Critical Exponent

A friend at work suggested the following thought experiment with regards to the current financial crisis:

We are currently considering a $700B bailout for Wall Street. Assume that the value of the homes being foreclosed because of the crisis is the same order of magnitude (more on this below, but that’s tangential to the thought experiment).

An alternative solution could be for the government to take the money that it is about to give to Wall Street, and instead buy out all the bad debt directly from citizens: in other words, give people with bad debts the money to purchase their homes outright. If you prefer, give them just enough money to bring their debt down to a manageable level, and leave them to pay the rest off. Depending on how the numbers work out, this could be cheaper or about the same as the Wall Street bailout. For the sake of argument, assume this alternative is cheaper. Question: why not implement this?

Under these assumptions, this bailout costs taxpayers less than the Wall Street solution. The beneficiaries of the government largesse would be individuals rather than corporations. The profit from the bailout would not go to the companies that would remain solvent and still require payment of their loans; the profit would go to individuals who have part or all of their debt paid off (though the companies would continue to stay afloat because any remaining consumer debt would now be serviceable).

I doubt this proposal would fly, however. I suspect people would resent that neighbors who got into debt over their heads are now being rewarded with a handout from the government that enables them to own too-expensive-for-their-means houses, while responsible folks who bought only as much house as they could afford receive no such gift and are stuck with more debt for less floor space.

But how is this different than the corporate handout? The companies that issued loans to risky borrowers are rewarded with the higher profits of the bubble and the government cash to survive the crash. Responsible companies that did not profiteer from questionable loans did not get the extravagant bubble profits and need no government handouts to survive the crisis.

Something seems wrong, no? Discuss.

[Here's a back-of-the-envelope calculation: One source cites approximately 300,000 foreclosures in August, so estimate twelve times that for the year: 3,600,000 foreclosures. The mean home price in the US is $212,000. Multiplying these two figures, we can estimate that the current value of foreclosed properties is about $763B (actually, slightly higher, since a large fraction occur in CA, where the mean house cost is higher). If we say that only half the mortgage debt needs to paid off for the remaining debt to be viable, we arrive at a $380B bailout, cheaper than but still the same order of magnitude as the current plan in DC.]

UPDATE: DailyKos came out with its own estimate of the numbers, lower than the one I present above.

Our marriage is less than a month away. Life feels full, as we try to juggle wedding tasks (the meeting of the parents went well), errands we want to get done beforehand (the picket fence is still an abstraction), and relaxation (hah!)

Obviously, I have marriage on the brain, but it seems like I’m not the only one. The New York Times has a retrospective on four years of gay marriage in Massachusetts, complete with a multimedia feature. Then, same-sex marriages are held up as examples of more equitable and non-gender-based power dynamics. And finally, in a shocking development, it seems that heterosexuals themselves are discovering equitable marriage roles.

These last two leave me shaking my head. Obviously in a same-sex marriage gender is not part of the power dynamics, but why should the power dynamics be affected by gender in the first place? And is it really that novel that some straight couples eschew gender roles? I certainly grew up with the expectation that both partners in a marriage share responsibilities equally, and that’s the norm among my friends, too.

Some NYU students would.

Sigh.

Tip of the hat to Jeff

Supposedly, this picture will determine whether you are left- or right-brained. I’m not sure I believe it really is an effective test (I’d like an explanation), but it sure is an interesting exercise to make the dancer spin the other way. Try it!

Hint: force yourself to change the depth dimension so that foreground and background switch.

Thanks to Feministe for the link

In an emotional statement, the mayor of San Diego reversed his stance against same-sex unions because his daughter is gay.

I have mixed feelings about this.

First of all, I applaud a politician for having the guts to say “I was wrong” and reverse himself. I admire him for putting family above dogma and for refusing to be a hypocrite.

Second, I applaud his daughter for being open, establishing dialog, and not giving up on the bond with her father.

But, third, I feel that this shows how self-serving we are even we pretend otherwise. Supposedly one holds convictions on fundamental or controversial issues such as this because one is convinced those convictions are correct. Whether that belief comes from rational thought, from humanist principles, from religious belief, from historical tradition, the presumption in politics is that those beliefs are held and professed not because of personal gain but because they’re good for society at large. That’s certainly the way the gay marriage debate has been framed.

But if a change in your personal circumstances makes you reverse your position, what does that say about your convictions? Your arguments, your talking points, your invective now change, not because you know more about the issue, but because being suddenly associated with the victims of discrimination now puts you at a disadvantage.

Will your new position survive new changes in your circumstances?

To me, you see, a good litmus test as to whether positions are worth holding is whether, indeed, I’d continue to hold them if my circumstances changed. If I wouldn’t advocate tax cuts for the rich when I’m poor, then advocating them when I’m rich is simply selfishness. If I wouldn’t advocate more social services if I were rich, then advocating them when I’m poor is purely self-serving. And similarly, suddenly supporting gay rights only because my daughter is gay means I care about me and my own but couldn’t be bothered with those whose plight did not affect me.

This Orion article captures the anxious guilt I feel that I am not doing enough, that I never can do enough.

Mark Lilla, writing the cover story for this week’s New York Times Magazine, uses the word theotropism. While a Google search reveals that this is not a neologism, I am delighted to run across such a succint term that captures the all-too-common drive to construe the world in divine, supernatural ways. My own speculation is that this is a mechanism for making sense of the environment that was useful in our infancy, as individuals and as a species—but which now all too easily leads us astray as sects feel called upon to enforce divine will on the unbelievers and apostates.

Reclusive Leftist laments people’s gullibility and points to this “ESP experiment”. Go to it and see. What’s amazing is not the experiment itself (you do see the simple trick, don’t you?), but people’s responses: naturally it must be something paranormal.

We could conjecture all day about the evolutionary advantage of gullibility as a means of group cohesion, but it seems pretty clear to me it’s serving us ill in this day and age. This is one of the topics to which my thoughts return, and there’s an essay just waiting to be written. Stay tuned…

The type of praise you give children, it turns out, can be counter-productive.

Executive summary: Kids told they are “smart” rather than “putting forth a good effort” tend to be risk-averse, preferring to defend their smart status rather than work on new challenges. Scientist think its due to the feeling of control (versus innate ability) that the praise engenders. It’s related to the delayed gratification circuit in the orbital and medial prefrontal cortex of the brain, a circuit reinforced by intermittent gratification. The praise must be specific and meaningful, though: vacuous plaudits are suspect in children’s eyes past the age of seven.

(Thanks to All too aware)

Cumulative advantage, a.k.a positive feedback.