On-line gambling

I’ve never gambled on-line and I have no intention of ever doing so. But, I think it is ridiculous the lengths our government has gone to prevent adults from doing so. It wasn’t enough to actually move all the gambling servers to Caribbean islands, etc.,– that seems reasonable enough that you won’t let the actual company exist within the US– but they’ve actually made it very hard to use your credit card with an on-line gambling company. Sure there’s problems with gambling, but there’s also problems from eating too much fast food. The government is well within its rights to nudge us one way or another, but, in general, should let adults behave as adults when it is clear they are engaging in consensual actions that don’t directly harm others.

Big Steve, who does enjoy his on-line poker (from Canada) makes the point of the hypocrisy of all this given all the state-sponsored lotteries.

My basic view is that if states can run lotteries, then citizens should be able to gamble online.  They actually have a decent chance of winning in a poker tourney, whereas the lottery is mostly for people who do not understand math.  Which one is more or less moral?  Yes, poker online can give gambling addicts more opportunities to lose their money, but keeping it illegal is just going to move those folks deeper underground.  Yes, kids can play online but not in regular casinos and that is a problem.  But how about we give parents some responsibility on that.  There are all kinds of things online–we need to figure out how to handle that challenge besides all or nothing, one size fits all solutions…

But I am not clear why adults cannot gamble online if states are actively promoting gambling in another form–lotteries–where the odds are much more against the player.  I do, however, understand the desire for politicians to play to certain blocs of voters to demonstrate that they are sufficiently religious/observant.  So, I am not sure the status quo will be changed, but there has been more progress than I would have expected.   I guess I shouldn’t gamble on the outcome.

I’d love to see this Puritan impulse in our government go the way of laws against using birth control.

More of this

I wish there were more Anthony Weiners in Congress.  This is simply awesome:

Chart of the day

Via Ezra:


I like his take, too:

At the moment, I’d put my money on a two-year extension of all the tax cuts, including those for the rich. But either way, we’re talking about adding $3+ trillion onto the debt, and the Republican position is that we should add even more than that. Meanwhile, we’re cutting food stamps to pay for Medicaid.

The Ownership society

Much to my dismay, WordPress does not allow you to embed Daily Show or Colbert videos.  Urgh.  It’s with your time to click through, though, to watch Colbert take down supply-side economics as only he can.

The $320K/year Kindergarten teacher

Fascinating Dave Leonhardt column (and here’s a blog post) on the apparent life-long effects of having a good vs. bad Kindergarten teacher.

How much do your kindergarten teacher and classmates affect the rest of your life?

Economists have generally thought that the answer was not much. Great teachers and early childhood programs can have a big short-term effect. But the impact tends to fade. By junior high and high school, children who had excellent early schooling do little better on tests than similar children who did not — which raises the demoralizing question of how much of a difference schools and teachers can make…

Just as in other studies, the Tennessee experiment found that some teachers were able to help students learn vastly more than other teachers. And just as in other studies, the effect largely disappeared by junior high, based on test scores. Yet when Mr. Chetty and his colleagues took another look at the students in adulthood, they discovered that the legacy of kindergarten had re-emerged.

Students who had learned much more in kindergarten were more likely to go to college than students with otherwise similar backgrounds. Students who learned more were also less likely to become single parents. As adults, they were more likely to be saving for retirement. Perhaps most striking, they were earning more.

Short version: kindergarten teachers are really important (not to suggest others aren’t too, but there’s probably something about shaping a child’s first classroom educational experience) and we ought to take this more seriously:

Mr. Chetty and his colleagues — one of whom, Emmanuel Saez, recently won the prize for the top research economist under the age of 40 — estimate that a standout kindergarten teacher is worth about $320,000 a year. That’s the present value of the additional money that a full class of students can expect to earn over their careers. This estimate doesn’t take into account social gains, like better health and less crime.

We need to treat teachers like professionals, pay them like professionals, and have expectations like professionals.  We don’t really do this.  Part of me cannot help wondering how much of this is because elementary and secondary education is a field traditionally dominated by women.   Here’s also a good opportunity to plug perhaps my favorite Gladwell article ever on teacher quality.  You really should read it.

Friday Book Post: the Big Short

So, finished reading The Big Short at the beach last week (I was way over-optimistic on my beach reading— only finished this and got a little under way on The Poisoner’s Handbook). As expected, really great book on the financial crisis– highly recommended.  It was pretty technical at times, but it kind of had to be to really tell the story.  Anyway, I could write a huge post on this, but just a few points that really struck me that I’m going to restrict myself to.

1) Bond rating agencies were really dumb.  I already knew that, of course, but I just did not realize how jaw-droppingly stupid the people rating the toxic assets were.  I did know that this whole mess would’ve never happened without the ratings agencies giving AAA ratings (as solid as US T-bills) to absolute crap, but I was shocked to find out how moronic (I’m running out of words on this point) they were.  Here’s what really killed me.  Apparently, a person with a credit (FICO) score of 615 and above is quite unlikely, historically-speaking, to default on a loan.   Thus, Moody’s and Standard & Poor’s required that the average, i.e., mean, FICO score for a CDO (a slice of a collection of mortgages be 615.  They did not look at the individual mortgages at all.  Thus the Wall Street wizzes very quickly gamed the system.  Load up CDO’s with a bunch of awful mortgages to people with FICO scores of 450 and just make sure you balance them off with an equal number of people with 780– thus, your mean of 615.  Problem is, a mortgage to someone with a FICO score is pretty much doomed to fail, and these were a huge portion of the CDO.  Yet, these financial instruments got AAA ratings– again, suggesting they are basically no-risk investments.  Nuts!!!!   Bill Gates walks into a bar, the average patron in the bar is now a millionaire.  Rocket science, this ain’t.

2) Investors are over-privileged and stupid.  One of the heroes of the book is an investor, Mike Burry, who saw this coming and made huge returns for himself and his investors.  This guy was pulling in amazing profits for his investors, but once he started lagging the market for just a little while they were all ready to bail.  Do they really think they should always be having great returns?  Apparently so.  A lot of investors missed out on a lot of money because they were not patient with Burry when it was quite clear he was seeing things other people were not.

3) Incentives matter.  Again, not exactly a new point, but critical to this big mess is that the giant Wall Street Firms incentivized short-term profit, rather than long-term gain, at almost every step.    In fact, many of the people who basically destroyed our economy walked away multi-multi millionaires.  I think financial reform may have tried to address this to a degree, but I suspect not nearly enough.  Far too much of Wall Street is incentivized for what is truly little more than short-term gambling with no larger social benefit.  That sucks.

4) Read it.

Metaphor of the day

I know I have plenty of my own stuff to say, but sometimes it seems tempting to just have my blog link automatically forward over to Jon Chait.  To quasi-paraphrase Carly Simon, when it comes to liberal blogging, “nobody says it better.”  Anyway, I love his metaphor for the Republican supply-side approach to taxes:

Imagine a man who has to lose weight. Either he needs to eat fewer calories or burn more of them. Conservatives are arguing that he should exercise less, because this will force him to eat less food. Foster writes, “Lower taxes are evidently what the American people want, which is especially galling to the tax-increase crowd.” And it’s true — Americans want to keep their spending and tax cuts too. Diets that promise to let you spend all day on the sofa and still eat lots of delicious food are also popular.

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