Superfreakonomics, Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance

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Some of our Grandchildren are occasional or even frequent readers of this web site, and this book contains heavily mature information. I don’t want them to read this book.

I reviewed Freakonomics by Steven D. Levitt and Stephen J. Dubner last week, was absolutely fascinated with most of that book, and highly recommend it (even to the grandkids, despite some “mature language”).  I wasn’t as fascinated with Superfreakonomics, but it has some great information.

You will know if you read my blog postings that one of my favorite subjects is global warming and what I believe to be the lack of solid scientific basis for most if not all of the dire predictions. I recommend that everyone should read Chapter 5, which is titled “What do Al Gore and Mount Pinatubo Have In Common?” It describes how the New York Times published an article quoting climate researchers who argued “this climatic change poses a threat to the people of the world.” Newsweek “…cited a National Academy of Sciences report…that climate change ‘would force economic and social adjustment on a worldwide scale’.” Both articles were published in the mid-1970s and were predicting the effects of global cooling. Average temperatures had fallen 0.5 degrees Fahrenheit from 1945 to 1968 and Newsweek declared that the decline “…had taken the planet about a sixth of the way toward the Ice Age average.” I won’t be surprised if the global warming predictions turn out to be just as inaccurate as the global cooling predictions being hyped in the media in the 70’s.

On the subject of predicting climate change, Superfreakonomics observes, “…even the most sophisticated climate models don’t do a very good job of representing…variables, and that obviously makes predicting the climatic future very difficult.” The predictions have obviously been that temperatures will continue to rise with increasing levels of carbon dioxide. However, temperatures have actually been mostly dropping the last few years. That insult imposed on the models by Mother Nature was termed a “travesty” by one of the prominent advocates of global warming.

I will summarize some fascinating information you will find in the book:

*  Drunk walking is proven to be much more dangerous than drunk driving (“…friends don’t let friends walk drunk”)

*  “Smile Train” began saving girls in India with cleft deformities by offering $10 for those delivered to the hospital to offset the $2.50 paid to midwifes to smother them

*  Many (60%) Indian men have penises too small to fit commercial condoms (Marketing suggestion: make a smaller condom and list it as “…tight to enhance sensitivity…”)

*  Horses in the 1900s caused a higher rate of deaths compared to autos today and caused immense health issues because of the huge amounts of manure

*  The media has “…never met an apocalypse it didn’t like…”

*  There were “…chilling tales of rampant shark carnage…” that resulted in the title “Summer of the Shark” in 2001 despite the fact there were an average number of attacks (68 with 4 fatalities)

*  Between the thirteenth and nineteenth century there were as many as a million European women executed for witchcraft after being blamed for bad weather that caused crop failures

*  Realtors take a 5 percent commission to sell a home while FSBMadison.com charges $150 to list a home

*  A Chicago prostitute is more likely to have sex with a cop than to be arrested by one

*  School children are currently likely to be taught by the college graduates with the lowest academic achievement since higher performing women are now becoming doctors, lawyers, etc. instead of teachers

*  Muslim women who become pregnant during Ramadan are more likely to have a baby with disabilities because they fast from food and drink during the day during that entire month

*  Terrorists are likely to be better educated and come from families who aren’t poor

*  There were 1000 extra traffic deaths after 9/11 because people drove instead of flying

*  Increased border security after 9/11 reduced foreign imports of marijuana to California and resulted in a boon to local growers

There are many more interesting facts, so you’ll have to read the rest of the book after you read the fun chapter on global warming.

Flash in the Pan

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This expression is used to describe something that seemed to have great promise but doesn’t “pan out” (prove) to be of lasting value. It apparently has two legitimate origins. Wiktionary says it came from the small charge of powder in the firing pan of a flintlock rife igniting but failing to ignite the powder that fired the ball. There was an impressive flash, but it was ineffectual. The Phrase Finder writes that the expression was also used by California Gold Rush prospectors who “…became excited when they saw something glint in the pan, only to have their hopes dashed when it proved not to be gold but a mere ‘flash in the pan’.”

Freakonomics, A Rogue Economist Explores the Hidden Side of Everything

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This book by economist Steven D. Levitt and New York Times writer Stephen J. Dubner was published in 2005, and I wish I hadn’t waited this long to read it. It describes how “experts” manipulate information to their advantage. Any person who intends to buy or sell a house or car or have a child educated should read this book.

The book is educational and interesting. There is a chapter titled “How is the Ku Klux Klan Like a Group of Real-Estate Agents?”Stetson Kennedy is the hero. He had Klan bloodlines, but went against the Klan after the black woman who raised him was beaten and raped after accusing a white trolley driver of shortchanging her. “So Kennedy decided—as any foolhardy, fearless, slightly daft anti-bigot would—to go undercover and join the Ku Klux Klan,” Kennedy took the Klan oaths, and one was, “Do you further swear to do all in your power to increase the white birth rate?” Kennedy’s first attempts to damage the Klan by telling officials of meeting plans failed. He then had the brilliant idea of enlisting the Adventures of Superman show. Kennedy gave the show a list of the Klan’s childish passwords. The show had several episodes of Superman combating the Klan. Children, including those of Klan members, were soon wearing capes and shouting “secret passwords while chasing others wearing pillowcases in a game called “Superman Against the Klan.” Klansmen were embarrassed, meeting attendance plummeted, and new applications for membership dropped to zero.

The discussion of Norma McCorvey will undoubtedly disturb readers. The authors were criticized by the entire political spectrum for what they wrote. Ms. McCorvey had given up two children for adoption, and was once again pregnant. She wanted a legal abortion, and a court case calling her Jane Roe was filed. The child had been born by the time the Supreme Court issued the Roe v. Wade ruling. She became a pro-life activist, but the ruling in her case allowed millions of women to have legal abortions. There were 750,000 abortions in the first year after Roe v.Wade, and it was estimated that half of those children, if born, would have lived in poverty, and would have been at risk of being criminals. The rate of violent crimes dropped despite universal predictions the rates were going to escalate out of control.

There are several educational tales. A study of real estate agents selling their own homes showed those houses remained on the market an average of ten days longer than homes they were selling for others. Their homes also sold for three percent more. That allowed them to pocket about $9,000 more on a $300,000 home. They had no incentive to hold out longer to put another $135 their pocket with the normal sharing of realtor fees to wait for a better offer.

There is a detailed analysis of teachers and the incentives given when their students do well on standardized tests. Some teachers earn the incentives by doing a good job of teaching while others cheat by giving the students longer than allowed or even changing answers using the eraser on the standard number two pencil. Students who have good teachers continue to test well while those who had teachers who cheated have lower scores from carefully monitored tests.

The authors give a few adages to explain the book: “Incentives are the cornerstone of modern life. The conventional wisdom is often wrong. Dramatic effects often have distant, even subtle causes. Experts…use their informational advantage to serve their own agenda. Knowing what to measure and how to measure it makes a complicated world much less so.”   

I can’t begin to describe all of the fascinating information derived by analyses of data described in the book. I’ve chosen the few samples given below.      

The amount of money spent is not the dominant factor in the outcome of elections. Americans spend more on chewing gum than on political campaigns.

The sales of car seats are more about successful marketing playing on the natural fear of parents than safety.

Baseball player Mark Grace said you aren’t trying if you aren’t cheating. Many people thought Grace had it right. Seven million children disappeared from the United States in 1987 after each child was required to have a Social Security number listed on income tax returns.

There is an interesting section describing how people attempt to attract attention on internet dating sites, and, not surprisingly, some of their self-descriptions are suspect. Less than one percent describes themselves as having “less than average looks.” It is also not surprising that “…men who say they want a long-term relationship do much better than men looking for an occasional lover. But women looking for an occasional lover do great.”

There is a detailed and disturbing discussion of crack cocaine dealers. Sudhir Venkatesh was sent by his graduate advisor into the Chicago ghettos to ask blacks a series of stupid questions about how they felt about being black. He miraculously survived and learned much about the dealers and their systems. The foot soldiers made on the average of $3.30/hour, and had a one in four chance of being killed during the four years he lived with them. They often asked Sid if he could perhaps get them a good job, such as working as a janitor at the University. The few people who made it to the higher ranks were very well paid, and all the foot soldiers took the risk for little pay on the outside chance they could make it to the higher status.

The final chapter of the book is about what effect on the names of kids on their lives. Two kids were named Winner and Loser, and the one named Loser became a respected New York policeman while the one named Winner spent most of his life in prison. Loser never hid from his name, although his friends typically called him “Lou.”  Beyond that, I was disinterested in this chapter.

The next to final chapter about what influences academic performance by school children is surprising. It isn’t surprising that the quality of teaching has the greatest influence. Other factors are counterintuitive. The statistics do not indicate taking kids to museums or reading to them is a positive. I think what the authors are missing is that the parents or grandparents taking the kids to a museum or reading to them is fun and rewarding for the parent or grandparent and the kid. I don’t care what the statistics show. We love the time with the grandkids. We doubt it hurts them that we relish our time with them, and don’t care that it doesn’t provide a statistically positive outcome for the grandchild.

Warren Buffet and his Secretary’s Taxes

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Warren Buffet’s secretary was in the spotlight at President Obama’s State of the Union Address after Mr. Buffet repeated his comments that she is the one paying the higher taxes. I know that Mr. Obama believes this is unfair, because I received a four page letter (perhaps robo-signed) that asks the question, “Do you think it is fair that Warren Buffet’s secretary pays a higher tax rate than Warren Buffet?” He then gives the answer, “I don’t and neither does Mr. Buffet.”

Mr. Buffet believes he and other millionaires should paying higher taxes on their individual returns, but he apparently doesn’t feel the same about Berkshire Hathaway. He owns a big share of that company, and it pays considerable amounts in corporate taxes. However, the company’s annual report discusses the running dispute it has with the IRS about how much it owes. This isn’t new; the IRS has been actively contesting whether Berkshire Hathaway is paying enough for almost a decade.

There are several interesting factors at play in this story. First, do his secretary and everyone else in Mr. Buffet’s office really pay more than Buffet? The answer is obviously no. The secretary does pay a higher rate on her estimated $200,000 salary, although I can’t find how she is paying the reported 35.8 percent of her income. There is a link to a tax calculator that shows a single person with taxable income of $200,000 would pay $50,897 in federal taxes, or 25.45%. A married person filing a joint return with the same taxable income would pay $44,070 or 22.03%. Perhaps Nebraska has really high state taxes or Omaha adds several percentage points for some sort of municipal tax.

Buffet reportedly pays federal income taxes at 17.4 percent of his taxable income, because much of his income is from capital gains that are taxed at a maximum of 15%. The disparity between his tax rates and those for his secretary is what has created outrage and earned her the adoration of those who champion higher taxes for millionaires. I haven’t seen it mentioned in many places that Mr. Buffet pays an estimated seven million dollars on his personal return, which my rudimentary math tells me that he reported about 40 million dollars of income. He wouldn’t have to wait for tax laws to be changed to address his outrage that he pays a lower tax rate than his secretary. He could simply donate another 7 million dollars to the government and there wouldn’t be an issue that needs national attention. I don’t know whether he could claim that donation to reduce his taxable income for the next year. Perhaps he doesn’t really want to send the IRS more of his personal income because his 23% share of the Berkshire Hathaway disputed corporate taxes is over five billion dollars.

It isn’t a surprise that Mr. Buffet is a big fan of Mr. Obama. The President’s decision to cancel the Keystone XL pipeline provides a big boost to earnings of Berkshire Hathaway. The pipeline was to transport oil from the Bakken oil fields in the Dakotas along with Canadian oil, but now much of that oil will have to be moved in railway tank cars operated by Burlington Northern and Santa Fe Railway Company. Berkshire Hathaway already owns 22% of that company and has an offer to buy the rest.

Let’s think about Keystone XL for a bit. The pipeline had been cleared as having minimal environmental impact in a three year study. It would have provided jobs to people making the pipe and installing it. It would have brought large quantities of oil to U.S. refineries that didn’t originate in countries that don’t like us very much. It also would have increased the amount of Bakken oil that would also move to those refineries. Apparently none of those positives would have justified irritating the people who call themselves environmentalists.

Choices for Producing Energy

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I just posted a review of “Wormwood Forest” by Mary Mycio about the Chernobyl disaster, and that brought me back to the question of what is the most responsible method of producing our electricity. We all want electricity to power the fans on our furnaces, the air conditioning, our lights, our computers and printers, to charge our phones other devices, and for some to charge the batteries in their cars. Abundant and affordable electricity is crucial to our economy and the comfort many or most of us have come to expect in our lives.

Most of our electricity is produced in plants fuled by coal (about 50%) or natural gas (about 21%) and by nuclear energy (about 19%). However, new regulations are putting pressure on the coal plants. First Energy Corp recently announced they are retiring six coal-fired plants because of the stricter federal anti-pollution rules. About a third of the workers at the six plants are eligible for retirement, and another 100 or so will be able to transfer to other jobs in the company. However, that leaves about 250 people who can’t retire without a job. This is probably just the beginning of such announcements, since it won’t be economically feasible to retrofit older plants.

I’ve reviewed several books that are pertinent to the discussion. The best, in my opinion, is “The Health Hazards of NOT Going Nuclear” written by Dr. Petr Beckman and published in 1976. On the subject of Chernobyl he would have observed the that minimal environmental effects from Three Mile Island proved that properly designed safety systems can prevent a disaster while shoddy design gives us what happened at Chernobyl. Dr. Beckman wrote that there is no completely safe way to make energy. “Energy is the capacity for doing work, and as long as man is fallible, there is always the possibility to do the wrong type of work; to ask for safe energy, therefore, is much the same as asking for incombustible fuel. He also observed that nuclear energy is “…far safer than any other form of energy.”

Back to the review of “Wormwood Forest,” the author was astonished during her tours of the Zone of Alienation created by the explosion of a Chernobyl reactor by the proliferation of wildlife. She said little is known about the radioactive animals of Chernobyl, but “What is known is that there a many, many more of them than before the disaster.” She also wrote that what she saw during her extensive tours converted her from being an “…adamant opponent of nuclear energy to ambivalent support…”at least until we reduce our dependence on fossil fuels.” I’m hoping that thinking such as that spreads before we reach the economic disaster created by bad economic policy and energy shortages predicted by some of the books I’ve recently reviewed.

Recent events involving the government trying to fund development of alternative energy endorses  the wisdom of Ms. Mycio in advocating nuclear energy until we sort out what is really possible with alternative fuels. As mentioned in the review of the book “Game Over” by Stephen Leeb, there isn’t enough iron to build the windmills and towers to replace energy from carbon based production. Solar power hasn’t been proven to provide a net gain in energy, and the results of providing Solyndra over half a billion dollars in government loans only led to a delay in bankruptcy and the layoff of about 1100 employees. There isn’t enough land area to grow biofuels to replace hydrocarbon energy production, and converting food such as corn into ethanol is both inefficient and idiotic.

Solyndra isn’t the only failure involving alternative energy technology. Beacon Power, a company involved in energy storage also went into bankruptcy after receiving $578 million dollars in taxpayer-guaranteed loans. The most recent bankruptcy was Ener1, an electric battery company that was recently awarded an $118 million dollar stimulus grant. That bankruptcy occurred about one year after Vice President Biden visited the plant to highlight the progress being made by the company with federal funds.

My hope is that technology for alternative energy becomes more successful or that new nuclear power plants will be built using the lessons learned from Three Mile Island, Chernobyl, and Japan before we reach a precipice of economic failure driven by misguided political policies about how we make our energy.

Just Deserts

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I originally researched this expression because my grandson asked me what it meant after hearing it as a joke on television. The question was “What is served at a celebration for someone getting what they deserve?” The answer was, “just deserts.” The expression does in fact mean someone receiving what they deserve. Wise geek says it is often misspelled as “just desserts.” The expression has been around for over a hundred years.