Category Archives: politics

Should we fire people who pick the wrong Final Four?

A thought experiment touched off by Cathy’s latest post on value-added modeling.

Suppose I’m in charge of a big financial firm and I made every trader who worked for me fill out an NCAA tournament bracket.  Then, every year, I fired the people whose brackets ended up in the lowest quintile.

This makes sense, right?  Successful prediction of college basketball games involves a lot of the same skills you want traders to have:  an ability to aggregate information about uncertain outcomes, fluency in quantitative reasoning, a certain degree of strategic thinking (what choices do you make if your objective is to minimize the probability that your bracket is in the bottom 20%?  What if your fellow traders are also following the same strategy…?)  You might even do a study that finds that firms whose traders did better at bracket prediction actually ended up with better returns 5 years later.  Even if the effect is small, that might add up to a lot of money.  Yes, the measure isn’t perfect, but why wouldn’t I want to fire the people who, on average, are likely to make less money for my firm?

And yet we wouldn’t do this, right?  Just because we think it would be obnoxious to fire people based on a measure predominantly not under their control.  At least we think this when it comes to high-paid financial professionals.  Somehow, when it comes to schoolteachers, we think about it differently.

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More pie than plate, Dane County edition

One chapter of How Not To Be Wrong, called “More Pie Than Plate” (excerpted in Slate here) is about the perils you are subject to when you talk about percentages of numbers (like “net new jobs”) that may be negative.

Various people, since the book came out, have complained that How Not To Be Wrong is a leftist tract, intended to smear Republicans as being bad at math.  I do not in fact think Republicans are bad at math and it sort of depresses me to feel my book reads that way to those people.  What’s true is that, in “More Pie Than Plate,”  I tear down an old Mitt Romney ad and a Scott Walker press release.  But the example I lead with is a claim almost always put forward by liberal types:  that the whole of the post-recession rebound has accrued to the 1%.  Not really true!

Long intro to this: I get to polish my “calling out liberal claims” cred by objecting to this, from the Milwaukee Journal-Sentinel:

UW-Madison, the fourth-largest academic research institution in the country with $1.1 billion of annual research spending, has helped spur strong job growth in surrounding Dane County. In fact, employment gains there during the last 10 years far outstrip those in any other Wisconsin county, accounting for more than half of the state’s 36,941 net new private-sector jobs.

I’m pro-UW and pro-Dane County, obviously, but people need to stop reporting percentages of net job gains.  What’s more — the reason job gains here outstrip other counties is that it’s the second-biggest county in the state, with a half-million people.  Credit to the Journal-Sentinel; at least they included a table, so you can see for yourself that lots of other counties experienced healthy job growth over the decade.

But just as I was ready to placate my conservative critics, Rick Perry went to Iowa and said:

“In the last 14 years, Texas has created almost one-third of all the new jobs in America.”

Dane County and Rick Perry, you both have to stop reporting percentages of net job gains.

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Ordinary business expense

From today’s NYT:

But even if Hyundai is eventually forced to pay the full amount of the damages, the punishment could be substantially reduced through a tax loophole that permits the company to save millions of dollars by deducting any court-ordered punitive damages as an ordinary business expense. The result, critics say, is that taxpayers are in effect subsidizing corporate misconduct.

What’s terrible about this isn’t that companies are allowed to claim the fines they pay for malfeasance are an ordinary business expense.  What’s terrible is that it’s true.

Update:  I misspoke, as a commenter points out.  A “fine” — that is, a penalty you pay to the government — is not deductible.  What may be deductible are punitive damages, paid to people you injured or whose river you despoiled.  Prepare your return accordingly!

Full professors make more money than bus drivers

Former Republican Congressional candidate and current UW-Madison history professor John Sharpless stands up for us against the Governor:

He said he arrives no later than 9 a.m. and leaves no earlier than 5 p.m. During that time, he said he’s either teaching, preparing lectures, doing research, attending required committee meetings, advising students and managing teaching assistants. Sharpless added that he often spends his evenings reading and grading papers.

“None of this seems like work to a guy like Walker because he lives a different life,” he said. “And I’m not going to make fun of what he does. I’m sure being a governor is a lot of work. He has to spend a lot of time in Iowa and South Carolina and North Carolina and courting other Republican big-wigs. That taxes the man horribly.”

But just to make it clear he’s still on board with GOP, he drops this in:

“I will retire with a salary that’s less than a Madison bus driver,” he said.

UW-Madison salaries are public records, so I can tell you that Sharpless’s is just under $80,000.  In 2012, only 9 employees of Metro made more than $70K.  And the ones who made that much, I’m pretty sure, are the ones who worked tons of overtime.

In other words, what Sharpless said is likely true in the strict sense of

“There exists a Madison bus driver whose salary this year exceeds mine”

but gives the wrong impression about typical full professors in the history department and typical bus drivers.

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Death to the 529 / long live the 529

Obama flip-flops faster than I can blog!  Prezzo has already walked back his proposal to change the 529 college-saving tax break, but I have a post about it queued up, and by gum I’m gonna publish it.

Here’s the plan that just got shelved.  From now on, capital gains on contributions you stow in a 529 plan won’t be tax free anymore — they’ll just be tax-deferred, as with a retirement plan.  In essence, it takes away a tax break whose benefit flows predominantly to high-income families (some 529 money is held by middle-income parents, but under Obama’s plan the $500 or so they’d lose on their 529 was more than offset by an AOTC expansion.)

OK, this Congress is as likely to roll back a tax break for high earners as they are to rename Reagan National Airport after Pete Seeger, so this isn’t actually happening, but I’m just saying, that’s the plan.

People are mad, and feel like they’ve been bait-and-switched. My FB feed, populated by dutiful savers like me, is full of ire. Mark Kantrowitz, in the New York Times:

He went as far as saying that the proposal could be characterized as a broken promise. “People saved money in 529 plans because of the expectation that the favorable tax treatment would continue,” he said.

But why does the New York Times let Mark Kantrowitz say this when it’s plainly not true? I saved money in a 529 plan. And the favorable tax treatment for that money will continue. When I take it out, I won’t pay a dime on any capital gains.

For money I put in later, it’s another story. But so what? If something’s on sale today, nobody’s breaking a promise to me when it’s not on sale tomorrow. I guess it’s strictly true that the proposal “could be characterized as a broken promise.” But it would be better to say it “could be characterized as a broken promise by people who don’t mind characterizing things as different things.”

A broken promise would look more like a state government defaulting on money it owes the thousands of middle-class taxpayers whose pensions it mismanaged.

 

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Loudly and bravely

Wallace Shawn:

As I write these words, in New York City in 1985, more and more people who grew up around me are making this decision; they are throwing away their moral chains and learning to enjoy their true situation:  Yes, they are admitting loudly and bravely, We live in beautiful homes, we’re surrounded by beautiful gardens, our children are playing with wonderful toys, and our kitchen shelves are filled with wonderful food.  And if there are people out there who are envious of us and who might even be tempted to break into our homes and take what we have, well then, part of our good fortune is that we can afford to pay guards to protect us.  And if those who protect us need to hit people in the face with the butts of their rifles, or if they need perhaps even to turn around and shoot, they have our permission, and we only hope they’ll do what they do with diligence and skill.

The amazing thing I’ve noticed about these friends of mine who’ve made that choice is that as soon as they’ve made it, they begin to blossom, to flower, because they are no longer hiding, from themselves or anyone else, the true facts about their own lives.

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Drowned out

Conservative blogger Glenn Reynolds is mad mad mad mad mad about .. well, I’ll let him tell it:

After years of effort, the European Space Agency’s lander Philae landed on a comet 300 million miles away. At first, people were excited. Then some women noticed that one of the space scientists, Matt Taylor, was wearing a shirt, made for him by a female “close pal,” featuring comic-book depictions of semi-naked women.  And suddenly, the triumph of the comet landing was drowned out by shouts of feminist outrage about … what people were wearing.

Drowned out!

Let’s sit with that a minute.  I just searched for “Philae” on Twitter and you know how many tweets I had to scroll through before I found one that mentioned Matt Taylor and his shirt?  32.  That sounds about right — I’d say 3% of the coverage I saw of the comet landing had to do with Matt Taylor’s shirt, and 97% had to do with the fact that we awesomely landed a robot on a comet.

But for Reynolds, the 3% drowns out the 97%.  3% is too much.  1% is too much!  Any little speck of feminist content is like the pea under the mattress for these guys. They can’t rest because the 3% is digging into them, it keeps them up all night, the feminism is still there, I can feel it, make it stop make it stop!

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Wisconsin is not a blue state

Another Wisconsin election day!  By the polls — and I trust the polls, absent any reason not to — incumbent governor Scott Walker is likely to squeeze by with a narrow win.  If you don’t live in Wisconsin, how much should you care about this?  A lot, says Slate’s Betsy Woodruff, who calls this race “The Most Important Race in America.”

Winning statewide as a conservative Republican in Wisconsin isn’t easy. Even though five of its eight congressmen are Republicans and the GOP controls its statehouse, Wisconsin is a very blue state. It’s historically been a union stronghold, and it hasn’t gone Republican in a presidential race since 1984. For progressives, the Republicans’ fragile hold on state government is an insult, an affront that should be corrected.

Wisconsin is not a very blue state.  In those 30 years since 1984, a Republican has been governor for 19 of them.  In both 2000 and 2004, the Democratic candidate won Wisconsin’s electoral vote by less than half a percentage point.  In 2012, Obama won Wisconsin by 7 points, in a year he won nationally by 4 points.  So Wisconsin, in Obama’s home turf of the Upper Midwest, was slightly bluer than the country that year.

But it’s not California or Maryland.  It’s not even New Jersey.  It’s a state that’s half Republican and half Democratic.  (See also:  “It’s a recall, not an omen.”)  That’s why elections here are close.  Despite what Woodruff writes, neither liberals nor conservatives think they have a right to own the state.  Walker has the advantage of incumbency and he’s probably going to win.  That’s important for his dreams of a Presidential run; but I don’t think it has much to say about national politics.

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Why I’m voting no on the Wisconsin transportation referendum

All attention is focused on Mary Burke and Scott Walker, so I didn’t even realize there’s a state ballot proposition in next week’s election.  And it’s not a trivial one, either.

Question 1: “Creation of a Transportation Fund. Shall section 9 (2) of article IV and section 11 of article VIII of the constitution be created to require that revenues generated by use of the state transportation system be deposited into a transportation fund administered by a department of transportation for the exclusive purpose of funding Wisconsin’s transportation systems and to prohibit any transfers or lapses from this fund?”

Mary Burke supports this.  So does Governor Walker.  The bill to put the referendum on the ballot was passed by large majorities of both houses.  “Yes on 1″ has an organized campaign and a snappy website; as far as I can tell, there is no such thing as “No on 1.”

But I’m voting no.  I don’t expect every dime of people’s property taxes to support upkeep of residential infrastructure.  I don’t think the sales tax should be restricted to promoting Wisconsin retail.  I think money is money and it’s the job of the legislature, not the constitution, to decide how money can best be raised and where in the state it’s most needed.

The amendment prevents gas taxes and vehicle registration fees from being used to fund schools and hospitals and police, but it doesn’t prevent other revenue sources from being raided to fund our highways and bridges.  And that’s what’s actually happening right now; the current administration takes $133 million from the general fund to fund transportation in the current budget.  I’m not sure why transportation, out of all state projects, ought to enjoy a special status:  allowed to draw money from the general fund, but constitutionally prohibited from releasing any back.

The Yes on 1 FAQ points out that many states around the country have constitutional language enforcing segregation of the the transportation fund.  I looked at a few of these, and it’s true!  But those provisions are of a rather different nature.  California’s constitutional provision requires that 25% of the money go to public transportation.  In Minnesota, it’s 40%.  Our referendum has no such restriction, requiring only that the money go to things funded by the DoT.  The Yes on 1 FAQ points out, correctly, that “Wisconsin’s segregated transportation fund is the sole source of state funding for the entire transportation system – highways, air, rail, transit, harbors, bicycle and pedestrian facilities.”  Pretty weak sauce — the fund will not be prohibited from funding other forms of transportation.  Unless an enterprising governor splits off transit into a separate department, that is.  (Ohio’s Constitution, by the way, already forbids gas taxes and license fees from aiding mass transit.)

The amendment establishes one class of spending and taxing as privileged above all the rest.  It shouldn’t be part of our state constitution.

Links:

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Is the two-Burke ballot the new butterfly ballot?

Scott Walker’s opponent takes on the WEDC:

BURKE:  One other area outside of that that people really should take a look at is the Wisconsin Economic Development Corporation, which was a nonprofit, public-private corporation created in 2011 which Governor Walker used to make himself the chair of. What’s most interesting is that Governor Walker’s experience in private business is in selling warranties for IBM and doing blood drives and fund-raising for the American Red Cross. While these are both worthy positions and individuals who do them obviously are working to build a life, that doesn’t give someone the experience necessary to make themselves a chair of a venture capital firm. Because that’s what it is. They’re giving away private taxpayer dollars to public businesses. We would end that practice.

Except that’s not Mary Burke; it’s Robert Burke, a lifelong Republican from Hudson who switched to the Libertarian party to run for governor.  Burke talks in the interview about how he hopes the “name recognition” — misrecognition? — he draws from the Mary Burke campaign will help him get votes.  The question is:  will he get votes from people who like libertarianism, or miscast votes that are actually meant for her?

Are you wondering whether Burke the Libertarian is running precisely in order to siphon votes from Burke the Democrat in this way?  I was, too, but I have to admit that the linked interview really does make him sound like a sincere libertarian dude who just found out Republicans dig market distortions as much as Democrats do.

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