quite directly; air travel is a major source of my personal carbon footprint, but also the best way I have to visit family back home.
Using the EPA’s handy carbon footprint calculator, I estimate that everything else I do in my entire life produces about 10 tons of carbon emissions per year. (This is actually pretty good, given the US average of 22 tons per person per year. It helps that I’m vegetarian, I drive a fuel-efficient car, and I live in Southern California.)

Using the ICAO’s even more handy carbon footprint calculator for air travel, I estimate that I produce about 0.2 tons for every round-trip economy-class transcontinental flight from California to Michigan. But that doesn’t account for the fact that higher-altitude emissions are more dangerous. If you adjust for this, the net effect is as if I had produced a full half-ton of carbon for each round-trip flight. Therefore, just four round-trip flights per year increases my total carbon footprint by 20%—and again, by itself exceeds what my carbon emissions need to be reduced to by the year 2050.

With this in mind, most ecologists agree that air travel as we know it is simply not sustainable.

The question then becomes: What do we do without it?

One option would be to simply take all the travel we currently do in airplanes, and stop it. For me this would mean no more trips from California to Michigan, except perhaps occasional long road trips for moving and staying for long periods.

This is unappealing, though it is also not as harmful as you might imagine; most of the world’s population has never flown in an airplane. Our estimates of exactly what proportion of people have flown are very poor, but our best guesses are that about 6% of the world’s population flies in any given year, and about 40% has ever flown in their entire life. Statistically, most of my readers are middle-class Americans, and we’re accustomed to flying; about 80% of Americans have flown on an airplane at least once, and about 1/3 of Americans fly at least once a year. But we’re weird (indeed, WEIRD, White, Educated, Industrialized, Rich, and Democratic); most people in the world fly on airplanes rarely, if ever.

Moreover, air travel has only been widely available to the general population, even in the US, for about the last 60 years. Passenger-miles on airplanes in the US have increased by a factor of 20 since just 1960, while car passenger-miles have only tripled and population has only doubled. Most of the human race through most of history has only dreamed of air travel, and managed to survive just fine without it.

It certainly would not mean needing to stop all long-distance travel, though long-distance travel would be substantially curtailed. It would no longer be possible to travel across the country for a one-week stay; you’d have to plan for four or five days of travel in each direction. Traveling from the US to Europe takes about a week by sea, each way. That means planning your trip much further in advance, and taking off a lot more time from work to do it.

Fortunately, trade is actually not that all that dependent on aircraft. The vast majority of shipping is done by sea vessel already, as container ships are simply far more efficient. Shipping by container ship produces only about 2% as much carbon per ton-kilometer as shipping by aircraft. “Slow-steaming”, the use of more ships at lower speeds to conserve fuel, is already widespread, and carbon taxes would further incentivize it. So we need not fear giving up globalized trade simply because we gave up airplanes.

But we can do better than that. We don’t need to give up the chance to travel across the country in a weekend. The answer is high-speed rail.

A typical airliner cruises at about 500 miles per hour. Can trains match that? Not quite, but close. Spain already has an existing commercial high-speed rail line, the AVE, which goes from Madrid to Barcelona at a cruising speed of 190 miles per hour. This is far from the limits of the technology. The fastest train ever built is the L0 series, a Japanese maglev which can maintain a top speed of 375 miles per hour.

This means that if we put our minds to it, we could build a rail line crossing the United States, say from Los Angeles to New York via Chicago, averaging at least 300 miles per hour. That’s a distance of 2800 miles by road (rail should be comparable); so the whole trip should take about 9 and a half hours. This is slower than a flight (unless you have a long layover), but could still make it there and back in the same weekend.

How much would such a rail system cost? Official estimates of the cost of maglev line are about $100 million per mile. This could probably be brought down by technological development and economies of scale, but let’s go with it for now. This means that my proposed LA-NY line would cost $280 billion.

That’s not a small amount of money, to be sure. It’s about the annual cost of ending world hunger forever. It’s almost half the US military budget. It’s about one-third of Obama’s stimulus plan in 2009. It’s about one-fourth Trump’s proposed infrastructure plan (that will probably never happen).

In other words, it’s a large project, but well within the capacity of a nation as wealthy as the United States.

Add in another 500 miles to upgrade the (already-successful) Acela corridor line on the East Coast, and another 800 miles to make the proposed California High-Speed Rail from LA to SF a maglev line, and you’ve increased the cost to $410 billion.
$410 billion is about 2 years of revenue for all US airlines. These lines could replace a large proportion of all US air traffic. So if the maglev system simply charged as much as a plane ticket and carried the same number of passengers, it would pay for itself in a few years. Realistically it would probably be a bit cheaper and carry fewer people, so the true payoff period might be more like 10 years. That is a perfectly reasonable payoff period for a major infrastructure project.

Compare this to our existing rail network, which is pitiful. There are Amtrak lines from California to Chicago; one is the Texas Eagle of 2700 miles, comparable to my proposed LA-NY maglev; the other is the California Zephyr of 2400 miles. Each of them completes one trip in about two and a half days—so a week-long trip is unviable and a weekend trip is mathematically impossible. Over 60 hours on each train, instead of the proposed 9.5 for the same distance. The operating speed is only about 55 miles per hour when we now have technology that could do 300. The Acela Express is our fastest train line with a top speed of 150 miles per hour and average end-to-end speed of 72 miles per hour; and (not coincidentally I think) it is by far the most profitable train line in the United States.

And best of all, the entire rail system could be carbon-neutral. Making the train itself run without carbon emissions is simple; you just run it off nuclear power plants and solar farms. The emissions from the construction and manufacturing would have to be offset, but most of them would be one-time emissions, precisely the sort of thing that it does make sense to offset with reforestation. Realistically some emissions would continue during the processes of repair and maintenance, but these would be far, far less than what the airplanes were producing—indeed, not much more than the emissions from a comparable length of interstate highway.

Let me emphasize, this is all existing technology. Unlike those optimistic forecasts about advanced new aircraft alloys and morphing wings, I’m not talking about inventing anything new here. This is something other countries have already built (albeit on a much smaller scale). I’m using official cost estimates. Nothing about this plan should be infeasible.

Why are we not doing this? We’re choosing not to. Our government has decided to spend on other things instead. Most Americans are quite complacent about climate change, though at least most Americans do believe in it now.

What about transcontinental travel? There we may have no choice but to give up our weekend visits. Sea vessels simply can’t be built as fast as airplanes. Even experimental high-speed Navy ships can’t far exceed 50 knots, which is about 57 miles per hour—highway speed, not airplane speed. A typical container vessel slow-steams at about 12 knots—14 miles per hour.

But how many people travel across the ocean anyway? As I’ve already established, Americans fly more than almost anyone else in the world; but of the 900 million passengers carried in flights in, through, or out of the US, only 200 million were international Some 64% of Americans have never left the United States—never even to Canada or Mexico! Even if we cut off all overseas commercial flights completely, we are affecting a remarkably small proportion of the world’s population.

And of course I wouldn’t actually suggest banning air travel. We should be taxing air travel, in proportion to its effect on global warming; and those funds ought to get us pretty far in paying for the up-front cost of the maglev network.

What can you do as an individual? Ay, there’s the rub. Not much, unfortunately. You can of course support candidates and political campaigns for high-speed rail. You can take fewer flights yourself. But until this infrastructure is built, those of us who live far from our ancestral home will face the stark tradeoff between increasing our carbon footprint and never getting to see our families.

This is a battle for the soul of America

PNRJ current events, ethics, public policy, Uncategorized , , , , , , , , , , , , , , , , , , ,

July 9, JDN 2457944

At the time of writing, I just got back from a protest march against President Trump in Santa Ana (the featured photo is one I took at the march). I had intended to go to the much larger sister protest in Los Angeles, but the logistics were too daunting. On the upside, presumably the marginal impact of my attendance was higher at the smaller event.

Protest marches are not a common pastime of mine; I am much more of an ivory-tower policy wonk than a boots-on-the-ground political activist. The way that other people seem to be allergic to statistics, I am allergic to a lack of statistics when broad claims are made with minimal evidence. Even when I basically agree with everything being said, I still feel vaguely uncomfortable marching and chanting in unison (and constantly reminded of that scene from Life of Brian). But I made an exception for this one, because Trump represents a threat to the soul of American democracy.

We have had bad leaders many times before—even awful leaders, even leaders whose bad decisions resulted in the needless deaths of thousands. But not since the end of the Civil War have we had leaders who so directly threatened the core institutions of America itself.

We must keep reminding ourselves: This is not normal. This is not normal! Donald Trump’s casual corruption, overwhelming narcissism, authoritarianism, greed, and utter incompetence (not to mention his taste in decor) make him more like Idi Amin or Hugo Chavez than like George H.W. Bush or Ronald Reagan. (Even the comparison with Vladimir Putin would be too flattering to Trump; Putin at least is competent.) He has personally publicly insulted over 300 people, places, and things—and counting.

Trump lies almost constantly, surrounds himself with family members and sycophants, refuses to listen to intelligence briefings, and personally demeans and even threatens journalists who criticize him. Every day it seems like there is a new scandal, more outrageous than the last; and after so long, this almost seems like a strategy. Every day he finds some new way to offend and undermine the basic norms of our society, and eventually he hopes to wear us down until we give up fighting.

It is certainly an exaggeration, and perhaps a dangerous one, to say that Donald Trump is the next Adolf Hitler. But there are important historical parallels between the rise of Trump and the rise of many other populist authoritarian demagogues. He casually violates democratic norms of civility, honesty, and transparency, and incentivizes the rest of us to do the same—a temptation we must resist. Political scientists and economists are now issuing public warnings that our democratic institutions are not as strong as we may think (though, to be fair, others argue that they are indeed strong enough).

It was an agonizingly close Presidential election. Even the tiniest differences could have flipped enough states to change the outcome. If we’d had a better voting system, it would not have happened; a simple plurality vote would have elected Hillary Clinton, and as I argued in a previous post, range voting would probably have chosen Bernie Sanders. Therefore, we must not take this result as a complete indictment of American society or a complete failure of American democracy. But let it shake us out of our complacency; democracy is only as strong as the will of its citizens to defend it.

What you can do to protect against credit card fraud

PNRJ financial advice, financial fraud, public policy , , , , , , ,

JDN 2457923

This is the second post in my ongoing series on financial fraud, but it’s also some useful personal financial advice. One of the most common forms of fraud, which I have experienced, and most Americans will experience at some point in their lives, is credit card fraud. The US leads the world in credit card fraud, accounting for 47% of all money stolen by this means. In most countries credit card fraud is declining, but not here.

The good news is that there are several things you can do to reduce both the probability of being victimized and the harm you will suffer if you are. I am of course not the first to make such recommendations; similar lists have been made by the Wall Street Journal, Consumer Reports, and even the FTC itself.

1. The first and simplest is to use fewer credit cards.

It is a good idea to have at least one credit card, because you can build a credit history this way which will help you get larger loans such as car loans and home loans later. The best thing to do is to use it for regular purchases and then pay it off as quickly as you can. The higher the interest rate, the more imperative it is to pay it quickly.

More credit cards means that you have more to keep track of, and more that can be stolen; it also generally means that you have larger total credit limits, which is a mixed blessing at best. You have more liquidity that way, to buy things you need; but you also have more temptation to buy things you don’t actually need, and more risk of losing a great deal should any of your cards be stolen.

2. Buy fewer things online, and always from reputable merchants.

This is one I certainly preach more than I practice; I probably buy as much online now as I do in person. It’s hard to beat the combination of higher convenience, wider selection, and lower prices. But buying online is the most likely way to have your credit card stolen (and it is certainly how mine was stolen a few years ago).

The US is unusual among developed countries because we still mainly use magnetic-strip cards, whereas most countries have switched to the EMV system of chip-based cards that provide more security. But this security measure is really quite overrated; it can’t protect against “card not present” fraud, which is by far the most common. Unless and until you can somehow link up the encrypted chips to your laptop in order to use them to pay online, the chips will do little to protect against fraud.

3. Monitor your bank and credit card statements regularly.

This is something you should be doing anyway. Online statements are available from just about every major bank and credit union, and you can check them at any time, any day. Watching these online statements will help you keep track of your spending, manage your budget, and, yes, protect against fraud, because the sooner you see and report a suspicious transaction the more likely you are to recover the money.

4. Use secure passwords, don’t re-use passwords, and use a secure password manager.

Most people still use remarkably insecure passwords for their online accounts. Hacking your online accounts —especially your online retail accounts, like Amazon—typically means being able to steal your credit cards. As we move into the cyberpunk future, personal security will increasingly be coextensive with online security, and until we find something better, that means good passwords.

Passwords should be long, complicated, and not easily tied to anything about you. To remember them, I highly recommend the following technique: Write a sentence of several words, and then convert the words of that sentence into letters and numbers. For example (obviously don’t use this particular example; the whole point is for passwords to be unique), the sentence “Passwords should be long, complicated, and not easily tied to anything about you.” could become the password “Psblcanet2aau”.

Human long-term memory is encoded in something very much like narrative, so you can make a password much more memorable by making it tell a story. (Literally a story if you like: “Once upon a time, in a land far away, there were seven dwarves who lived in a forest.” could form the password “1uatialfatw7dwliaf”.) If you used the whole words, it would be far too long to fit in most password systems; but by condensing it into letters, you keep it memorable while allowing it to fit. The first letters of English words are not quite random—some letters are much more common than others, for example—but as long as the password is long enough this doesn’t make it substantially easier to guess.

If you have any doubts about the security of your password, do the following: Generate a new password by the same method you used to generate that one, and then try the new password—not the old password—in an entropy checking utility such as https://howsecureismypassword.net/. The utility will tell you approximately how long it would take to guess your password by guessing random characters using current technology. This is really an upper limit—computers will get faster, and by knowing things about you, hackers can improve upon random guessing substantially—but a good password should at least be in the thousands or millions of years, while a very bad password (like the word “password” itself) can literally be in the nanoseconds. (Actually if you play around you can generate passwords that can take far longer, even “12 tredecillion years” and the like, but they are generally too long to actually use.) The reason not to use your actual password is that there is a chance, however remote, that it could be intercepted while you were doing the check. But by checking the method, you can ensure that you are generating passwords in an effective way.

After you’ve generated all these passwords, how do you remember them all? It’s unreasonable to expect you to keep them all in your head. Instead, you can just keep a few of the most important ones in your head, including a master password that you then use for a password manager like LastPass or Keeper. Password managers are frequently rated by sites like PC Mag, CNET, Consumer Affairs, and CSO. Get one that is free and top-rated; there’s no reason to pay when the free ones are just as good, and no excuse for getting any less than the best when the best ones are free.

The idea of a password manager makes some people uncomfortable—aren’t you handing your passwords over to someone else?—so let me explain it a little. You aren’t actually handing over your passwords, first of all; a reputable password manager will actually encrypt your passwords locally, and then only transmit encrypted versions of them to the site that operates the password manager. This means that no one—not the company, not even you—can access those passwords without knowing the master password, so definitely make sure you remember that master password.

In theory, it would be better to just remember different 27-character alphanumeric passwords for each site you use online. This is indisputable. Encryption isn’t perfect, and theoretically someone might be able to recover your passwords even from Keeper or LastPass. But that is astronomically unlikely, and what’s far more likely is that if you don’t use a password manager, you will forget your passwords, or re-use them and get them stolen, or else make them too simple and allow them to be guessed. A password manager allows you to maintain dozens of distinct, very complex passwords, and even update them regularly, all while remembering only one or a few. In practice, this is what provides the best security.

5. Above all, report any suspicious activity immediately.

This one I cannot emphasize enough. If you do nothing else, do this. If you ever have any reason to suspect that your credit card might have been compromised, call your bank immediately. Get them to cancel the card, send you a new one, and check any recent transactions.

Do this if you lose your wallet. Do it if you see something weird on your online statement. Do it if you bought something from an online retailer that seemed a little sketchy. Do it if you just have a weird hunch and something doesn’t feel right. The cost of doing this is a minor inconvenience; the benefit could be thousands of dollars.

If you do report a stolen card, in most cases you won’t be held liable for a penny—the credit card company will have to cover any losses. But if you don’t, you could end up making payments on interest on a balance that a thief ran up on your behalf.

If we all do this, credit card fraud could become a thing of the past. Now, about those interest rates…