Friday, December 31, 2010

How to live rent-free the rest of your life. OR, Five Big Mistakes Criminals Make During Police Interrogations.

 "...the technique of violence was first developed in 2 million B.C. by the australopithecines and tried by forthwith primates, who had no brains to speak of, but nonetheless invented the tomahawk and used it on each other. This practice led to the enlargement of the brain, another useful weapon. Yes, murder was invented even before man learned to think. Now, of course, man has become known as the 'thinking animal.'"
- spoken during the credits of Death Race 2000 (1975).

One of the reasons I love reality television is that it can make you feel like an expert in fields you have no personal knowledge or training in whatsoever. From watching many episodes of A&E's crime show, "The First 48" I feel pseudo-enlightened about the workings of the criminal justice system, and I'm here to share that almost-wisdom with you.

For those unfamiliar with the show: The First 48 is named after the first two days of a homicide investigation. As the audience is informed during every opening credit sequence, “the chance of solving a murder is cut if half if detectives don't get a lead in the first forty-eight hours.” [It never says what the chance of catching a killer is overall, probably because the data is difficult to collect and the existing numbers are less than encouraging. In New York, for example, the NYPD “solved 59 percent of homicides last year.” Not the best average, but far better than the conviction rate for auto theft, at just 9%].

Now, a homicide detective's job is far from easy – witnesses tend to be scared of murderous criminals, logically enough – but criminals do make their share of dumb mistakes. Without further ado, I present: the five biggest mistakes that murder suspects make leading up to a police interview.

Mistake #1: Not understanding capital-murder statutes. In the criminal code of most states, if a person is killed during the commission of another crime, all parties who were involved can be given a life sentence, even if they didn't pull the trigger. It's the last part that trips suspects up the most often. It doesn't matter if you planned to kill someone; if you're part of a robbery and then they die, you might as well have been holding the gun yourself. 
On The First 48, it's fairly common for the police to catch one person who was involved in the crime. They'll try to distance themselves from the murder; “We wanted the money, sure, but I didn't even know he had a gun. I just drove the car. I don't even know what happened, who shot, or anything. I just drove away as fast as I could.” Doesn't matter; the above was still a confession to capital murder. In one case after a woman was killed, the police charged the three young men who were there (one was the getaway driver), and also a fourth who lent them the gun and the car for the robbery. Basically, if you're in for a cut of the spoils if the crime goes right, you're also in for a life sentence if it goes wrong.
Lesson for Criminals: if a robbery goes bad and someone dies, you might as well shoot your co-conspirators too. You'll wish you did later when they confess by accident.*
*Just kidding. Killing people is never a good idea. 
Mistake #2: Giving ridiculous phony alibis. Often, criminals will turn themselves in after they hear the cops are looking. One might expect they'd take some of that time to get their bad alibi straight. One might also be wrong. 
Interrogation Room Dialogue:
Suspect: It couldn't have been me. I was with my cousin playing video games all Saturday.
Detective: OK. [Stands up, walks out.]
**Detective calls the cousin**
Detective: Was _____ with you on Saturday?
Cousin: No way, I haven't seen him in weeks.
**Detective hangs up, goes back into interrogation room**
Detective: So, it's not looking good for you...

The reality is, even if you're innocent, giving a questionable alibi can get you convicted. This is why even innocent people should probably avoid talking to the police, and criminals shouldn't count on others vouching for them (especially when police start throwing around ugly phrases like “obstruction of justice” and “accessory after the fact”).
Lesson for Criminals: say you're with your mom. At least she'll probably back you up. 
"The Law of the Streets."
Mistake #3: Committing crimes during broad daylight in front of witnesses. This one seems pretty intuitive, but apparently many career criminals think their bad-ass reputation will keep anyone from snitching on them. They're mostly right – it'll keep almost everyone from snitching – but all it takes is one eye-witness. For your convenience, I attached a chart depicting the positive relation between “street cred” and the chance of being snitched on. Street cred depends on being a violent bastard (at least in some circles) and also leaving people alive to tell about it. When the number of witnesses increases, the chance of keeping them all quiet falls quickly, especially when the criminal's reputation is sufficiently bad-ass to make people nervous they might get killed just for seeing, even if they don't talk.
Lesson for Criminals: decide in advance whether you want a career in crime or show business. You can only pursue both if you work at the White House. 
Mistake #4: telling family, friends, or random acquaintances about the details of the crime. People are both innately bad at keeping secrets, and expect people close to them will be excited about similar things they are. This is a bad combo for criminals because no matter how much they love you, your mom/sister/nephew/uncle/drinking-buddy is probably not as thrilled about your most recent robbery-murder as you are. Blood is thicker than water and all that, but no family wants to be famous for a star appearance on America's Most Wanted. They will turn you in.
Lesson for Criminals: see #3.

Mistake #5: Keeping all the evidence on your person. If I've learned one thing from crime shows, it's that blood can end up in the darnedest places; on the bottom of shoes is an especially popular one. New shoes are expensive and all, but nothing compared to a life sentence. It'd be smarter to walk into a police station barefoot than wearing crime-spree shoes. Enough said.
Lesson for Criminals: keep on doing this one. I'd prefer murderers continue getting convicted.

The Big Finish: some might think I'm writing this to help criminals get away with murder. They'd be wrong, and not just because most thugs don't spend much time reading economics blogs (I'm guessing). Capital- or felony-murder statutes are intended to have a deterrent effect from participating in serious crimes, but – based on the number who confess unintentionally – many criminals aren't aware of how those laws work, so any deterrence is lost. I want to increase public awareness that the getaway driver is just as guilty as the trigger-man, at least in the eyes of the law. The First 48 is a tragic show because too many young people are getting killed or throwing away their lives committing stupid crimes. If this blog saves a life in 2011, it'd be one of my prouder accomplishments. No, you don't have to thank me.

Final anecdote to illustrate how felony-murder laws work. A young man was found dead near an outdoor stand selling shoes and clothes. As police investigate, this story emerges. Some thugs had robbed this clothing stand repeatedly, so the owner started paying local kids to work as protection. When the next robbery went down, while the owner was being hustled, one of the young men he'd hired found a gun and shot one of the robbers to death (he told this to police). Detectives released the shooter, and went looking for the robber's partner. When the partner was found, he was charged with the murder, even though he hadn't fired a shot and it was his friend who'd been killed. In some states, shooting the perpetrator of a crime in progress is not only legal, but a good way to get their buddies locked up too. If more criminal accomplices considered this consequence then there might be less crime.

Monday, December 6, 2010

The printing presses have broken down; how will we inflate the currency now?

This just in. A recent printing run, in hundred dollar bills, has substantial defects that make many of the notes unusable. How big of a printing run? Just $110 billion worth. From CNBC:
At the time, officials announced the new bills would incorporate sophisticated high-tech security features, including a 3-D security strip and a color-shifting image of a bell designed to foil counterfeiters.
But the production process is so complex, it has instead foiled the government printers tasked with producing billions of the new notes.
An official familiar with the situation told CNBC that 1.1 billion of the new bills have been printed, but they are unusable because of a creasing problem in which paper folds over during production, revealing a blank unlinked portion of the bill face.
A second person familiar with the situation said that at the height of the problem, as many as 30 percent of the bills rolling off the printing press included the flaw, leading to the production shut down.
The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes. For now, the unusable bills are stored in the vaults in "cash packs" of four bundles of 4,000 each, with each pack containing 16,000 bills.
Officials don’t know exactly what caused the problem. "There is something drastically wrong here," a person familiar with the situation said. "The frustration level is off the charts."
Because officials don’t know how many of the 1.1 billion bills include the flaw, they have to hold them in the massive vaults until they are able to develop a mechanized system that can sort out the usable bills from the defects.
Sorting such a huge quantity of bills by hand, the officials estimate, could take between 20 and 30 years. Using a mechanized system, they think they could sort the massive pile of bills, each of which features the familiar image of Benjamin Franklin on the face, in about one year. [Emphasis added.]
The total cost of producing the bad bills was $120 million, excluding whatever it will take to sort the good from the bad. The unusable bills will have to be burned; frankly, it might be cheaper to just burn the entire print run, compared with sorting over 1.1 billion items of currency.

Apparently, during this print run of 1.1 billion, no one checked at the beginning/middle for quality control. A private firm that operated like this would be out of business. With almost a third of the prints unusable, I can't imagine many repeat customers... other than the federal government.

Kidding aside, this poses some tangible problems for the Federal Reserve, whose strategy has depended on getting currency flowing in the economy. With at least a year's delay before this money will actually be reaching consumers' hands, it complicates monetary policy. Facing an already Herculean task of managing market perceptions and signals, having this additional lag between action and effect could make the results of Fed decisions even more difficult to anticipate.

Tuesday, November 16, 2010

"Coupon Lady Money Saving Madness" is madness indeed.

So, I found a video on the internet which should have bargain-hunters, cheapskates, and economists (to be redundant) foaming at the mouth. By using coupons and mail-in rebates, a woman was able to cut her grocery shopping bill down from over $150.00 to just $9.43. Find the video here. So why isn't everyone saving 97% on their shopping, and putting the grocery stores out of business?

The reason most people don't do this (and never will) is because it's inefficient. Yes, it's very impressive to see someone save ~$145 off their groceries, but the real question is how much time did it take, in coupon saving, organization, and so on, in order to accomplish that? The woman in the video said she collects coupons, sends in rebates, and plans all her shopping in advance... If it took her 14 hours, she effectively earned $10/hour for her coupon-clipping work. However, I'm guessing it took longer than that, and her "wage" was actually much lower.

For people who have jobs, it'd be more effective to spend those extra hours working than clipping coupons. If you don't have a job or are paid a very low wage, coupon clipping could make sense. However, there are a variety of other ways to make money on the internet - filling out surveys, using ShortTask, or advertising on Twitter - to name just a few. For an hourly rate, you can almost certainly do better than coupons.

If you're a college student, spend that time studying instead -- you're going to school to make more money later, so focus on grades, not penny-ante coupons (unless you're studying english or sociology, in which case I suggest dropping out and coupon-clipping full time, because it'll be more profitable).

There's an efficient level of coupon saving, which depends on your income and how you value your time. For highly paid professionals, the efficient amount of coupons might be zero, while some others may gain a small benefit from spending their time that way. Taking coupons to an obsessive level, as this woman appears to have, is just wasting time for yourself and everyone in line behind you.

Friday, November 5, 2010

Scary statistics for the medical economics debate.

[The shaded box is around my response.] Survey Source.
Stumbling around the internet awhile back, I came across this medical ethics questionnaire. In addition to providing a haven for procrastinators, this survey also shows the distribution of answers that others have made. Most of the questions were fairly ho-hum with predictable splits of opinion. However, the skew of answers to an economics-related question startled me.

When asked "what level of involvement should the government have in setting prescription prices?" a whopping 56% of the responders said "Create Price Ceilings" and 8% more thought the government should set all prescription prices. Apparently, 64% of those polled trust bureaucratic regulators more than the market when it comes to pricing medicine.

I can appreciate the sentiment behind price ceilings on prescription medication: it's undeniable that many people can't afford treatment they need to stay healthy. However, price ceilings are just a bad idea. 

For those unfamiliar, a brief rundown on the economics of price ceilings. When the government mandates a below-market price for a good, it creates several negative side-effects. Most immediately, amount supplied decreases. Faced with a lower price, manufacturers will cut back on production. In context of prescription medications, this means less drugs being developed, tested and sold to the public. Ailments that could potentially be treated will continue to harm people. Slightly more subtle is dead-weight loss, which represents market transactions which could have occurred, but did not. In other words, some people could have benefited by paying the higher price to get the drug, but the price ceiling prevented them from doing so. As a result, both consumers and producers lose out, although the outcome for the person seeking medication is perhaps most tragic.

High costs for prescription medications are definitely a problem; health care costs in general have been rising much faster than the general rate of inflation, putting important treatments out of reach for many people. High drug prices have also helped drive up health insurance costs, presenting a large drag on businesses.

Instead of an artificial cap on prescription prices, it would be more productive to look at the supply-side factors which keep those costs high. The lengthy FDA approval process alone costs "about $800 million per approved drug" and creates instant pressure for the company to charge high prices and recoup their investment upon release. Taking aim at these restrictions would be better than capping prices and ultimately smothering the development of life-saving medications.

Monday, October 25, 2010

New wood-based substitute for plastic shows that the greatest resource is still human ingenuity.

Resource exhaustion has been a common theme in public dialogue, from the days of Thomas Malthus up to today. The National Energy Policy Institute recently published a documentary entitled "The End of Suburbia: Oil Depletion and the End of the American Dream." I didn't watch it, but a staff writer for the California Chronicle describes its general "claim that the suburbs wouldn't exist without cheap oil." Enjoy your SUVs while you can, I guess.

In this film, and similar pieces on 'a coming age of energy scarcity', the unspoken assumption is that oil resources are fixed so they must eventually run out. A seemingly intuitive claim, but perhaps a false one. Some economists (most famously the late Julian Simon) have argued that natural resources are functionally infinite. As a resource becomes more scarce the price rises, causing people to search for substitutes. To quote Simon himself:
Ivory used for billiard balls threatened to run out late in the 19th century. As a result of a prize offered for a replacement material, celluloid was developed, and that discovery led directly to the astonishing variety of plastics that now gives us a cornucopia of products (including billiard balls) at prices so low as to boggle the 19th century mind.

Thanks to human ingenuity and technological advance, previously useless materials can become resources for the future. Now, due to concerns about the environmental effects of plastic and the future price of oil, the next stage in this process has arrived with Arboform.

Discovered in the last two years by German researchers, this plastic substitute uses lignin (a component of wood usually discarded during paper production) combined with flax and other fibers to form a mold-able substance with similar properties to plastic. Some Arboform products - golf tees, furniture, baby toys, and women's designer shoes - have already been introduced. According to one of the scientists, "By just using lignin, we could technically replace a quarter of the world's plastic production." 

Obviously, oil is still relatively cheap, and plastics are still the most economical choice for most products -- or I'd be typing this on an Arboform keyboard. However, if in the future oil were more scarce, the paper industry is already producing 130 million pounds of lignin per year; a ready substitute for petroleum-based plastics. Similar substitutes are being developed in the fields of transportation and power production, and will become more profitable and widely used if oil is ever depleted. Given the availability of substitutes informed by instant feedback from prices, there's no reason to expect the "suburban lifestyle" is in much danger from oil scarcity.

As long as market prices operate, running out of resources is one danger we can stop fearing. Arboform is just one example of how innovators can turn today's problem into tomorrow's opportunity.

Sunday, October 10, 2010

Fermi Paradox makes discovery of new habitable planet a good news/bad news situation.

In the latest science news, a planet has been discovered which could potentially support life. A neighborly 20.3 light years away, Gliese 581g has liquid water and enough gravity to maintain an atmosphere -- making it a fairly good imitation of earth.

Great news, right? Homo sapiens now has the potential to spread across the galaxy, leaving the barren rock of Terra behind as we forge into the great empty unknown. Unfortunately, the actual "getting there" part is still a ways off. Even worse, this discovery may not bode well for the future of humanity.

What could be so ominous about discovering a distant, earth-like planet? It all boils down to the Fermi paradox. From Wikipedia, the Fermi paradox "is the apparent contradiction between high estimates of the probability of the existence of extraterrestrial civilizations and the lack of evidence for, or contact with, such civilizations." In other words, if they're out there, why haven't we seen them yet? Given the extremely long lifespan of the universe and the enormous number of galaxies and stars, the laws of probability would indicate that any space-faring life form should have colonized the entire universe by now.

The lack of evidence for extra-terrestrial life, in spite of the enormous opportunity for its growth, requires some serious explaining. One possible cause - the lack of earth-like planets which could support life - has just been ruled out completely. What reasons are left to account for the apparent barrenness of the universe?

A recent paper by Nick Bostrom of Oxford University postulates that some 'Great Filter' might exist, which causes lifeforms to go extinct before they can spread across the cosmos. This could be a cataclysmic event, or just a mundane limitation that stops most organisms from evolving into something complicated enough for space travel. Bostrom argues that this filter is either behind us - humanity has passed the test - or somewhere in our future - bad news. His conclusion: discovering evidence of a complex extra-terrestrial lifeform would indicate the Great Filter is waiting for us ahead, and we are as dead certain to fail at perpetuating our species as the billions of other races that must have existed throughout the galaxy before us.

The discovery of Gliese 581g is a great step in astronomy, physics, and potential science fiction topics. However, the Fermi paradox implies that if we ever go there, and discover even so much as an amoeba, it's a dismal sign for humanity's ultimate prospects of survival.

Tuesday, September 28, 2010

Laws against 'texting and driving' haven't made us any safer.

We've all seen it: alarming, dangerous driving behavior perpetrated while under the influence of cell phones. In response to this threat, many locales (including my home state of Washington) enacted bans on texting-while-driving. Has the menace of distracted drivers been curbed?

According to a USA Today article, traffic accidents have actually gone up in areas where anti-phone laws were enacted. To quote the most interesting part:
"Texting bans haven't reduced crashes at all," says Adrian Lund, president of the Insurance Institute for Highway Safety, whose research arm studied the effectiveness of the laws.
Thirty states and the District of Columbia ban texting while driving; 11 of the laws were passed this year. The assertion that those efforts are futile will be a major issue at this week's annual meeting here of the Governors Highway Safety Association (GHSA).
Researchers at the Highway Loss Data Institute compared rates of collision insurance claims in four states — California, Louisiana, Minnesota and Washington — before and after they enacted texting bans. Crash rates rose in three of the states after bans were enacted.
The Highway Loss group theorizes that drivers try to evade police by lowering their phones when texting, increasing the risk by taking their eyes even further from the road and for a longer time.
The findings "call into question the way policymakers are trying to address the problem of distracted-driving crashes," Lund says, calling for a strategy that goes beyond cellphones to hit other behaviors such as eating and putting on makeup. "They're focusing on a single
manifestation of distracted driving and banning it," he says. [Emphasis added.]
This outcome is another lesson in unintended consequences. Before the law, presumably people would text briefly and when the road conditions were safer. After the law, drivers were more concerned about watching for police, decreasing their attention to the road. Of course, the hope was that regulation would eliminate the undesirable behavior, but apparently the appeal of text-messaging outweighs the risk of a traffic ticket. This isn't especially surprising; if someone is willing to elevate their risk of injury or death by texting while driving, it's unlikely that the small chance of a fine will alter their behavior much.

It appears that texting-while-driving is here with us to stay. If government really wants to reduce the danger, perhaps they should regulate the auto companies (which they now own) install built-in heads up displays on the windshield, so drivers can stay caught up with MySpace Twitter and Facebook in addition to text-messaging by voice command, while never taking their eyes off the road. Then we'll see if consumers tolerate the additional cost that safety and peace of mind entail.

Thursday, September 23, 2010

Teamster wisdom on political economy

If God allowed everybody to die in bed, the government would regulate that we'd have to sleep standing up."

-Alex (on History Channel show Ice Road Truckers, Season 2 Episode 4).


For context: Alex is driving a big-rig and hauling a 45-ton piece of mining equipment across the arctic ocean. The road he's driving on consists of nothing but frozen ice, and there's a blizzard rapidly approaching.

In addition to steady nerves and a dry sense of humor, the man has an intuition for political economy. I'll just let the quote above stand on its own. Thoughts?

Wednesday, September 15, 2010

The reason why 99.8% of all 'get rich instantly on Twitter' claims are hoaxes.

I purposely exclude 0.2% of 'make-money-off-Twitter' plans from the "hoax" category, because I'm sure some very smart person out there will go and prove my generalization wrong. Until that blue moon arrives, I'll explain why all the Tweet-gurus offering to make you big bucks for doing nothing are just yanking your chain.

Not familiar with the "instant money on Twitter" phenomenon? In my endless quest for self-publicity, I've stumbled across a lot of statuses like
"Making $500 dollars per week from home off Twitter while on autopilot. Come see how!!!!" 
or similar. Sounds appealing, but is it too good to be true? Yes, yes it is. Some economic thinking can reveal why.

1)  There are no barriers to entry on Twitter. All it takes is an e-mail address and lack of respect for grammar (just kidding) and you can start a Twitter account. Economists would describe this as an open market. Entry and exit are free, and there are are large number of Twitter users - over 75 million now - but that number could easily grow (or decline) in the future.

2)  Large amounts of cash for sitting at home is a tempting opportunity for most people. In an open market, positive profits cause new suppliers (Twitter users) to enter until the price for their product drops, and profits return to zero in the long run. Intuitively, everyone desires more pay for less work; if easy money opportunities really exist, why haven't they already been snapped up by some other Tweeter? The supply of users is so large that any actual profit opportunity would be almost instantly utilized if they're believed to be legitimate.

What does this amount to? Twitter is an open market situation, so the easy opportunities have most likely been exploited already. In the lingo, it's reached a Pareto-efficient state, where new transactions will cause one person to gain only at the expense of another. In Twitter-context, all that's left are scams that can make one rich by taking from many. In other words, a pyramid scheme (or in light of recent events, perhaps it should be re-dubbed 'the Madoff Special'). Given Twitter's booming follower base, even an extremely low response rate by potential marks might be enough to keep a scammer in business.

A pyramid scheme produces nothing tangible, so the possibility for mutual gain is zero. I haven't tried any of the get rich quick plans that various Twits have offered because, if the above logic holds, it would be a stupid waste of time and money. Basically, if someone is really making $500 a week on Twitter it's because they conned the gullible into giving it to them, and they're probably hoping you'll be their next payday advance.

Caveat: Just to avoid confusion, I'm not claiming it's bad to generate company profits off Twitter. Used properly, Twitter is a valuable tool for social marketers to network and promote a business. Such people have a useful service available and just need a medium to get the word out. In these cases, Twitter can facilitate sales that otherwise would not have occurred, which is more economically efficient -- those social media specialists contribute value and earn their money. The distinction between established firms marketing a product versus scam artists promising an easy buck shouldn't require any further explanation.

Tuesday, September 14, 2010

Bedbugs. Yet another reason to hate Rachel Carson (aside from 800 million dead of malaria).

The history of malaria is interesting, in a macabre sort of way. A hardy parasite spread by insects, the cause of malaria was unknown for most of human history. The name we know today comes from the French phrase for "bad air," reflecting the common observation that malaria cases peaked around swampy areas. Their solution in Algeria - drain the swamps - was effective, but costly.

Malaria, the organism, is extremely difficult to kill. However its crucial vector, the mosquito, is vulnerable when combated with the correct chemical tool. In 1939, Paul Mueller discovered just that: DDT. This insecticide is cheap, effective, and quite safe for humans. Some claim it causes cancer, but their evidence has since been disputed. By comparison the malaria problem is undeniable and catastrophic, with millions dying on a yearly basis. As said by Wenceslaus Kilama, the Chairman of Malaria Foundation International "this is like loading up seven Boeing 747 airliners each day, then deliberately crashing them into Mt. Kilimanjaro."The imagery is hard to overlook.

The history of bed bugs is less interesting, but in a much more annoying way. Like malaria, bed bugs have plagued humanity since the dawn of time. They cause irritation, swelling, and definitely a terrible night's sleep. We're still combating this invasive parasite as well -- a national Pest Convention is meeting to discuss the issue. Exterminators have been caught by surprise as bed bug infestations have sprung up in the last several decades across the country, and surprisingly little is known about them.

What do malaria and bed bugs have in common? They've both been increasing since DDT usage was halted thanks to Rachel Carson's book, Silent Spring. Some people claim that bed bugs' modern upsurge is just due to increased travel. I think the facts say otherwise, given the almost total eradication of bed bug cases during the heyday of DDT's popularity. That issue aside, there's no disputing the deadly impact of malaria -- a plague that can easily be prevented by regular spraying of DDT.

The public outcry prior to the DDT ban is a classic example of action taken without full understanding of the consequences. Enough has been written on this already, so I won't belabor the point. Ultimately, Rachel Carson isn't the only one to blame; fault rests with the politicians and lobbyists who listened to her before all the evidence was in. Now, the public at large is feeling the consequences from decisions made forty years ago. With bed bugs infesting the Big Apple, maybe it will get people itching for change in our national pest control priorities.

Monday, September 13, 2010

Statistical Fallacy #002: Confusing Correlation with Causation. Does a strong handshake really make you live longer?

Even highly educated and intelligent medical researchers aren't immune to statistical errors. A recent study in the British Medical Journal referenced 33 other studies on personal mobility and life expectancy, and compiled their results. According to Reuters, 
They found simple measures of physical capability like shaking hands, walking, getting up from a chair and balancing on one leg were related to life span, even after accounting for age, sex and body size. 
While the phrase "accounting for age, sex and body size" makes this process sound very objective and scientific, there are obviously a lot of other factors that can play a role in life expectancy. Personal differences, such as leading a more active lifestyle, could cause someone to have both more hand strength and also better health in general which contributes to their longevity.

While statistics saying "the death rate over the period of the studies for people with weak handshakes was 67 percent higher than for people with a firm grip" sound very dramatic, it's hard to say if that relationship is reverse-causal; in other words, having a weak grip may signal your lifespan will be short, but will improving your grip really make you live longer? Probably not, which suggests it's far more likely that a common variable - for example, sitting on the coach all day - causes both weak hands and a lower life expectancy.

Common sense says that working with a stress ball or doing forearm exercises to develop a crushing handshake probably won't substantially reduce your chance of death from heart disease, cancer, stroke, or the other leading causes of death for adult Americans. However, this is exactly the impression given by the Reuters article title "Want to live longer? Get a grip!" Heavens forbid someone took this seriously and developed gorilla-like forearms only to find out their fitness investment had been in vain.

Friday, September 10, 2010

Private funding for prison rehabilitation -- latest British innovation.

Say what you will about eccentricities in the United Kingdom's political structure, they aren't afraid to try some new things. Particularly, in the area of penal reform.The U.K. prison system is struggling with extremely high recidivism rates; according to the BBC "60% of criminals who serve short sentences reoffend within a year of leaving prison."

So what's the plan? Much like purchasing a bond, investors can put money into the rehabilitation program (currently limited to male inmates with sentences less than one year). If reoffenses among the subject group drop by a specified amount, the investors receive dividend payments.

Quoting the BBC:

"It pays by results," said [Justice Secretary Ken] Clarke. "We're going to pay what works and what works should therefore grow and what doesn't work will vanish.
"I like the innovative funding, the payment by results, the collaborative groups, and if it succeeds it will grow and if it doesn't, by that time we will be trying something else.
"But sooner or later, something has got to be done about reoffending.
Social Finance said there would be indications of whether the project was succeeding within a year but the full return would not be known until the end of the six-year investment term.
Social Finance director Emily Bolton said: "Investors benefit and the government gets some cost savings. The better the reductions in reoffending, the higher the investors' return.
"It's not taking money out of the system, in fact it's enabling us to transfer the money to more socially valuable things."
An interesting idea. America is already using private companies to help run its prisons. However, their incentive structure is reversed -- the more people in jail, the more money. One such company was compared to a "hotel that's always at 100 % occupancy. . . and booked to the end of the century." The opposite strategy - using private industry to prevent crime - hasn't been applied much, unless you count mall cops and security guards.

In spite of a comprehensive parole/probation system, American prisons have their own recidivism problem. Some telling statistics:
In 1999, a total of 244,700 probationers and 173,800 parolees were reincarcerated for new offenses.Those numbers respectively comprise 15 and 42 percent of all parolees and probationers released that year. (41)

It makes me think of George Clooney in Oceans 11, who is paroled and immediately planning his next heist -- except most criminals don't have a screenwriting crew in their corner. Obviously, the rehabilitative aspect of our prison system is lacking something.

While an obvious solution to reoffending would be to increase sentences until no one would be able to get in and out of prison in a lifetime, it's questionable how much that would advance larger social goals (like not incarcerating half our adult population; we're up to 2 million so far). As state budgets continue to tighten, perhaps financial reality will cause us to take a cue from the Brits, and make crime prevention as profitable as punishment.

Saturday, September 4, 2010

Attention Undergrads -- you're still paying for all those classes you skipped.

Graph made by Mark Kantrowitz of
We've reached a momentous, but little celebrated moment in financial history. Credit card debt has been surpassed by student loans (including both federal and private). Let's give a big 800 billion cheers for education!

You can see this trend in the graph to the left. Notice how in 2008, credit card debt peaked and has now declined, while student loan debt has gone up at a steadily increasing rate. The modern family unit (mom, dad, and the federal government) have been paying a larger and larger bill, and for those who can't afford it, the slack has been taken up by private lenders. Unlike credit card bills, which fluctuate with the larger economic climate, student loan debt just kept going up and up.

Education is always a good investment, right? With costs of tuition rising by 8% per year, one might expect students would soak up every valuable minute of classroom instruction. That hasn't been the case. While tuition rates have gone up steadily, student attendance has gone down. This trend has been especially strong in recent years. According to Blair Hedges, a biology teacher,

throughout the 1990s... on average, 80 percent of enrolled students came to his class. But he noticed a decline over the last five years -- so much so that he decided to take an informal tally of his students. What he found was discouraging: Forty to 50 percent of students weren't attending his classes, which mirrored what he heard from colleagues in his department and at other large universities.

Some schools have instituted punitive policies, allowing the instructor to give a failing grade to students who skip too often, but even that hasn't kept attendance numbers up.

On the surface, this shows that education is one of the most over-priced but under-valued commodities on the market. For an economist, that requires some explaining. Three economic concepts can show why students pay for a class, then don't show up to it:
  • Sunk costs. Once the tuition payment is made (or the loans taken out) it doesn't factor into decisions anymore. Whether you go or not, the bill at the end is the same.
  • Signaling. Going to college shows potential employers that you're the type of person who can do the work required to get a college degree, and who they might want to hire. They'll never know if you dozed through your freshman calculus class (at least until a bridge falls down).
  • Opportunity cost. Attending class implies a trade-off; what else can you do with an hour? Going back to bed with a headache may seem foolish in retrospect when taking the test, but at the moment appears like a much better idea.
In classes where the material can be learned better from a book, the tests aren't based off in-class material, or you already know what's being taught, skipping makes logical sense. This begs the question, however, of why it's even worth taking that class in the first place.

If you're an undergrad and the above makes you content with low attendance, I'd suggest reconsidering your field of study. Education is only useful if you can do something with it, and that'll be hard to accomplish after snoring through the coursework. While you can count on some college professors not caring whether you show up, be assured that bill collectors coming for the student loan payments will be much more tenacious.

Monday, August 30, 2010

The 'Landes Law' on imperialism and its domestic corollary.

Historian David S. Landes
In his New York Times bestseller The Wealth and Poverty of Nations: Why Some are so Rich and Some so Poor, David Landes claims
"a law of social and political relationships, namely, that three factors cannot coexist: (1) a marked disparity of power; (2) private access to the instruments of power; and (3) equality of groups or nations." [63]

Penned in 1998, this writing still sheds some interesting light on our recent foreign policy adventures in Afghanistan and Iraq. Conspiracy theories and "blood for oil" slogans aside, private companies did have a large involvement in immediate invasions as well the as follow-up occupations. Along with industry lobbying and corporate connections in the White House, condition (2) seems to have been justified. The marked disparity of power and inequality between groups hardly even need discussion.

On face, the principle at work here seems accurate. As Landes argues, "Where one group is strong enough to push another around and stands to gain by it, it will do so." However, this incentive isn't limited to foreign policy. I'll propose the following corollary to Landes Law:

Welfare State Corollary: three factors cannot coexist: (1) a marked disparity of specialized interests; (2) private access to the instruments of government; and (3) national government running a balanced budget.

In other words, when an interest group (e.g. farmers, doctors, bus-drivers, etc.) has enough political influence, it will push others around through the legislative process, as long as it stands to gain by doing so. When a multitude of such interests exist, satisfying all their demands will flout any efforts at a balanced budget (unless taxes are incredibly high, and there's an interest group against that too).

While Landes' Law poses a serious challenge to efforts at global peace, the Welfare State Corollary has implications on our current political system's ability to respond to the current financial crisis. I'll leave it to the reader to decide on the accuracy of this analogy.

Tuesday, August 24, 2010

Statistical Fallacy #317: Holding Constant that which Changes. See: 'median household income'.

"Torture numbers, and they'll confess to anything."*
  Our inquisitionist of the day hails from Bloomberg. In an article today, Venessa Wong wrote the following:
While many Americans dream of a windfall that will take care of their financial needs for life, the sobering reality is most of us are not getting far: U.S. Census Bureau data show median household income barely changed in the 10 years following 1998 as the price of housing and other goods increased. In consumer price index-adjusted dollars, the median household income in 2008 was $50,303, compared with $51,295 in 1998. [Emphasis added.]
 What's wrong with the above? In a fairly common maneuver to paint a doom-and-gloom image of the times, average household size is treated as a constant to compare incomes over time. That just isn't the case.

The problem with using 'median household income' as a measuring stick is that it's actually a factor of two other variables: combined income, and number of people per household. The latter aspect is conveniently overlooked by pessimists, who are looking to demonstrate a negative trend over time. When everything is considered, a different picture emerges.

In 1915, the average number of people sharing a house was 4.5. By 1967, that number had declined to about three. Greater mobility, less social pressure for early marriage, and a general rise in affluence all played a role in reducing the amount of people per household.  In other words, more kids are leaving the parents' basement, and more elderly people remain self-sufficient without their kids.

How does this impact the analysis by Ms. Wong? Based on Census Bureau data, there have been significant changes in persons per household, even in the limited span of 1998 to 2008. This is displayed in the graph above. In 1998, there were an average of 2.62 persons per household, and by 2008, that number was 2.56. When you're talking averages from a nation of 300 million people, those small differences add up quickly.

By performing some mundane mathematical operations, we can see what the statistics really say about income between 1998 and 2008. Correcting for changes in household size over that time, we find that the average income per household member actually went up, contrary to the dour picture from the Bloomberg article. An almost $100 gain per household member - averaged across the entire nation - isn't too bad (especially since it's adjusted for inflation and includes non-working people such as children).

It's fairly obvious why otherwise-intelligent people would overlook such a simple flaw in their statistics. The news headline "Things Generally Improving, but Slowly" doesn't sell much copy. Worry and concern is what draws readers, and if the numbers don't support that, they'll have to be twisted until they do.

*Quotation attributed to Gregg Easterbrook.

Sunday, August 22, 2010

Busting the 'egg scandal' wide open.

These eggs were not broken to make an omelet.
Recently, Wright County Egg and Hillandale Farms, both located in lovable Iowa, have come under fire for "poisoning" the public with salmonella from their eggs. An egg source for 13 different retail brands, this news has rocked supermarkets nationally, and an even wider recall might be in the works.

"The history of ignoring the law makes the sickening of 1,300 and the forced recall of 550 million eggs shockingly understandable," says William D. Marler, a Seattle attorney representing someone who became ill from a 'dangerous' egg salad. (They're all dangerous in my opinion, especially on a hot day).

The numbers above got me wondering. What proportion of the recalled eggs were contaminated with salmonella? If 550,000,000 eggs resulted in 1,300 people becoming sick, the chance of any one egg making someone ill is .000236% . Eat a whole dozen, and your odds skyrocket to .0028%, a roughly one-in-35,000 chance of becoming ill from a tainted egg.

Surely, if you're one of those 1,300 people, hearing the numbers won't cure your stomach-ache and flu symptoms, but it should be reassuring for the other 99.99% of the population. Salmonella can be dangerous for the very young and very old, but many cases are so mild they aren't even reported.

Some media outlets, such as the Huffington Post, have taken this story and run with it, using those salmonella cases as a biting indictment of mass-produced food. Their title "Cheap Food Makes You Sick" seems to capture the gist pretty well. One thing they leave out is that cheap food can also make you healthy. Eggs are an excellent source of B-12, omega fatty acids, and other vitamins essential for good health. When you compare rickets, scurvy, and beriberi to a mild risk of salmonella, puking for a few days might be the healthiest decision.

Basically, it's all very well and good for rich people to say that everyone should drop $4.99 for a carton of organic eggs, and who cares about the cost of sending back 550,000,000 potentially tainted eggs? Yes, it'd be tragic if someone died from eating a bad egg, but it's also terrible for the Iowa farm workers, their families, and the agricultural community in general which will likely bear the cost of this recall. Additionally, thanks to the hype surrounding those few salmonella cases, consumers might be deterred from eating their eggs into the future, harming both the farm economy and public health.

Roughly 40,000 salmonella cases are reported per year in America, which makes the egg issue look like a drop in the bucket. Instead of a costly recall, more measured responses could have been taken to contain the "outbreak" of salmonella. Perhaps the best advice on the subject yet: avoid cookie dough and cook your breakfast thoroughly. I may have to give up Eggs Benedict for a few days, but in the larger scheme that's not such a big deal. I'm not sure the same can be said for wasting billions of dollars in eggs. Think of the sad chickens, if nothing else.

Thursday, August 19, 2010

Don't recycle your green glass, plastic or paper. That's right, trash it for the planet.

Recently in the news, the Mayor of New York expanded the state's recycling program to encompass more plastics; supposedly, this will divert 8,000 tons of plastic from landfills each year. My question is, what's so bad about throwing garbage in the trash?

With all our trash in the Dakotas, as it should be.
Maybe this makes sense to New Yorkers -- their state did birth the "trash crisis" myth which has followed American politics home like a stinky dog. However, recycling has remained a national craze, even though landfills are generally cheap and available across the country. Fun fact: If all American trash were brought to one huge landfill, and "you keep filling up this landfill for 100 years, and if you assume that during this time the populations of the United States doubles, then the landfill will cover about 160,000 acres, or 250 or so square miles, with trash 400 feet deep." Source. That may seem like a lot, so to put it in perspective, see the attached diagram which compares the 3,717,813 square miles of the lower 48 to this hypothetical landfill. Doesn't look so big now, does it?

Recycling colored glass, paper and plastic isn't just unnecessary; it's also inefficient. Let's count the ways:

Green Glass:
Glass is made from sand, perhaps the most cheap and plentiful stuff you can find other than dirt. We're not running out of it. Making glass is relatively simple: heat the glass, shape it, then allow it to cool. Recycling glass that has color added becomes much more complicated. It takes chemical processes I can't even spell in order to clean out the waste products and allow the glass to be reused... generating even more byproducts that are released into the environment. There's a glut of ground green glass (try saying that three times fast) and no one wants to use it, so basically all that recycling was wasted effort.

The problem with plastics is that there's so many different kinds of them; each comes with a little number on the bottom which the consumer is supposed to reference and then recycle accordingly. The time lost, just from millions of people going through this mundane and unnecessary exercise, probably outweighs any economic benefit from reusing those plastics. Even discounting people's valuable time, recycling plastic doesn't save natural resources; "when the equation includes the energy used to synthesize the plastic resin, making plastic containers uses as much energy as making glass containers from virgin materials." The source for this is a Berkeley environmental organization, so you know it's not just angry libertarians. In other words, hug a tree, then throw that plastic bottle away.

Speaking of trees, we've got lots of them.  In fact, American forests have expanded substantially over the last century, largely thanks to improvements in agricultural productivity which allowed more land to return to its natural state. Paper pulp mostly comes from tree farms these days, so the environmental impact of virgin paper is pretty small. Recycling that paper pulp after it's had inks, dyes, and other junk added to it is another story. All those chemicals have to go somewhere, so the recycling process creates its own little clean-up problem afterward. I'm no chemist, but I'm pretty sure it's harder to dispose of dioxins than old newspaper.

Bottom Line:
If recycling were efficient, private companies would send trucks around asking for your trash, and government wouldn't need to promote it. This will never happen, which shows that recycling is popular not because it helps anything but because it makes us feel good inside to "do our part" for nature. With environmental campaigns bombarding the general public with guilt appeals and claims of impending disaster on a near-daily basis, it's no surprise people need something to clear their conscience. I think it It's time to buck the trend, and feel good about disposing of trash the efficient way - in the garbage - instead of making every can, bottle, and paper product into a pointless political statement. Being wasteful never felt so good.

Saturday, August 14, 2010

Money Melts the Pounds Away -- an in-depth look at The Biggest Loser outcomes.

No, this is not veiled commentary on my social life.
Obesity is a growing issue in the industrialized world generally and the United States in particular. The science behind obesity is still developing, but the popular culture response has already begun. Reality television, which has previously attempted to resolve our lovelessness, joblessness, and lack of fashion has now begun to confront the ‘American lifestyle.’ 

Television network NBC’s hit reality series “The Biggest Loser” takes a group of overweight individuals and sequesters them in a large housing and gym facility. There, under the oversight of expert personal trainers and medical personnel, they attempt to lose weight as quickly as possible. Taking place within a competitive team setting, at the end of each week the people who lost the least weight risk being eliminated. At stake is $250,000 cash for the winning player and a $100,000 prize for the eliminated player losing the most weight by the finale.

The Biggest Loser's game-show world bears only loose relation to the reality of an average person looking to drop a few pounds. However, its dramatic format and inspiring message have proved a global success, with the creation of Biggest Loser UK, Biggest Loser Australia, and Biggest Winner Arab (to name a few). The American version of the show has produced nine seasons since 2004, with a tenth being filmed as of this writing. 
With each contestant’s weight loss announced weekly, this television series provides a wealth of data on weight loss under ideal and controlled conditions. With 6 to 8 daily hours of exercise, a rigidly structured diet organized by top-rate personal trainers along with a strong monetary incentive, participants on The Biggest Loser have every advantage in losing large amounts of weight. Some drop over twenty pounds, or over 5% of their body mass, in a single week. The vast majority go on to change their lives by adopting healthier eating habits and frequent exercise. These results demonstrate weight loss at the absolute limit of human capacity. 
While every participant on The Biggest Loser puts in a monumental effort to lose weight, there can only be one winner. Contestants experience different outcomes in weight loss in spite of a generally high standard of effort. There have been many debates in the bio-medical field on whether obesity is caused by genetics, culture, age, or something else entirely, and a consensus has yet to emerge. With its wide demographic variety, The Biggest Loser provides an opportunity to test how these differences impact optimal-scenario weight loss. 


The format of the Biggest Loser lends itself to data collection. The first half of each episode follows the contestants through a competitive challenge and their daily exercise. During the latter half, each person is weighed in and their amount is compared to the previous week's measurement. The grand prizes are based on a total percentage of weight lost, so as not to advantage larger contestants. For this study, a similar method was used to balance out starting weight differences between participants. Data was taken from the first nine Biggest Loser U.S. episodes, which featured a total of 158 people. A fuller explanation of the variables continues below. 
Sample RWL Calculation for Helen (Season 8)
Dependent Variable: Rate of Weight Loss (RWL) 

In order to compare outcomes across demographics, it was first necessary to condense each person's weight loss up to the finale into a single figure. For each week, every contestant's total weight loss up to that time was recorded. That number was divided by their base weight at the start of the season to arrive at their total percentage lost. Plotting all those points to a graph, then imposing a line of best fit results in a graph for each participant like the one seen here. The slope of the line is the average rate of weight loss (hereafter RWL) for that person across the time they were on The Biggest Loser. In the example above, the slope is 2.309. This is interpreted to mean that Helen (our sample contestant) lost an average of 2.309% of her base weight each week she was competing on The Biggest Loser. She entered weighing 257 pounds, and on average she lost 5.9 pounds each week until the finale. 
Independent Variables:

Age: The Biggest Loser draws from every age group, with contestants from the age of eighteen up to over sixty. Age can play two conflicting roles. The first factor is maturity; with age comes experience, determination and mental resilience. A mature person will be more likely to conquer the mental and physical strain of rapidly losing weight. The second factor is infirmity; older people are more likely to enter the contest with pre-existing injuries and are also slower to recover if they are hurt while exercising. While minor injuries are common for nearly all Biggest Loser contestants, being young and healing rapidly is an advantage that plays against maturity. 
Base Weight: While all Biggest Loser contestants are “overweight”, both their degree of obesity and general body types vary greatly. Heavier contestants have more weight to lose, but may also be in worse physical shape to start, which slows exercise. It's expected that a higher base weight will have a negative effect on rate of weight loss.

Height: Taller overweight people have two factors working against them. First, having a larger frame increases strain on joints and muscles, increasing the risk of injury. Second, tall people have more bone and muscle mass, making it more difficult to lose a high percentage of weight. Shorter Biggest Loser contestants are expected to have an advantage.

Gender: The effects of male-female differences are difficult to predict, because sex is interconnected with many other demographic variables. Men are on average taller, and generally enter the show with a higher base weight than women. Additionally, many of the male contestants were former athletes (wrestling and football being to most common) so they have more endurance to start. Based on the sample, it's expected that men will have an advantage in rate of weight loss.

Ethnic Background: Contestants were divided between four categories: Black, Hispanic, Asian, or none of the above (“white”). There are limitations to this approach; ethnic differences are clearly more subtle than these categories encompass. Many of the people considered “white” were of Italian origin but American born. The “Asian” category was geographically broad; Heba from Season 5, who was of Egyptian heritage, was classified as Asian. As a result, the results of ethnic background on weight loss are unpredictable. 
Marital Status: Contestants with spouses have two contradictory factors at play. Having someone for emotional support during many weeks away from home is a huge advantage. Some seasons of The Biggest Loser were “Couples” themed, and some married couples worked together to lose weight. The majority of married participants were separated from their spouses, however. Missing home hurt the morale of some contestants and made them more willing to leave The Biggest Loser campus. 
Kids: Many of the married contestants also had children at home. The number of children is expected to have an ambiguous effect on weight loss. However, it is most likely correlated with age, as older people have had more years to produce children. 
Weeks on “Campus”: Perhaps the ultimate advantage in losing weight is more time with the trainers and specialized diet provided to Biggest Loser contestants. More weeks on campus is expected to correlate strongly with a high rate of weight loss. At the very least, people who stay in the longest are also the ones who have the highest, most consistent rates of weight loss.


Irrelevant Variables: 
Race: varying ethnic origins did not have a measurable impact on rate of weight loss. The majority of participants were white, and some ethnic groups (e.g. Asians) had very low representation, so statistical significance was hard to achieve.

Northwest, Southwest, Northeast: three of the location dummy variables did not have any statistically significant difference from the base case (the generic “Midwest”). 
Season: not discussed much before, the season did not strongly impact weight loss. 
Spouse: being married did not make a measurable difference. The contradictory factors at play for a married person canceled out, leaving the variable statistically irrelevant.

Relevant Variables: (in order of greatest statistical significance)

Weeks: as expected, staying on the show longer was a sign of faster weight loss. The extremely high t-stat for this variable shows that more weeks on campus corresponds almost exactly with higher rates of weight loss, other factors being constant.

Male: men had a substantial advantage in losing weight quickly. Anecdotal observation supports this – the majority of seasons were won by men, and most of the finalists were also men. Women did better in the later seasons, but men in general had the advantage.

Southeast: for whatever reason, people hailing from the southeast part of the country had a lower rate of weight loss. None of the other regional variables had a measurable impact, which makes this result especially surprising.

Age, Age2: as anticipated, an older and more mature person has an advantage, but at a certain point, the indignities of age start to impede weight loss. 
Base Weight: a higher base weight correlates to lower rates of weight loss, other factors being held constant. While intuitively, it would seem that heavier players have more to lose and should drop it quickly, that was not evident in the data. Being in worse physical shape and having less stamina for sustained exercise was a disadvantage for heavier contestants.

Height: taller participants did not lose weight as quickly as shorter ones. Other factors being constant, a lower stature was an advantage.


Combining all these factors together, we can generate a profile of the “perfect” Biggest Loser participant. Such a person would be: male, middle-aged, below average in height, and lack a Southern accent. Why? I'm not sure, ask a sociologist. My economics work here is done. 

Potential Flaws: 
  • Calculating the RWL requires knowing how long between the last episode of the show and the finale. Contestants are sent home for between two and four months (depending on the season) and the exact amount is not always clear. For three of the seasons, it was necessary to extrapolate the number of weeks before the finale based on the seasons prior and following. 
  • Some participants chose not to attend the finale, so their final weight loss totals are unknown. The number of contestants not appearing was less than five between all nine seasons, but calculating a rate of weight loss based on a different span of time would have introduced serious inconsistencies into the model. To compensate, the weight loss at their last episode in the game was recorded for absentee players as their finale weigh-in total. 
Questions, comments, or suggestions for more analysis are welcome.

Sunday, August 8, 2010

The case for a private military -- let the market take a shot.

At the end of a previous blog post, I speculated on the possibility of an all-private military. The idea: instead of having the DOD do the work of recruiting, training, and then deploying our military personnel, the federal government could just handle the top-level strategy then hire out for troops to implement it. Unconventional? Yes. Effective? Possibly.

Currently, the U.S. army is staffed on an all-volunteer basis. People have to willingly choose to put their life on the line. That system just isn't working -- the military is facing a serious recruitment shortage. When you look at the numbers, it's obvious why:

An enlisted Private with less than two years experience will receive $17,366 for a year's service (not including benefits etc.) After becoming a Captain and serving for more than six years, pay would be $61,405 -- if you survive that long. Compare that to the median pay for a security guard at $29,854 with a built-in job benefit of not being shot at regularly, and the recruitment shortage starts making a lot more sense.

There are more reasons for joining the military than to make money. Some people believe strongly in serving their country, have no other way to go to college, or need to support a family. Those are noble thoughts, but the upper-crust Senators and executive bureaucrats who send our service-men and -women into harm are not nearly so noble. Army recruiters are not above lying to get young people to sign their life away for causes they may not even understand. Applicants are told they'll have desk jobs, never see a fight, and can expect to live the high life abroad on Uncle Sam's dollar. It's truly repugnant to send people into battle not knowing the risks they're taking, but it's become common practice in the face of growing troop shortages.

I'm not trying to single out army recruiters here; they're given an unenviable job, and have to complete it to the best of their ability. The real problem is that the government isn't willing to pay enough to convince most people to put their lives on the line. Right now, the only way to fill that shortage is to lie, coerce, or otherwise fool people into saying yes against their better judgment. There's a reason private military contractors get paid up to ten times more than similarly ranked army officers -- that's what people think it's actually worth to go into a war zone and risk losing it all.

When Congress has a large standing army at its disposal, there's always a temptation to use it. They're paying the soldiers one way or another; might as well have them do something. With a private military, the government has to pony up the cash right away and justify it to the public. Having to allocate funds for each military expedition would shine a spotlight on each deployment, bringing greater wisdom and restraint to the decision. An all-private military would help avert the adventurist tendencies that have gripped recent administrations. America's military power would be used more sparingly, and only when the costs were truly justified.

Paying the market price for soldiers wouldn't be cheap, but no one claims the current method is saving money. In fact, with a private military, the massive DOD bureaucracy could be trimmed down substantially, and spending decisions streamlined. Private military contractors have a profit incentive to find the best balance of high technology vs. cost, a trade-off the DOD has hardly ever considered. Military funds could be better used by private industry, perhaps bolstering our ailing economy, instead of being frittered away by DOD inefficiency. The current DOD budget of $533.8 billion could do much more good in private hands.

Isn't it dangerous to put our national security in the hands of private corporations? Many people implicitly trust the government, and think the market is subject to corruption or abuse of power. The string of lies leading up to the Iraq war should reveal that these fears have been misplaced. Many politicians have no qualms about deceiving the public if it will serve their personal goals. Privatizing the military would provide another check and balance against misuse of power, because they'd have to justify their actions to another interested group - the soldiers - instead of sending them to fight and die with no influence in the matter.

If you get a private paycheck, you can quit when the risk seems too high. Do that in the military, and you go to jail. The forced aspect of military service can make sense in a national emergency, but often it's just coercive and unfair. Even if the recruiter lied, and convinced someone to join under false pretenses, it doesn't matter -- you're stuck. A private company would have to increase wages to keep soldiers around, instead of threatening them with prison. America was built on freedom and choice, and we shouldn't abandon those principles if we expect others to follow them.

Couldn't a private military hold our government hostage, refusing to fight when the nation was in danger? Logic does not support that possibility. If America fell to a foreign power, private contractors would lose their primary employer. The incentive is to not bite the hand that feeds you. Also, there are enough different private military companies - so many that they need their own directory service - that competition for business would get at least some to fight. Finally, the control of our nuclear deterrent and second-strike forces would still be in the executive's hands, which is enough to avert major conflict with foreign powers.

The most pressing danger to American security is blowback from our overly-aggressive foreign policy. The 9/11 attacks were a response to our overweening military presence in the Middle East, which has continued to spark resistance and insurgencies since then. Our military is not well-equipped to deal with the policing role it has been thrust into. Transitioning to private forces would avoid causing terrorist attacks by restraining our foreign presence, and also ensure that the right people for the job are on the ground to deal with insurgents who hate us already.

I'm not saying we should abolish our standing military tomorrow. What's needed is a slow transition, region by region, to see if the idea works. For example, if the federal government were to withdraw all enlisted army troops from Iraq and/or Afghanistan and leave private troops there, it would be a perfect test case to see the idea in practice. As an added benefit, the troops would be freed up to deter other threats around the globe. Pulling some active-duty troops back home would ensure that in the short-term, America is able to use them for what they're actually trained in - fighting an open war - instead of the relatively new task of insurgency control and winning 'hearts and minds'. Private contractors with experience in the region could fill-in for those jobs easily. It's a win-win situation: if withdrawal of active duty troops was a failure, they could always be reinstated, but if it were a success, that smaller experiment would become a model for our overall troop policy and provide the political spark for a broader transition.

Most of the current objections to private military contractors - hurting troop morale, expanding executive power, or dodging accountability - would be resolved by switching away from a mixed military presence, and making all our forces private. Pay disparities would disappear, Congress would be able to oversee their actions more easily, and competition in the industry would hold private soldiers to an even higher standard of behavior.  Facing serious troop shortages, America is left with only bad options; either slog along with our currently insufficient military forces, or institute a draft to get the troops we need. As Vietnam demonstrates, forced service is likely to spur even harsher resistance to the military, and further undermine our international power and image. Paying the market rate for soldiers would allow America to sustain a balanced global presence and mitigate conflicts, without risking overstretch and total collapse of leadership (which seems to be the current path). It's unlikely to happen soon, but it's time to consider relinquishing the business of war to the market.