Infuriating Weakness

This article is full of stuff that really annoys me.  Let's start with the leader:

The EU's naval force has freed six Somali pirate suspects, a day after they were captured trying to hijack a vessel off the East African coast.

They caught a gang of violent criminals in the act of committing a crime, and then they release them without any punishment.  This is not how you preserve law and order in international waters.  We are teaching this hive of scum and villainy that we are too weak, cowardly, and/or stupid to protect ourselves against blatant unprovoked attacks.  Is it any wonder that piracy in particular, and lawlessness in general, are infecting the world?

The suspected pirates were allegedly part of a gang who attacked the Panamanian-flagged ship MV Almezaan.

I know they have to follow journalistic conventions, but it is just ridiculous to use the words 'suspected' and 'allegedly' in that sentence.  They are definitely pirates.  They were shooting at people.

Cmdr Harbour told the BBC that the case against the suspects captured on Tuesday was "clear-cut".

"We intercepted the pirates, we destroyed their mother-ship and we went on board the cargo ship to get statements," he said.

"But we had to release them because the master of the ship would not testify."

 Why do we even need the testimony of anyone the ship being attacked?  Why is the word and expert opinion of a military officer not enough?  Is the court system really so screwed up that they will refuse to convict on the testimony of a (presumably) respected and competent officer, but they would convist based on the word of some random merchant captain?

The guards who shot the pirate suspect were also likely to avoid any censure, with Cmdr Harbour saying nothing could be done without statements from those involved.

Was someone seriously considering censuring the people who acted in self-defense?  Why on earth would you get in trouble for shooting a pirate that was attempting to take you hostage?  Maybe this is why they refused to testify.  I would not want anything to do with a legal system that treats me the same as it treats a pirate.

The authorities have struggled to find a solution to the problem of piracy - both stopping the attacks, and how to punish captured suspects.

Here's a suggestion: Stop being such bloody wimps and cowards!  Existing international law gives all naval officers the right to try and execute pirates.  They were clearly guilty, so use them as target practice and send them to the bottom of the ocean.

But there is no consensus on how to prosecute the suspects, and moves to set up an international tribunal have foundered.

Why are we so obsessed with giving these thugs 'proper justice'?  They have set themselves in clear violation of the law of nations.  They are terrorists earning money that funds more terrorism.  They are unlawful enemy combatants.  They are pirates.  Existing legal precedent, game theory, and common sense all agree that they should be killed on sight.  I trust any naval officer in the military of any democratic country to tell the difference between 'pirate' and 'not pirate' and kill the pirates immediately after they are caught.  It worked 200 years ago, and it will work today.

Giving legal rights to people who are actively engaged in the premeditated business of depriving others of human rights is stupid.

The really annoying thing is that we are willing to throw away all of our notions of rights and justice when we find it politically convenient and we can get away with it.  Our ongoing drone attacks in Afghanistan and Pakistan have killed hundreds of innocent civilians, just because they happened to be in the vicinity of someone that an informant claimed was a terrorist leader.  Why are we willing to slaughter hundreds of innocents in one war zone, but we are unwilling to punish a few dozen of the the clearly guilty in another?

It seems that the only things they really care about are status, image, and politics.

Rationality Equilibrium

As a way to make my Economics class more interesting, each homework assignment has an 'Extra Credit Game' that illustrates a principle of economics or game theory.  A game that I have used three times now, with a slight variation, is:

Extra Credit Game: Choose a number from zero to 100. You will get one point if you choose the number that is closest to one-half of the average of all numbers chosen by the class.

Before reading on, pick the number that you think will win.

This game has a lot of strategic depth, if you think about it a bit.  It tests your rationality and your ability to predict human behavior.  There are several possible levels of thinking:

Level 0: Some people will just not think about the problem and pick a number at random.  Anyone who picks a number above 25 is clearly a Level Zero thinker.

Level 1: If you assume that everyone else guesses at random, then you will figure that the average will be 50, so you will choose 25.  That is, if you chose 25 it marks you as a Level One thinker who assumes that everyone else is a Level Zero thinker.

Level 2:  If you think that everyone else is a Level 1 thinker, then you will think that the average will be 25, and you will pick 12.

There are also in-between levels.  If you picked a number between 12 and 25, it means you think that the rest of the population is divided between Level 0 and Level 1 thinkers.  (Or you could be a Level Zero person who just happened to guess low.)

Level 3:  If you think that everyone else is a Level 2 thinker, then you will think that the average will be 12, and you will pick 6.

This process continues, up until the level of 'Hyperrationality'  A hyperrational thinker is one who is capable of thinking through all consequences of everything and assumes that everyone else does the same thing.  A hyperrational person will pick zero for the problem.

Game theory assumes that everyone is hyperrational, so the only equilibrium for the problem is one where everyone picks zero.

There is a difference between being hyperational and being wise.  Wise people understand that the world is full of people who, to put it kindly, do not really think through things, and adjust their estimates accordingly.  In order to win, you have to accurately judge the rationality of the other people playing the game.

This game shows how hard it is to make economic predictions about things like consumer behavior or housing prices or the stock market, because the 'correct' prediction will be based on the actions of other people, many of whom are also trying to figure out what you are doing and who will change their actions based on the signals you generate.

The first time I ran the game, the class average was 17.2 so the winning number was 9.  The second time I ran it, the average was 8.5 and the winning number was 4.

The last time, after the homework had been assigned but before it was due, one of the students asked, in class, "If we all pick zero, will we all get the point for winning?"  I said yes.

This student is the 'community organizer' of the class.  Whenever I run any kind of coordination game, she sends emails out to the class telling them what to do so everyone gets the maximum number of points.  She told everyone, in class, to pick zero, and later sent an email to everyone with the same instructions.

This is a great example of why economics models that assume rational, or even hyperrational actors, make good predictions about the world.  Casual observation, plus lots of lab experiments, have shown that people act irrationally the first time they are confronted with a problem.  In my class, five people picked numbers greater than 25 in the first game.  But economic theory is about the real world, where people have a chance to see what happens as a result of their choices, and learn from their mistakes.  People may be bad at thinking things through, but they are good at responding to feedback and learning through experience.  It does not take many feedback cycles for behavior to converge to the hyperrational.

Unfortunately for our community organizer, and most of the class, chaos happens no matter how much you try to plan.  There were three people who did not pick zero.  I have no idea why.  They were actually in class when she asked the question, and they must have gotten the email.  Maybe they just did the homework at the last minute and forgot about the plans.  Two of the people picked higher numbers, and one picked the number '1' which turned out to be the winning number.  I do not think that this was a conspiracy, based on what I know of the social patterns of the class.  In any case, there is zero motive to arrange such a thing, because the winner would have still gotten a point if she picked 0, and there is no grade curve.

This illustrates another thing that economists know.  Even if everyone has an incentive to cooperate, and if someone is actively helping the cooperation, there will always be random shocks to the system.  No matter how much you try, it is really hard to get people to all do the 'right' thing.  Any system you design has to be robust to these shocks.  A small shock, or a small act of stupidity, can make everything fall apart if you are not careful.  Never assume that people will always listen to you or do the right thing or even avoid doing utterly stupid things.

So in conclusion, 'self-interested rationality, plus a random error term' is the best model we have of predicting human behavior.

Health Care Bill Prediction

The summary of the health care bill states:

Promoting Employer Responsibility. Requires employers with 50 or more employees who do not offer coverage to their employees to pay $2,000 annually for each full‐time employee over the first 30 as long as one of their employees receives a tax credit. Precludes waiting periods over 90 days. Requires employers who offer coverage but whose employees receive tax credits to pay $3,000 for each worker receiving a tax credit up to an aggregate cap of $2000 per full‐time employee.

If this is an accurate summary, and I am reading this correctly, and cross-referencing properly, it means that employers will have an extremely strong incentive to stop hiring low-skilled people, and if they do, to not offer them health insurance.

Workers receive tax credits if their income is less than 400 percent of the poverty line.  The first sentence implies that, if you have one worker making less money than this, you will have to pay a lot of money, but if everyone in your company is highly paid, you do not have to pay anything.

In most cases, low-skill labor and high-skill labor are substitutes.  This means that companies usually have a choice between hiring a small number of highly skilled people or a large number of low-skilled people.  Highly skilled people must be paid higher salaries, but they also bring more benefits to the company.  This provision, like any government mandate that forces you to pay some fixed cost per worker, encourages companies to hire fewer low-skilled people and replace them with high-skilled people.

Therefore, I predict that income and employment inequality will continue to increase.  Low-skilled people will find it harder and harder to get jobs, and they will be paid less.  Whenever the government forces a company to pay money for each worker, the pay of that worker will go down by an equal amount in the long run.

I am not sure exactly what the last sentence means, but I think it relates to the following from the full text of the bill:

(3) CONTRIBUTION IN LIEU OF COVERAGE- Beginning with Y2, if an employee declines such offer but otherwise obtains coverage in an Exchange-participating health benefits plan ... the employer shall make a timely contribution to the Health Insurance Exchange with respect to each such employee in accordance with section 313.

In other words, if an employee chooses to decline the employer-provided health care but instead goes to the exchange, and if the employee is eligible for a subsidy, then the employer has to pay $3000 to the government.

I understand why this provision is in there.  It is meant to discourage employers from offering substandard coverage.  But if enough people choose to go to the exchanges, it would mean that offering health care is actually more expensive than not offering it.  It may seem unlikely that people would choose to decline coverage, given that the employer must pay most of the costs, but that might happen if the exchange plans are good and if the government subsidy is high enough.

Consider what happens if the employer does hire a large number of low-skilled people.  Assume that you run a factory that hires 80 workers who earn less than 400 percent of the poverty line, and 20 managers who earn more.  If you do not offer any health care to anyone, you will have to pay $140,000. ( $2000 x (100-30))  If you do offer them health care, but they all choose to remain with their current exchange-based provider, you will have to pay $200,000.  ( 80 x $3000 = $240,000, which is limited to the cap of $2000 X 100 )  As long as 47 or more of your workers decline your coverage, you have to pay more than $140,000.

Therefore, offering your employees health insurance could easily cost you more in taxes, over and above the actual costs of the health care.  If my understanding is correct, then you will see many employers simply ceasing to offer health insurance in 2014.  Paying the fine for not insuring people is cheaper than paying the fine for having people choose another option.

Actually, I hope that this is the case.  Most economists understand that the current practice of getting health care through your employer causes a lot of problems.  We would prefer a system where everyone bought health insurance with their own money and employers did not get involved.  It may well be that this health care reform bill drives employers out completely and produces a market of nothing but individuals buying their own care on health exchanges, with poor people getting a cash subsidy.  If it does, then that would be a big improvement.

Conscription

I get angry when anyone starts suggesting that our country should consider reinstating any form of military conscription.  This is partly because they demonstrate ignorance of military facts by assuming that the quality of a volunteer and a conscript are the same.  Volunteers are always far better than conscripts, and the damage that would be done to the morale and culture of our armed forces by reinstating a draft, in any situation, would be immense.

The existence of conscription damages society in other ways.  It makes people despise the concept of military service.  It gives the elites a tool to abuse their own population, and also to threaten other countries.  It makes it much easier to wage aggressive war.

But mainly, my feelings come from a very strong belief that military conscription is wrong.  It is fundamentally and unequivocally wrong, one of the worst possible violations of human rights that can be imagined.  It is the ultimate and most brutal consequence of the philosophy that human beings only exist to serve a collective, and that individuals can be sacrificed at will when 'society' demands it.

Conscription is slavery.  It is actually worse than slavery, because the conscript is forced to do things that are far worse than manual labor.  Slavery 'only' puts you in a position where you have no power over your own life and are subject to arbitrary cruelty and violence.  Conscription does all of this, and combines it with a regime of psychological manipulation designed to make you murder your fellow human beings.

I may need to explain that last sentence a little.  I do not mean to imply that volunteer soldiers are doing anything wrong.  Volunteering to defend your family, friends, homeland, and civilization from things that would threaten it is a good and noble thing to do.  It is precisely this nobility of purpose that makes conscription such an abomination.  Conscription corrupts something that should be an individual choice by making it a type of slavery.

To see what I mean, consider marriage.  Marriage is an extremely important institution; the proper raising of children is vital for the future of society.  If people did not get married and have children, then the country would surely be destroyed.  But consider what would happen if the government conscripted people into marriage.  Consider the damage it would do to individuals, to the idea of marriage, and to society as a whole.  Forcing people to get married would be an abomination, precisely because a volunteer marriage is such a good thing.

This analogy also helps explain why it is so insulting to call our soldiers 'mercenaries'.  The difference between a volunteer and a mercenary is the difference between a wife and a prostitute.  The only thing they have in common is the fact that they are not slaves.

Society can only function when people make choices to do the things that are necessary for that society to grow and prosper.  You cannot force them to do these things.  If you try, you end up with a hollow shell of a civilization.

There is never an excuse or justification for conscription.  Any civilization that cannot summon enough volunteers to defend itself does not deserve to exist.

Logic Puzzle Answer

Regarding yesterday's question:

Most people choose option 2.  It seems more plausible because it has two greens, and we know the dice is more likely to turn up green.  However, if you look carefully, you can see that sequence 1 is actually contained within sequence 2.  Sequence 2 is just sequence 1 with an extra G added at the beginning.  This means that is 2 wins, 1 must win also.  Sequence 1 is strictly better than sequence 2, and you should bet on it.

The general lesson to learn is that each bit of information in a prediction makes the prediction less likely, no matter how plausible it seems.  The combination of A and B is always less likely to happen than A alone, no matter how much the combination might 'make more sense' than A alone.

More here

Cuong Nhu Self Defense

It is 7 in the morning.  A noise in your house has just woken you up.  What do you do?

If you are a Cuong Nhu black belt, you grab two weapons, rush downstairs in your underwear, and deal with the situation.

"In essence, he gift wrapped this case for us. He did a great job," Lt. Keith Kameg said about White.

The newspaper article is well-written, and gives a good description of how a trained martial artist should deal with an intruder.  Although Sensei MJ White was prepared for the worst, he used the minimum amount of force necessary to subdue the guy who had just broken into his house.

Note that he had weapons within easy reach and his first instinct was to grab them.  This is important.  Whether your self defense training is with martial arts or firearms, you should always have your weapon where you can get to it easily, and you should always remember your training and be prepared for all things at all times.  Simply owning things and practicing how to use them is not enough.

Learning how to hit things is easy.  Training your instincts and reflexes to respond appropriately to a wide variety of situations is much harder, and takes years of training.  That is what we do in Cuong Nhu

Congratulations to Sensei MJ for showing how a true martial artist acts.

Logic Puzzle

    Consider a regular six-sided die with four green faces and two red faces.  The die will be rolled 20 times and the sequences of greens (G) and reds (R) will be recorded.  You are asked to select one sequence, from a set of three, and you will win $25 if the sequence you chose appears on successive rolls of the die.  Please check the sequence of greens and reds on which you prefer to bet.

    1.  RGRRR
    2.  GRGRRR
    3.  GRRRRR

I will post the correct answer and a discussion tomorrow.