Kevin Drum

The Kids These Days....Part 476

| Tue Dec. 9, 2008 2:38 PM EST

THE KIDS THESE DAYS....PART 476....Here's the latest international report card on how American kids are doing in science and math. Short answer: not badly, really. According to the latest TIMSS report, eighth grade Asian kids outscore everyone, and American kids outscore nearly everyone who's not Asian (only Hungary, England, and Russia do slightly better). The story in science is about the same. TIMSS doesn't conduct their tests in every country, but among the countries that do worse than the U.S. are Australia, Sweden, Italy, Norway, and Israel.

Full results here. They're pretty much the same as in years past, by the way. It would obviously be nice if American kids were doing even better, but the evidence hardly suggests that the United States is some kind of educational hellhole. In science and math, anyway, we're better than most and roughly average among our first world peers.

UPDATE: Sorry, I guess the charts are a little hard to decipher. Basically, they show what percentage of kids scored at or above various levels on the TIMSS test. For example, 92% of American eighth graders scored above the cutoff point for low performance on the math test and 67% scored above the intermediate level, compared to an international average of only 75% and 46% respectively. Basically, at every single level, more American kids scored above the cutoff point than the international average.

However, keep in mind that these international averages include lots and lots of very poor countries. If you look only at other rich countries, the United States is right around average.

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Social Happiness

| Tue Dec. 9, 2008 1:50 PM EST

SOCIAL HAPPINESS....Remember all those news reports from last week hawking a study about how happiness is spread via social networks? Via Justin Wolfers, a couple of spoilsports have done a competing study that looked at a few other characteristics. From their writeup:

As we intended to investigate potential biases in previous methods, we looked at three health outcomes that could not credibly be subject to social network effects and were available in all three waves of the data: self reports of skin problems, self reports of headaches, and height over time.

Long story short, they found network effects for all three of these things even though network effects almost certainly don't exist. The problem, they say, is that shared environments (same school, similar eating habits, etc.) can explain much of the supposed "contagion," but the datasets used for social network studies often don't include enough information on individual environments to allow it to be factored out.

In other words, be careful accepting breathless claims about the spread of this or that via social networks. Maybe it's true, maybe it isn't. On the other hand, it can't hurt to have happy friends, can it?

BCS Uber Alles

| Tue Dec. 9, 2008 1:19 PM EST

BCS UBER ALLES....Via Lee Sigelman, apparently this has been circulating virally:

After determining the Big-12 championship game participants the BCS computers were put to work on other major contests and today the BCS declared Germany to be the winner of World War II.

"Germany put together an incredible number of victories beginning with the annexation of Austria and the Sudetenland and continuing on into conference play with defeats of Poland, France, Norway, Sweden, Denmark, Belgium and the Netherlands. Their only losses came against the US and Russia; however considering their entire body of work — including an incredibly tough Strength of Schedule — our computers deemed them worthy of the #1 ranking."

Questioned about the #4 ranking of the United States the BCS commissioner stated "The US only had two major victories — Japan and Germany. The computer models, unlike humans, aren't influenced by head-to-head contests — they consider each contest to be only a single, equally-weighted event."

German Chancellor Adolph Hiter said "Yes, we lost to the US; but we defeated #2 ranked France in only 6 weeks." Herr Hitler has been criticized for seeking dramatic victories to earn 'style points' to enhance Germany's rankings. Hitler protested "Our contest with Poland was in doubt until the final day and the conditions in Norway were incredibly challenging and demanded the application of additional forces."

The French ranking has also come under scrutiny. The BCS commented "France had a single loss against Germany and following a preseason #1 ranking they only fell to #2."

Japan was ranked #3 with victories including Manchuria, Borneo and the Philippines.

Time for Obama to get cracking on that college football playoff he says he favors. That would be change we can believe in.

Malaria Vaccine

| Tue Dec. 9, 2008 12:26 PM EST

MALARIA VACCINE....My morning paper reports some spectacularly good news for Africa:

A vaccine against the parasitic disease malaria cut illnesses by more than half in field trials and could be safely given with other childhood inoculations, two studies have reported.

....Malaria kills nearly 1 million people each year and sickens about 2 million others, according to estimates from the World Health Organization. Most of the deaths are among children younger than 5 in sub-Saharan Africa, the population that the vaccine targets.

More here.

Idiocy in Illinois

| Tue Dec. 9, 2008 12:12 PM EST

IDIOCY IN ILLINOIS....I seem to recall reading somewhere recently that Illinois governor Rod Blagojevich has a 4% approval rating. So I guess he figured he had nothing to lose:

Gov. Rod R. Blagojevich of Illinois was arrested on Tuesday morning and charged with corruption, including an allegation that he conspired to profit from his authority to appoint President-elect Barack Obama's successor in the United States Senate, prosecutors said.

As Mr. Blagojevich mulled the Senate appointment, prosecutors say, he discussed gaining "a substantial salary" at a nonprofit foundation or organization connected to labor unions, placing his wife on corporate boards where she might earn as much as $150,000 a year and trying to gain promises of campaign money, or even a cabinet post or ambassadorship, for himself.

A 76-page affidavit from the United States Attorney's office in Northern Illinois says Mr. Blagojevich was heard on wiretaps over the last month planning to "sell or trade Illinois' United States Senate seat vacated by Pres-elect Barack Obama for financial and personal benefits for himself and his wife."

....According to the statement from prosecutors, Mr. Blagojevich told an adviser last week that he might "get some (money) upfront, maybe" from one of the candidates hoping to replace Mr. Obama. That person was identified only as "Candidate 5."

In an earlier recorded conversation, prosecutors say, Mr. Blagojevich said he was approached by an associate of "Candidate 5" with an offer of $500,000 in exchange for the Senate seat.

Jeebus. Is Blagojevich also the world's biggest moron? The evidence says yes.

Race and Status

| Tue Dec. 9, 2008 12:31 AM EST

RACE AND STATUS....Blacks are often stereotyped as having lower status than whites. That won't surprise anyone. But does it work in the other direction too?

Apparently so. The LA Times reports today on a study suggesting that people are more likely to be identified as black if their status changes for the worse. In a review of data from the National Longitudinal Survey of Youth, in which subjects are interviewed annually (biannually after 1994), a pair of researchers found that people who had been identified by interviewers in one year as white were less likely to be identified as white the next year if they were in jail, unemployed, or impoverished:

"Race isn't a characteristic that's fixed at birth," said UC Irvine sociologist Andrew Penner, one of the study's authors. "We're perceived a certain way and identify a certain way depending on widely held stereotypes about how people believe we should behave."

....For example, 10% of people previously described as white were reclassified as belonging to another race if they became incarcerated. But if they stayed out of jail, 4% were reclassified as something other than white, the study said.

I don't have any special views on the "race is a social construct" question, but this certainly suggests, at the margins at least, that social status does indeed have an effect on how race is perceived. The full study is here.

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Risk

| Mon Dec. 8, 2008 8:33 PM EST

RISK....Brad DeLong says that, ultimately, the global stock of capital fluctuates based on five factors: (1) savings and investment, (2) good and bad news out in the real world, (3) the default discount, (4) the liquidity discount, and (5) the risk discount. The first two haven't changed recently. The third has produced about $2 trillion in mortgage losses and $4 trillion in followon recession-based losses. The fourth, thanks to heroic efforts from central banks, has had a positive impact of about $3 trillion. So in Brad's estimate, the first four factors have produced a net loss of about $3 trillion worldwide. However, total actual losses worldwide during the economic crisis of the past year have come to about $20 trillion so far:

Thus we have an impulse — a $2 trillion increase in the default discount from the problems in the mortgage market — but the thing deserving attention is the extraordinary financial accelerator that amplified $2 trillion in actual on-the-ground losses in terms of mortgage payments that will not be made into an extra $17 trillion of lost value because global investors now want to hold less risky portfolios than they wanted two years ago.

....Our models predict that in normal times, with the ability to diversify portfolios that exists today, the risk discount on assets like corporate equities should be around 1% per year. It is more like 5% per year in normal times — and more like 10% per year today. And our models for why the risk discount has taken such a huge upward leap in the past year and a half are little better than simple handwaving and just-so stories. Our current financial crisis remains largely a mystery: a $2 trillion impulse in lost value of securitized mortgages has set in motion a financial accelerator that we do not understand at any deep level but that has led to ten times the total losses in financial wealth of the impulse.

.... $2 trillion shocks to global wealth [] happen every several years, every time there is a recession or a big rise in the prices of natural resources. But financial distress of the magnitude we see today happens once a century. Since the Bank of England developed its lender of last resort doctrine in the 1830s, we have only had two episodes this bad: the Great Depression and today.

If I had to guess, I'd say the financial accelerator was so outsized this time around because of the size and scope of the uncertainty it generated. During an oil shock, say, or a dotcom bust or a Latin American default, investors have at least some idea of which investments are going to be hardest hit and — more importantly — which ones aren't. But this time around, because of the size of the initial losses and their fundamental opacity, every investment has become suspect. After all, until the global derivative chains are somehow unwound, virtually every bank, hedge fund, and corporation with any serious exposure to modern financial instruments is — maybe, possibly — bankrupt. A housing bust wouldn't normally affect IBM very hard, for example, but what if it turns out that IBM has a bunch of CDS counterparty exposure to mortgage losses somewhere on its books? They probably don't, but how sure are you of that? Multiply that uncertainty by every company in the world, and you get $17 trillion in losses.

Eventually, I guess, the housing market will bottom, the toxic waste sloshing around the financial system will once again have a reasonable range of values, and the question of who has exposure to the losses will start to get narrowed down. Until then, the risk premium will probably stay sky high.

*John Thain's Bonus

| Mon Dec. 8, 2008 3:15 PM EST

JOHN THAIN'S BONUS....The Wall Street Journal reports on the latest in the bonus soap opera:

Merrill Lynch & Co. chief John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered securities firm's compensation committee is resisting his request, according to people familiar with the situation.

....A few months ago, when the board began seriously considering 2008 bonuses, a proposal was presented to the compensation committee by Merrill that Mr. Thain should be paid in excess of $30 million, according to people familiar with the matter. That number has since come down in recent talks with various board members and Mr. Thain has recently indicated to committee members that $5 million to $10 million is more reasonable.

Well, that's mighty big of him, isn't it? Especially for a guy who got a $15 million bonus just for signing on at Merrill a year ago.

But garden variety outrage isn't what I'm after here. What I want to know is: what was Thain's bonus plan when he was hired? According to the Journal, "Merrill shares were trading above $50 when he was hired, and his pay package was structured heavily toward his ability to increase the price by another $40 or more. Merrill's shares have fallen steadily this year, closing Friday at $13.04 in 4 p.m. New York Stock Exchange composite trading."

Look: the plan he signed is the plan he signed. If his bonus was based on increasing Merrill's stock price, and instead their stock collapsed, then he shouldn't get a bonus. Instead of just saying so, though, Thain and the compensation committee will apparently go through something that's become standard American CEO kabuki, in which the comp plan is essentially rewritten if "bad luck" reduces bonuses below a level that's tolerable to our titans of industry. In this case, Thain's argument is that he saved Merrill by selling it off to Bank of America, a deal that BofA had been lusting over for ages and that required, according to news reports, little more than a couple of days to put together.

This isn't a matter of outrage toward John Thain personally. For all I know he did the best he could with the hand he was dealt. But that doesn't matter. He's getting paid plenty of money for showing up to work, and arranging a shotgun marriage after presiding over a historic collapse hardly seems deserving of special attention. If he doesn't have the horse sense to figure that out on his own, BofA might want to think twice about keeping him aboard.

Abortion Politics

| Mon Dec. 8, 2008 2:46 PM EST

ABORTION POLITICS....In the New York Times yesterday, Ross Douthat made the case that hardline views on abortion didn't have much to do with the Republican defeat in November. I think he's basically right about that. Abortion just wasn't a high profile issue this year.

However, then he goes a step further, arguing that conservatives aren't really so very hardline on abortion these days anyway. "Compromise, rather than absolutism," he says, "has been the watchword of anti-abortion efforts for some time now." Steve Benen replies:

The evidence of conservative willingness to "compromise" on abortion is surprisingly thin. In 2005, for example, pro-life and pro-choice Democrats crafted the Prevention First Act, which aimed to reduce the number of abortions by taking prevention seriously, through a combination of family-planning programs, access to contraception, and teen-pregnancy prevention programs. Dems sought Republican co-sponsors. Zero — literally, not one — from either chamber endorsed the measure.

What's more, this year, pro-life activists in South Dakota and Colorado forced strikingly inflexible anti-abortion measures onto their statewide ballots. Both lost, but it was a reminder of the movement's "absolutism" on the issue.

There is, of course, another side to this as well. As Ross himself points out in his piece, the Supreme Court's ruling in Roe v. Wade means that "the pro-life movement is essentially trapped." He takes this to mean that pro-lifers can't offer any genuine compromises because Roe doesn't allow them, but there's more than a whiff of disingenuousness to this. After all, does anyone really believe that the pro-life movement wants to overturn Roe (and Casey) merely in order to open the door to European-style compromise on abortion law? Anyone care to sound out James Dobson on that notion?

The truth is more prosaic: pro-life activists have done exactly what you'd expect them to do. They've pushed for the most restrictive possible laws they can get away with, and in many states they've succeeded in making abortion de facto unavailable. If Roe were overturned, compromise would be the last thing on their minds.

Biden and the Senate

| Mon Dec. 8, 2008 2:13 PM EST

BIDEN AND THE SENATE....Harry Reid got some attention over the weekend for telling the Las Vegas Sun that Joe Biden should stick to his end of Pennsylvania Avenue after the inauguration:

In a move to reassert Congressional independence at the start of the new presidential administration, the vice president will be barred from joining weekly internal Senate deliberations, Senate Majority Leader Harry Reid said in an interview with the Las Vegas Sun...."He can come by once and a while, but he's not going to sit in on our lunches," Reid said. "He's not a senator. He's the vice president."

....A spokeswoman for the vice-president-elect said "Biden had no intention of continuing the practice started by Vice President Cheney of regularly attending internal legislative branch meetings — he firmly believes in restoring the Office of the Vice President to its historical role."

"He and Senator Reid see eye to eye on this," said Biden's spokeswoman Elizabeth Alexander.

This is fine, and certainly in keeping with tradition. But here's the funny thing: of all the things that Dick Cheney did to expand the role of the vice president, spending more time on Capitol Hill was one of the few that seemed pretty legitimate to me. The vice president is, after all, the president of the Senate, so the idea that he might spend a lot of time in the Senate cloakroom taking the temperature of presidential initiatives and just generally working to help round up votes — well, that doesn't really sound like much of an abuse to me. The fact that Republican senators tended to knuckle under to Cheney's strongarming says more about Republican senators than it does about whether the vice president is a good choice to liason with Congress.

Of course, all Reid has said is that Biden won't be welcome at Democratic caucus meetings, so maybe we're all reading more into this than is really there. That really was a bridge too far for Cheney, but there's plenty the vice president can do outside of formal caucus meetings if he wants to. And offhand, I can't think why he wouldn't want to.