When I first heard that Apple iPhones were collecting location data on users, I was a little skeptical of the possibility that this was just a mistake. The data, you see, was collected in a .db file, and that's not really something you're likely to do by accident. If your intent is to hold just the current location data in memory (and there are plenty of good reasons to do that), you'd just hold it in memory. You wouldn't create a database structure to do it.

Well, according to the Wall Street Journal, my skepticism was warranted:

Apple Inc.'s iPhones and Google Inc.'s Android smartphones regularly transmit their locations back to Apple and Google, respectively, according to data and documents analyzed by The Wall Street Journal—intensifying concerns over privacy and the widening trade in personal data.

Google and Apple are gathering location information as part of their race to build massive databases capable of pinpointing people's locations via their cellphones. These databases could help them tap the $2.9 billion market for location-based services—expected to rise to $8.3 billion in 2014, according to research firm Gartner Inc.

Neither Apple nor Google have deigned to comment on this issue. If they actually have an explanation for this, that better change pronto.

Paul Ryan is "courageous" for proposing huge cuts to Medicare and Medicaid in order to finance tax cuts and balance the budget by 2050. But how about the Congressional Progressive Caucus? Their plan balances the budget sooner than Ryan's, and their numbers are more honest to boot. So why haven't they gotten any attention? Matt Steinglass thinks he knows:

The budget savings come from defence cuts, including immediately withdrawing from Afghanistan and Iraq, which saves $1.6 trillion over the CBO baseline from 2012-2021. The tax hikes include restoring the estate tax, ending the Bush tax cuts, and adding new tax brackets for the extremely rich, running from 45% on income over a million a year to 49% on income over a billion a year.

....Mr Ryan has been fulsomely praised for his courage. The Progressive Caucus has not. I'm not really sure what "courage" is supposed to mean here, but this seems precisely backwards. For 30 years, certainly since Walter Mondale got creamed by Ronald Reagan, the most dangerous thing a politician can do has been to call for tax hikes. Politicians who call for higher taxes are punished, which is why they don't do it. I'm curious to see what adjectives people would apply to the Progressive Congressional Caucus's budget proposal. But it's hard for me to imagine the media calling a proposal to raise taxes "courageous" and "honest". And my sense is that the disparate treatment here is a structural bias rooted in class.

Bingo! The Beltway elite mostly understands things like Medicare and Medicaid as academic subjects. They themselves don't really need them, so they can accept big cuts with considerable equanimity. But taxes are a different story. Higher tax rates affect them and their friends directly, so they're wide open to intellectual just-so stories about how high taxes are economically destructive.

This same personal dynamic also leaves them wide open to believing that entitlement cuts are courageous while tax increases on the well-off aren't. Ask a Wal-Mart clerk, though, and their life experience would probably push them in exactly the opposite direction. Neither one is inherently correct, but the difference is that Wal-Mart clerks don't usually get op-eds printed in the Washington Post. Beltway elites do. So one meme takes off and the other doesn't, even though both are equally rooted in little more than personal experience and class bias.

"Price elasticity" is a measure of how people react to rising prices. A high number means they cut back sharply when prices rise. A low number means they just suck it up and keep buying.

So what's the elasticity of oil prices? This is important, because it tells us, for example, how people are likely to react to higher taxes on gasoline. Will they use less and find other ways to get around? Or is it damn the torpedoes, keep burning the stuff, and figure out other places to cut back?

Stuart Staniford draws our attention to the latest estimates from the IMF, and as he says, they're pretty eye popping. Here's the table:

Take a look at the bottom row. "Non-OECD" means poor countries, and the IMF figures that short-term price elasticity in poor countries is -0.007, which means that a 1% increase in price leads to only a 0.007% decrease in consumption. Put another way, even a 50% increase in price leads to only a negligible 0.35% decrease in consumption1. Long-term elasticity is higher, but even here a 50% price hike would lead to only a 1.8% decrease in consumption.

The rich world is modestly more sensitive. In the short term, a 50% price increase produces a 1.2% decrease in consumption. In the long term, it produces a 4.7% decrease.

Part of the reason for these tiny effects is that income elasticity is quite large. That is, when income goes up, oil demand also goes up. In the short term, a 1% income increase in the poor world produces a 0.7% increase in oil demand. So as long as incomes are going up in the developing world (and they are), the effect of higher incomes swamps the effect of higher oil prices.

If these numbers are right, they're pretty stunning. Even in the rich world, it apparently takes massive price increases to significantly reduce the demand for oil, even over a 20-year horizon. In the developing world, forget it. As long as incomes are going up, demand will go up. Urk.

1Actually, elasticity isn't necessarily linear, so a 50% increase might have a bigger effect than 50 times a 1% increase. However, it's probably not wildly non-linear at these levels, so the response to a 50% price increase is still likely to be quite small.

Earlier this week, David Frum wrote that although he's been a Reaganite free market true believer for nearly 30 years, he recently realized that the bargain he thought he had made simply hasn't been kept:

Especially after 2000, incomes did not much improve for middle-class Americans. The promise of macroeconomic stability proved a mirage: America and the world were hit in 2008 by the sharpest and widest financial crisis since the 1930s. Conservatives do not like to hear it, but the crisis originated in the malfunctioning of an under-regulated financial sector, not in government overspending or government over-generosity to less affluent homebuyers. Fannie Mae and Freddie Mac were bad actors, yes, but they could not have capsized the world economy by themselves. It took Goldman Sachs, Merrill Lynch, AIG, and — maybe above all — Standard & Poor’s and Moody’s to do that.

....Speaking only personally, I cannot take seriously the idea that the worst thing that has happened in the past three years is that government got bigger. Or that money was borrowed. Or that the number of people on food stamps and unemployment insurance and Medicaid increased. The worst thing was that tens of millions of Americans — and not only Americans — were plunged into unemployment, foreclosure, poverty. If food stamps and unemployment insurance, and Medicaid mitigated those disasters, then two cheers for food stamps, unemployment insurance, and Medicaid.

Obviously Frum is still considerably to my right. There are just a lot of things we're never going to agree on. But it's nice to read this, and not because it moves Frum modestly in the direction of my own worldview. It's nice to read it because it's such an unusual concession to reality. The financial crisis of 2008 was a stupendous event, and it's frankly stunning to me how few people seem to have responded to it in any substantive way. Occasional throat clearing aside, it's been business as usual for a huge chunk of the political, business, and pundit class, especially on the right.

I just don't get that. The Great Collapse was a big enough, and unexpected enough, event that it should have changed your mind at least a little bit about something. If it didn't, you either have godlike powers of prognostication or else you've simply decided not to let real world events ever affect your worldview. I'm willing to put money on the latter.

Isn't multitasking a great subject? It must be since I keep coming back to it. Today, Matt Yglesias, who is still (barely) a twenty-something, says that he's long since figured out that true multitasking is impossible (i.e., literally paying attention to multiple things at once), but:

I’m never totally sure what it is that people mean by “multitasking.” Does switching between tasks rapidly count? I do that all the time. A little reading, write a post, respond to some emails, send some tweets, then do it all over again. That seems inherent to the life of the professional blogger. And I do think it’s scrambled my brain a bit, insofar as I find it much harder now to read long books than it was when I was in high school....I think people ought to try to distinguish between switching between tasks (useful as more kinds of tasks are invented) and actually trying to do multiple things simultaneously, which seems to me to be a fool’s errand.

Task switching is obviously a different thing than multitasking, and humans have been doing it for a long time. Anytime you get interrupted, either electronically or in person, you have to switch tasks at least briefly. And the cost of this is that you lose your train of thought and have to get it back when you return to your original task.

This is harder for some things than others. Blogging is obviously tailor made for task switching. Each blog post is a single short thought that doesn't require a ton of concentration to keep in mind. So if the phone rings or someone IMs you, it's not a big deal. Writing computer code, by contrast, is exactly the opposite: it usually involves keeping a complex problem in working memory for a substantial time as you put together a few dozen or hundred lines of code to address it. When I was in the computer biz, programmers complained bitterly whenever they were deeply into a tricky piece of coding and some yahoo product manager (i.e., me) would wander by their cubicle to ask them why they'd put a button in one place instead of another. Poof! Their concentration was broken and they'd have to spend several minutes regaining it after I left. I've done just enough coding myself to understand this state of mind perfectly, and this is no prima donna excuse making. It's absolutely real.

Still, not everything is like that, and I've always thought that although the media onslaught that bathes kids from earliest childhood had obvious drawbacks (most notably a shortening of attention spans), it probably also had advantages. The main one, it seemed to me, was that kids raised this way could probably task switch faster than older people like me. And who knows? In the world of the future, maybe that will be more important than having a long attention span.

But this is what makes the recent research on multitasking so dismal: it turns out that high multitaskers can't task switch faster than others. In fact, they're worse at it. They're worse at everything.

Now, who knows. Maybe experiments in the lab are incomplete. Maybe things will be different for kids who grow up this way from earliest childhood. Maybe. But I doubt it. More likely, critical brain functions are being lost, and nothing is being gained in return. It's kind of grim.

I'm forced to defend my honor again on taxes. But I want to make this fairly brief. I don't have a staff to run the numbers and I don't have access to the details it would take to do a tax exercise with precision. But that probably doesn't matter too much. Basically, I just want to put together a rough proof of concept showing how the kind of tax increases I have in mind to deal with the long-term deficit would (in my ideal world) hit the average family.

So here's what I did. Basically, I took the deficit reductions in the Rivlin-Domenici plan and converted them into one-third spending cuts and two-thirds tax hikes. Then I figured those tax hikes as a percentage of national income, rather than a percentage of GDP, since we're ultimately interested in how much of their income taxpayers will have to pay under my proposal. All of this jibed pretty well with the latest CBO report on the deficit, so I think the numbers are in the right ballpark. In fact, if anything I'm being more aggressive than I need to be.

So here's the way I figure it. In the medium term, we need to let the Bush tax cuts expire, allow the Medicare cuts in ACA to take effect, and cut perhaps another $50-100 billion per year in spending. This will wipe out the primary deficit and then some.

Then, between 2015 and 2030, we need to phase in tax increases that ultimately amount to about 7% of national income. The CBO has a nice table showing how national income is split up between different household income levels, so my task is to divvy up the tax increases so they add up to a total of 7%. Here's how I did it:

The top row shows the share of national income from each quintile. The second row shows how much additional income they'd pay in taxes by the time my full tax hikes were phased in. The poorest don't get hit at all. The 2nd quintile has to pay an additional 2% of their income in taxes. The middle quintile pays an additional 3% of their income. All the way to the top 1%, who pay an additional 12% of their income. All of this adds up to 7% of total national income.

Remember, this is only the tax half of the deficit plan. To make the numbers come out, you'd also need spending cuts amounting to about half of the tax increases. Beyond that, a couple of comments:

  • Conservatives will be aghast that I'm raising the effective tax rate on the richest 1% by 12 percentage points. But the rich have had a helluva ride over the past 30 years: their incomes have skyrocketed and their tax rates have gone down. Now the holiday from history is over. Sorry guys. And since I don't belong to a religion that pretends that higher tax rates on the rich will inevitably produce economic catastrophe, I'm free to simply allocate taxes in a way that's fair and equitable.
  • I'm making no assumptions about how we change the tax code to accomplish this. It might be a combination of income tax rate hikes, payroll taxes, carbon taxes, estate taxes, reductions in tax expenditures, consumption taxes, or anything else. All I'm saying is that after you figure out the incidence of whatever taxes you raise to get to 7% of national income, this is how I'd like to see it distributed.
  • As I suggested before, half the country would pay no more than an additional 3% of their income in taxes, and 80% of the country would pay no more than an additional 5% of their income. And this would be phased in gradually over the course of fifteen years. It's not pain free by any means, but it's not the end of the world either.

No one should take this too seriously. It's not a real proposal, the numbers are back-of-the-envelope, and trying to make plans on a 20-year horizon is a mug's game anyway. However, it does show that if we rein in the deficit with a 2:1 ratio of tax hikes to spending cuts, the tax increases can still be quite manageable.

The alternative, of course, is some pretty savage cuts in Medicare, Medicaid, and Social Security. If conservatives think they can sell this to the public as an alternative to tax increases like mine, more power to them. But I don't think they can. The public, bless their black little hearts, doesn't want program cuts or tax increases, but when they're finally forced to make a decision, as they will be, I think they're more likely to accept tax increases like mine paired with modest program cuts, rather than small (or no) tax increases paired with big cuts. We'll see eventually, I guess.

It's been a busy week in Libya news. First Britain announced that it was sending in some advisors. Then France began pushing for a 1000-person "humanitarian" force to be shipped in to protect aid shipments. A day later France and Italy both joined the advisor brigade. Simultaneously the United States announced it was sending $25 million in "non-lethal aid" to the rebels. And today we got this:

President Barack Obama has approved the use of armed Predator drone aircraft in Libya to improve the precision of low-level attacks on ground targets, Defense Secretary Robert Gates said Thursday.

The first Predator mission since Obama’s go-ahead was flown Thursday but the aircraft — armed with Hellfire missiles — turned back early due to poor weather conditions, Marine Gen. James Cartwright, vice chairman of the Joint Chiefs of Staff, said at a news conference with Gates....Cartwright did not specify what targets the aborted Predator mission Thursday was intended to strike.

As Adam Weinstein says, what could go wrong?

Matt Miller has gotten a lot of kudos this morning for his column pointing out that "The House Republican budget adds $6 trillion to the debt in the next decade yet the GOP is balking at raising the debt limit." I don't really read Miller much or know anything about him, but I gather that the reason he's getting a lot of attention for this unremarkable observation is that (a) he's normally a "a mellow, straight-laced guy," but (b) today's column is evidence that "the budget debate has driven him stark, raving mad." (That's Jon Cohn's take.)

Bob Somerby likes the column, but he's annoyed that Miller says he doesn't understand why the rest of the press corps keeps giving Paul Ryan and his congressional colleagues a pass on this. The problem, Somerby says, is that "it's fairly clear that he does understand":

Early in his column, Miller says he doesn’t understand why the press corps won’t criticize Republicans on this point. He doesn’t understand why they present Ryan as “courageous,” as “visionary.” And then, a mere six paragraphs later, Miller shows that he does understand! He says there’s a “meme,” a hunk of “conventional wisdom,” driving the press corps’ conduct. Miller doesn’t explain just what this “meme” is, nor does he explain how it got “established” as conventional wisdom. But presumably, he is referring to the Standard Press Novel in which Republican budget cutters like Ryan are inevitably said to be “courageous,” “bold” and “honest”—in which their contradictions and errors, no matter how severe, end up on the cutting-room floor.

These “memes” have been ruling much of our “journalism” for a good many years. To see this Standard Press Novel at work, just read through Jeff Zeleny’s “Political Memo” in today’s New York Times.

Hmmm. Yes. The Zeleny hagiography is worth reading. If you don't feel like instantly canonizing Ryan after you're done, you just haven't read it closely enough. You'd barely know the guy is even a politician, let alone a standard issue conservative ideologue pandering to his base at every opportunity and waving around all the usual bogus Heritage Foundation crap that all the rest of them do. That piece of the Paul Ryan Story just isn't part of the narrative.

Skin in the Game

Paul Krugman points out that healthcare "consumers" aren't really consumers at all in the traditional sense of the word:

Medical care is an area in which crucial decisions — life and death decisions — must be made; yet making those decisions intelligently requires a vast amount of specialized knowledge; and often those decisions must also be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping.

....The idea that all this can be reduced to money — that doctors are just people selling services to consumers of health care — is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society’s values.

But Niklas Blanchard objects that not all of medicine is practiced under life-and-death circumstances:

The actual truth of the matter is that the bulk of medical spending of the average person does not involve death at all...just nagging, often temporary, quality of life issues. In fact, outpatient care (which includes routine and sick visits to the doctor and same-day hospital visits), drugs and non-durables (which includes things like wheelchairs and other medical supplies), and administration account for ~2/3rds of all medical spending in the US.

This is true, but I think it still underestimates just how much knowledge consumers can bring to bear on medical decisions. Take me. By coincidence, the last few months have been absolutely stuffed with visits to the medical-dental-industrial complex. My doctors keep getting worried about things and insisting that I should have some test or other done. On Monday I'll have yet another — easily the most disagreeable of the lot — and I fully expect that it will show exactly the same thing as all the others: nothing. This has collectively cost thousands of dollars and annoyed me endlessly, especially since I've been certain the entire time that there was nothing wrong with me.

Of course, the fact that I'm certain there's nothing wrong with me doesn't mean there's actually nothing wrong with me. I don't know squat about medicine, after all, and a few days on the internet isn't really going to make me any more qualified to decide if I ought to get a followup ultrasound to check out those spots on my gall bladder. None of this has been life and death, and I wasn't under any special pressure to figure out what to do, but that made no difference. As a practical matter, getting a second opinion would have been more expensive than just having the tests done, and trying to otherwise second guess my doctor would have been pretty stupid.

I think there are plainly some areas where forcing people to think harder about medical care (i.e., asking them to fork over some of their own money) can make sense. But it has to be done smartly, since the impact of foregone medical care is often just higher expenses down the road. As an example, we might very well be better off if we not only didn't charge copays for statins and blood pressure meds but actually paid people to take them. They're that cheap and effective, and the bigger problem here isn't overuse, it's getting people to take the damn things when they're told to.

So yes: let's work on incentives, at both the patient, doctor, hospital, and insurance level. But I don't think we should kid ourselves into thinking that this will affect two-thirds of medical care. More likely, it's something like ten or twenty percent. For the rest, like it or not, we just have to follow our doctor's advice.

Gregg Easterbrook:

Obama said last year that itemized deductions for the wealthy should be phased out — then on his own tax return, claimed a huge itemized deduction. Until those who advocate higher taxes for the well-off practice what they preach, the national debt situation may only get worse.

This is one of the most annoying tropes in existence, on both the left and the right. The point of laws is to provide a level playing field, and no one is a hypocrite for following existing law even if they think it should be changed. That goes for congressmen who accept earmarks even though they think earmarks should be banned, it goes for drivers who park for free on city streets even though they think parking meters should be installed, and it goes for rich people who pay taxes at the current rate even though they think that rate is too low.

No one is obligated to be a sucker. The whole point of taxation is that it's a collective enterprise: I'm willing to pay my taxes for the common good as long as everyone else is doing it too. But until then, there's no reason that I should impoverish myself (or my constituents) while everyone else is merrily taking full advantage of current law. Fairness matters, and that ain't fair.