Tuesday, March 31, 2009

Unfunny Three Stooges?

NYMag declares Jim Carrey, Sean Penn and Benicio Del Toro to be unfunny.

Seems like a bum rap to me.

1. Jim Carrey is the new Curly

Obviously, the comedy merits (or lack thereof) of Jim Carrey are, more or less, common knowledge. You like "Ace Ventura" and "Liar, Liar," or you don't.

Carrey is at his best when he downplays the kookiness, as he did in Peter Weir's "The Truman Show." or "Eternal Sunshine of the Spotless Mind" which was directed by Michel Gondry and written by Charlie Kaufman.

Carrey's comic persona has an element of creepiness, exploited to comic effect in Ben Stiller's underappreciated "The Cable Guy." If you liked Stiller's recent "Tropic Thunder," and you haven't seen "Cable Guy," add it to the Netflix queue.

2. Benicio Del Toro is the new Moe

Not an automatic pick for the role, but Del Toro has demonstrated comic talents before.

Benecio managed to do some terrific pratfalls as a crooked cop in Robert Rodriguez's "Sin City," including getting dunked in a toilet. He was similarly effective in Guy Ritchie's comic thriller "Snatch", in which he committed a robbery while dressed as a Hasidic Jew.

But Del Toro's best comic credential is his bizarre turn as Doctor Gonzo in Terry Gilliam's film version of Hunter S. Thompson's "Fear and Loathing in Las Vegas." Del Toro gained forty pounds to play a gun-toting, sex-crazed maniac, tweaked on a fictional drug called adrenochrome. Nothing on Del Toro's resume indicated that he could perform this role, but he subsumed himself in it and matched the chameleon-like Johnny Depp in weirdness.

3. Sean Penn is Larry

Sean Penn is known for his self-seriousness about his politics and his craft. But he was very funny as a neurotic jazz guitarist in Woody Allen's "Sweet and Lowdown."

Sunday, March 22, 2009

Populist rage set to derail economic recovery.

Maybe it wasn't a good idea to stoke a campaign against Wall Street greed, when we were depending on Wall Street greed to fuel our economic recovery. The Obama administration has been seeking private investors to help it buy toxic assets from crippled banks.

No private investors want this stuff under normal market conditions, and the government doesn't want to be responsible for figuring out the prices for the assets, nor does it want the taxpayers to take on all that risk. So, Obama's plan is to use the TARP money to provide incentives for private entities who can invest in this stuff to buy it from the banks that can't get healthy with this stuff on their balance sheets.

The incentive for these private partners is obviously profit. But AIG employees found out this week that making money while in partnership with the government is dangerous.

Of course AIG was bailed out because it would have failed otherwise. The private partners in purchasing these assets aren't failing or getting bailed out. But if they make a lot of money on this, and collect huge fees or pay large bonuses, they know that the distinction is not going to be important to financially strapped taxpayers who will be really angry to see rich guys on Wall Street collecting huge checks from a government-funded plan.

These guys don't want to get perp-walked before a Congressional committee, like $1-per year Edward Liddy did last week. They certainly aren't going to be interested in taking on risk in this deal if they fear Congress is going to pass a tax bill to confiscate any profits they might earn from it.

Obama knows the difference between the partners the administration is trying to attract for the bank rescue and the bailout recipients, but if the profits of these partners become a hot potato, nobody expects the President to expose his neck to explain to voters who are losing their homes how some of the guys collecting seven-figure checks are good guys.

Meanwhile, former New York governor Eliot Spitzer is pretending to be surprised that the bailout funds the government put out to prop up AIG and prevent it from defaulting on its agreements is being used to prop up AIG and prevent it from defaulting on its agreements.

Friday, March 20, 2009

Is the AIG bonus tax a Bill of Attainder?

Legal blog Above The Law wonders whether the AIG bonus tax is an unconstitutional bill of attainder.

A bill of attainder is a legislative act declaring someone a criminal. Since this confiscation is done through taxation rather than criminal punishment, the bonus tax is not technically a bill of attainder.

The claim that the bonuses are unconstitutional, I think, has to be framed as a violation of the rights to due process and equal protection under the law.

The narrative that the lawyers opposing the tax might use is that this confiscatory act was fueled by violent populist rage, targeted at specific people, and culminated in a confiscation of property from individuals who had no representation, without any trial or finding by a jury, as a punishment.

In support of such an argument, the analogy to a bill of attainder is certainly relevant; what Congress is doing here is arguably precisely what the framers intended to prevent by banning such laws. However, the Constitutional prohibition on such acts doesn't resolve this issue because the bonus tax is technically distinguishable.

The success of such an argument also hinges on whether this tax can be distinguished from taxes that have been upheld in the past (there were constitutional challenges to the income tax).

Regardless, this whole bonus crusade is destructive and idiotic. Grandstanding politicians are pounding a simple and symbolic issue, because they aren't smart enough to address the real problem.

This is wasting the time of officials who need to be working on the plan to get toxic securities off of institutional balance sheets, and its undermining the ability of Obama and the Treasury to operate at a time when they need to be able to act decisively.

The $165 million Congress is trying to claw back is dwarfed by the amount of wealth that has been destroyed while officials were jostling to get in front of television cameras to pretend to be outraged over bonuses everybody knew about weeks ago.

And when all the rage these legislators are stoking gets innocent Americans killed, I hope they can live with that

Saturday, March 14, 2009

Madoff and his victims

Joe Nocera at the New York Times agrees with me that the credulity of Madoff's victims allowed the fraud to happen, and goes so far as to call them accomplices in the threat of their own assets.

I'm not sure that their failure to diversify among managers is really a fault; diversification is supposed to protect investors against fluctuations in a single sector, not against massive fraud on the part of money managers. I feel very bad for the individual investors who lost money to Madoff.

The real accomplices, though, were the institutional investors and the funds-of-funds who funneled money to him and did not figure out what was going on, or those who did, and pulled their money out.

I'm not support the Madoff investors' demands for a bailout though. No other investors who have been punished in this securities market are getting one. I'm sure there are some tragic autoworkers someplace who worked 30 years for GM and put all their savings in company stock, and they're wiped out too. Ownership of company stock was a cultural norm of investment banks, so those guys had their savings and their jobs wiped out at the same time.

Stuff is hard all around.

Wednesday, March 11, 2009

Better late than never

In 1861, watchmaker Jonathan Dillon inscribed a secret message into Abraham Lincoln's pocket watch.

In 1906, Dillon told the New York Times that the inscription said "The first gun is fired. Slavery is dead. Thank God we have a President who at least will try."

This week, the Smithsonian cracked open the watch, and found that the watch is actually inscribed: "Jonathan Dillon April 13- 1861 Fort Sumpter was attacked by the rebels on the above date J Dillon. April 13- 1861 Washington thank God we have a government Jonth Dillon."

The Times published a correction to the 1906 article today. That will teach them to trust some guy a hundred years ago.

Here is the Times article about the watch.

Rush to Judgment

David Frum mentions, in his interesting conservative take-down of Rush Limbaugh, that Republicans dominated the college-educated vote in every presidential election since the inception of exit polling, until 2008, when Obama beat McCain by 8 points among B.A holders.

Reagan also dominated the youth vote, though the pendulum has since swung heavily the other way.

The Republican party's recent attempts to find its own Obama resulted in the unfortunate televised State of the Union response by Bobby Jindal, and RNC chair Michael Steele's awkward and widely mocked attempts to connect to "hip-hop" voters.

In the meantime, Limbaugh has been there to shout as the party floundered for real leadership. The GOP could certainly do with more Frum and less Limbaugh right now.

Madoff and the SEC

Slate's "Big Money" says Madoff's fraud exposes how bad the SEC was at doing its job. I don't know that this is true.

Sure, the SEC ignored the detailed memo submitted by dogged whistleblower Harry Markopolos, but all those submissions were anonymously submitted, because Markopolos feared retribution by Madoff. Government agencies get a lot of mail from cranks, and it doesn't seem efficient or desirable in a free society to launch federal investigations on the strength of anonymous accusations.

We can regret, in hindsight, that the SEC didn't catch Madoff sooner, but the fact that the SEC didn't launch an investigation over the anonymous Markopolos memo isn't a basis for criticizing the agency; if anonymous tips start bringing down government heat, we'll replace the possibility of an undetected fraud with the certainty of malicious and false anonymous tips damaging honest business.

And it would be unfortunate to tolerate such excess, because we don't need more oversight from the SEC to protect against people like Madoff. He operated with limited oversight because his clientele was rich and sophisticated, and should have been able to watch out for their own interests.

There are a whole lot of specialized entities that only manage money for wealthy and institutional investors, precisely because the SEC allows such funds to operate with little regulatory oversight on the premise that these investors can protect themselves from fraud.

Funds that are managing the savings of ordinary workers and families face much more stringent regulatory scrutiny because these investors are thought to be more vulnerable to fraud and less capable of understanding where their money is going.

But the fact that some sophisticated investors failed to protect themselves doesn't disprove the presumption that they were capable of doing so. Any of the fund managers who were directing capital to Madoff could have done the same analysis Markopolos did.

Increased SEC examination of lightly-regulated funds will consume public resources while destroying the abilities of these funds to develop proprietary investment strategies.

The funds chose to be hedge funds in the first place because they saw more upside to lighter regulatory involvement, even at the cost of closing off sources of capital who the regulators offer higher protections. The sophisticated investors chose to invest with the hedge funds, anticipating higher returns, even though they knew other types of funds offered more regulatory protection for investors.

After 9/11, the government created its new TSA agency to manage airport security. Now, before travelers get on an airplane, they must throw away their toothpaste, strip off their shoes and belts, and often submit to pat-downs. For this embarrassment and inconvenience, travelers get almost zero marginal safety benefit.

Putting similar inconvenient restrictions on investment would probably offer a similarly marginal benefit at the much higher cost of delaying recovery, especially since the Treasury is relying on hedge funds to buy toxic securities as part of its bank rescue.

The lesson of Madoff is greater skepticism of too-good-to-be-true returns and more diligence by investors. It may be appealing to call for a regulatory environment where this sort of thing cannot happen, but the cure would be worse than the disease.

Monday, March 9, 2009

Stem Cell Research

Congratulations to President Obama for reversing George W. Bush's absurd restrictions on federal funding for embryonic stem cell research.

William Saletan at Slate is concerned we're going to lose our souls over this stuff. He shouldn't worry too much; there's no serious moral problem with this research, because a complete genetic code is a necessary but not sufficient component of humanity. That means that embryos are not people. They're not proto people. They're human genetic material, but they are not human beings.

An embryo lacks agency. It lacks self awareness. It lacks the capacity to experience pain. Insects are more capable of suffering than a human embryo. Moreover, these embryos, leftovers from in vitro fertilization, lack the necessary circumstances to ever become human.

An embryo outside a womb contains a recipe for humanity, but, in the same way that semen expelled in a condition where procreation is impossible, or an ovum expelled from the uterus through menstruation, it this genetic material does not exist in a context where it can become a person.

Even if the embryo were inserted into a hospitable uterus, it is more likely to die than to develop. The embryos that may be used for stem cell research would never have become people.

While there is room for argument over the point in development in which a fetus becomes an entity with moral significance, it's unreasonable to place that point at the moment the sperm and the egg fuse, especially where that occurs outside the human body.

The exaltation of morally insignificant genetic material is a rhetorical position that allows people of certain ideological persuasions to oppose recreational sex, contraception, fertility treatment and abortion.

These 'pro-life' individuals are perfectly willing to forego cures for terrible and deadly diseases to avoid making a rhetorical compromise. If anyone is missing a soul, it's them.

If my soul is in danger, it's because I've eaten the flesh of animals raised in hellish conditions and slaughtered for my consumption. It's because I've purchased products manufactured in foreign factories where wages and conditions are dismal. It's because I've gone about my business while the horrific genocide in the Sudan has raged unchecked.

All this stuff is worth losing sleep over. Tiny bundles of cells in petri dishes are of absolutely no moral concern.

Predicting the "Watchmen" box office

Slate.com's "Big Money" blog is predicting a $169 million total box office take for "Watchmen" based on the opening weekend gross and the Metacritic score.

I think their total might turn out a little low. Their calculation neglects to consider several major factors: the film's running time, the film's R rating, and the month of release.

Most of the films compared on Slate's chart were June/July releases, which tend to be very front-loaded because, during the summer's movie glut, the blockbusters come in rapid succession, often with only a week to make a mark. Theater booking and marketing is designed to really front-load those releases.

The film's three-hour running time also reduces the number of showings per screen, so there were less screenings of "Watchmen" per screen than there might have been for a shorter movie. That means there are likely to be viewers turned away from sold out shows, who will come back next weekend.

The film's R rating and its source material in a 1980's era comic book may also skew the audience older. Adult viewers are relatively less likely to pack a theater on the release weekend.

On the other hand, "300," a 2006 R-rated March release from the same director, also with mediocre reviews, roughly tripled its opening weekend take, so there may be something to Slate's model.


Fish at the NYT is upset today because he is accused of "Neoliberalism." He characterizes this as an ideology that solves everything with markets, and he points to Ronald Coase as one of its proponents.

Fish seems to want to separate ethics from efficiencies, and that makes no sense. Destroying economic value makes society poorer, and a series of destructive economic decisions collectively make society materially worse-off, increasing misery, poverty and want.

A few Marxists may continue to hold that a relatively wealthier society with high inequality is ethically preferable to a relatively poorer society with less inequality, but otherwise, most ethical frameworks do, in fact, try to preserve things that are of value, rather than destroying them.

A number of philosophers define ethical goods in terms of utility. Neoliberals don't oppose state intervention in markets; they oppose the destruction of value and inefficient mechanisms that prevent utility-maximizing outcomes.

The state is implicitly involved, for example, in the Coase hypothetical involving the factory and the stream, because there has to be a rights framework to determine how the burden will be distributed.

The dispute between the fisherman and the factory is a very direct example of a market failure requiring a legal correction. If there is no state mechanism to protect the fisherman's rights, the factory owner will pollute without regard to the damage to the fish, and the fisherman will bear the cost.

This is an economic externality, where part of the cost of economic behavior is borne by someone who is not a participant. The market will not account for this external cost, and the state must step in to correct the externality.

The notion that efficiency generates the best possible outcome merely instructs the state in how to solve the problem; i.e. by awarding damages to the fisherman, or facilitating a settlement between the factory and the fisherman, instead of allowing the fisherman's livelihood to be destroyed without affording him compensation, or shuttering the factory to preserve the stream.

I assume Fish is being accused of neoliberalism because his previous columns have suggested that academic tenure creates value-destroying situations. This characterization is incorrect; Fish seems to argue against expansive academic freedom and tenure protections as a moral bad. The neoliberal would disagree with Fish, arguing that tenure, which is an agreement mutually reached between universities and professors, is a value-maximizing arrangement in which the benefits of giving the professors broad discretion in their activities and near-immunity from termination exceed the costs.