Whatever

• Down with Doom
• The 100 Greatest Movie Insults (NSFW)
• Another plot by Wal-Mart to tick off somebody
• Space porn
• Solace for guitar

The Science and Art of Prediction Markets

What constitutes a good question for a prediction market? Obviously, for the question to be valuable the answer should provide information that was not available when the question was originally asked. Otherwise, why ask the question. Value, however, is only one aspect of a good question. For prediction markets to function in a useful manner the questions that are asked must also be constructed properly. There is both a science and an art to this process.

The Science

There are three criteria to keep in mind when constructing a question for a prediction market:

• The correct answer must be concrete
• Answers must be determined on specific dates
• Information about possible answers can be acquired before the settled date

Concreteness is important because it settles the question being asked - the result is not open to interpretation. An example of a question with a vague answer would be "What policy should the U.S. government enact to encourage economic growth? A) Subsidizing green energy, B) free trade, C) fiscal austerity, D) health care reform." One problem here is that the time frame to accurately answer this question could be extensive. Also, the complexities of economic growth make it difficult to tease out the individual variables that would be necessary to concretely answer the question. If two or more answers are correct (whatever that may mean) then the market may end up reflecting the value judgments of the participants, not objective knowledge. This type of question is more suited for a poll rather than a prediction.

Not only should answers be concrete, there should be some point in time when each answer can be determined to either have occurred or not have occurred. A question that never gets resolved can hamper the prediction process by reducing the incentive to invest in that market. (Can a non-expiring question be valuable? Could the ongoing process of information discovery be useful? Questions to ponder.)

This doesn't mean, however, that every answer must be determined on the same date. Wrong answers can be closed as the process unfolds. Once the correct answer is determined, however, the market should be closed. For example, take the question "Which candidate will win the 2012 Republican Party nomination for U.S. President?" If this question is asked in January of 2012 there could be several possible answers (one for each candidate). As the year progresses to the Republican Party convention, several candidates will drop out of the election. The prediction market would then close out those answers (candidates) but stay open for the remaining answers. Weeding out wrong answers over time is part of the discovery process.

The final criterion - the ability to acquire information before the settled date - is what separates prediction markets from strict gambling. If all participants are in the dark about a question until that question is settled, then there is little value in asking the question. Prediction markets are powerful because they allow participants to impart some knowledge into the process over a period of time. The resulting market prices can then provide information that can be acted upon throughout the process. If participants cannot acquire useful information to incorporate into the market, then market activity is nothing more than playing roulette where all answers are equally possible until the correct answer is determined.

A good example to illustrate the above criteria is a customer satisfaction survey. Railinc uses a bi-annual (twice a year) survey to gauge customer sentiment on a list of products. For each product, customers are asked a series of questions the answers to which range from 1 (disagree) to 5 (agree). The answers are then averaged with a final score for each product ranging from 1-5 (the goal is to get as close to 5 as possible).

The following market could be set up for Railinc employees:

What will the Fourth Quarter 2010 customer satisfaction score be for product X?

• Less than or equal to 4.0
• Between 4.1 and 4.4 (inclusive)
• Greater than or equal to 4.5

The value of this market is that Railinc management and product owners may get some insight into what employees are hearing from customers. Customer Service personnel could have one view based upon their interactions with customers, while developers may have a different view. Over time, management and product owners could take actions based upon market movements.

As far as concreteness is concerned, the final answer for this question will be determined when the survey is completed (e.g., January 2011), and it will be a specific number that falls into one of the ranges given by the answers.

This market also satisfies the last criteria regarding the ability to acquire information before the market is settled. This is important because this is where the value of the market is realized. As Railinc employees (i.e., market participants) gain knowledge over time they can incorporate that knowledge into the market via the buying and selling of shares in the provided answers.

The Art

In the example given above regarding the customer satisfaction survey, the answers provided were not arbitrary - they were selected to maximize the value of the market. This is where the art of prediction markets is applied.

If the possible answers for a customer survey are 1-5 why not provide five separate answers (1-1.9, 2-2.9, 3-3.9, 4-4.9, 5)? Why not have two possible answers (below 2.5 and above 2.5)? The selection of possible answers is partially determined by what is already known about the result. In the case of the survey, past results may have shown that this particular product has average a 4.1. It is highly unlikely that the survey results will drop to the 1-1.9 range. Providing such an answer would not be valuable because market participants would almost immediately short that position. This is still information, but it is information that is already known. What is desired is insight to what is not known. The answers provided in the above example will give some insight into whether the product is continuing to improve or whether it is digressing.

So, the selection of possible answers to market questions must take into account what is already known as well as what is unknown. What do you know about what you don't know?

Conclusion

Good questions make good prediction markets. Constructed properly, these questions can be a valuable tool in the decision making process of an organization.

Whatever

• Perpetual Storytelling Apparatus
• What do you know about what you don't know?
• Django
• I don't know what we did but I know we needed it (??)
• "In the long run we are all dead." Really?

Introduction to Prediction Markets

Prediction Markets are an implementation of the broader concept of Collective Intelligence. In general, Collective Intelligence is an intelligence that emerges from the shared knowledge of individuals which can then be used to make decisions. With Prediction Markets (PM), this intelligence emerges through the use of market mechanisms (buying/selling securities) where the pay out depends upon the outcomes of future events. In short, the collective is attempting to predict the future.

Prediction Markets should be familiar to us because a stock market is really just a forum for making predictions about the value of some underlying security. Participants buy and sell shares in a company, for example, based on information they feel is relevant to the future value of that company. A security's price is an aggregated bit of information that is not only a prediction about the future, but is also new information from which more predictions can be made. That last part is important because prices are information that cause participants to act in a market.

A real-world example of using PMs to make decisions is Best Buy's TagTrade system. This system is used by Best Buy employees to provide information back to management on issues like customer sentiment. The linked article explains one particular incident:

TagTrade indicated that sales of a new service package for laptops would be disappointing when compared with the formal forecast. When early results confirmed the prediction, the company pulled the offering and relaunched it in the fall. While far from flawless, the prediction market has been more accurate than the experts a majority of the time and has provided management with information it would not have had otherwise

Another interesting example comes from Motorola and their attempts to deal with idea/innovation requests from their employees. Their ThinkTank system was set up to allow employees to submit ideas on products and innovations. Those in charge with weeding through these requests were initially overwhelmed. To improve the process, Motorola used PM software to allow employees to purchase shares in the submitted ideas. At the end of 30 days the market was closed and those ideas that had the highest share price got pursued, and employees holding stock in those ideas got a bonus.

(Some other companies using Prediction Markets are IBM, Google (PDF), Microsoft, and Yahoo! Some of these companies use internal prediction markets (employees only) while others provide external markets (general population). The Iowa Electronics Market (IEM), associated with the University of Iowa, uses PMs to predict election outcomes. IEM has been in existence for over 20 years, and has studies showing their predictions being more accurate than phone polls.)

The bonus paid out by Motorola points to an important aspect of PMs - incentives. With good incentives participants stay interested in the process and look for ways to make more accurate predictions. Driving people to discover new information about future events can lead to interesting behavior in a company.

Another key aspect of PMs is the idea of weighting. That is, the ability of traders to put some weight behind their predictions. Those who are more confident in their predictions can purchase/sell more shares in those outcomes. Contrast this with a simple survey where an expert's opinion gets the same weight as a layman's (one person one vote).

Railinc is now starting to venture into using Prediction Markets with Inkling's software and services. Some of the topics for which predictions could be made are bonus metrics, customer surveys, project metrics, and fun things like World Cup results. One thing that will be interesting to track over the coming months is the value of PMs in such a small company (Railinc has approximately 150 employees). Value from PMs tends to come from larger populations where errors can be canceled out and participation rates stay constant. The hope is that at some point these markets will be opened to various parties in the rail industry thereby increasing the population and alleviating this concern. If the markets were opened up to external parties then the topics could be broadened to include regulatory changes, industry trends, product suggestions, and ideas to improve existing applications. So, the potential is there if the execution is handled properly.

Prediction Markets provide an interesting way to efficiently gather dispersed information. Using this innovative tool, Railinc will attempt to tap into the Collective Intelligence of its employees and, hopefully, the rail industry.

More to come.

ESRI and Python

Railinc is using ESRI to create map services. One of these services provides information about North American rail stations. The official record of these stations is in a DB2 database that gets updated whenever stations are added, deleted, or changed in some way. When we first created the ESRI service to access these stations, we copied the data from DB2 to an Oracle table, then built an ESRI ArcSDE Geodatabase using the Oracle data.

We had some issues with the ArcSDE Geodatabase architecture, and after some consultation we decided to switch to a File Geodatabase. This architecture avoids Oracle altogether and instead uses files on the file system. With this set up we've seen better performance and better stability of the ESRI services. (N.B: This is not necessarily a statement about ESRI services in general. Our particular infrastructure caused us to move from the Oracle solution.)

The question now is how do we keep the stations data up-to-date when using the File Geodatabase approach? Enter Python.

Rail Stations Data

Before getting to the Python script, let's take a look at the structure of the rail stations table.

• RAIL_STATION_ID - unique id for the record
• SCAC - A four character ID, issued by Railinc, that signifies the owner of the station
• FSAC - A four digit number that, combined with the SCAC, provides a unique identifier for the station
• SPLC - A nine digit number that is a universal identifier for the geographic location of the station
• STATION_NAME
• COUNTY
• STATE_PROVINCE
• COUNTRY
• STATION_POSTAL_CODE
• LATITUDE
• LONGITUDE
• LAST_UPDATED

Most of this data is going to be informational only. What's most important for this process are the latitude and longitude columns which will be used to create geospatial objects.

Python and ESRI

The end result of this process is going to be the creation of an ESRI Shapefile - a file format created and regulated by ESRI as an open specification for data interoperability. Basically, shapefiles describe geometries - points, lines, polygons, and polylines.

While working on this problem I found three ways to create shapefiles programmatically:

• The ESRI Java API
• The ESRI Python scripting module
• The Open Source GeoTools Toolkit

I chose Python over the others because of its simplicity and its history with ESRI. (I do have a working solution using the GeoTools Toolkit that I may share in a future blog post.) Now, to the script.

First, I'll create the Geoprocessor object using the ESRI arcgiscripting module specifying that I want output to be overwritten (actually, this tells subsequent function calls to overwrite any output).

import arcgisscripting, cx_Oracle, datetime

gp = arcgisscripting.create(9.3)
gp.Overwriteoutput = 1
gp.workspace = "/usr/local/someworkspace"
gp.toolbox = "management"

Next, I'll create an empty feature class specifying the location (workspace), file, and type of geometry. The geometry can be POINT, MULTIPOINT, POLYGON, and POLYLINE. In this case, I'll use a POINT to represent a station. At this time I will also define the projection for the geometry.

gp.CreateFeatureclass( "/usr/local/someworkspace", "stations.shp", "POINT" )
coordsys = "Coordinate Systems/Geographic Coordinate Systems/North America/North American Datum 1983.prj"
gp.defineprojection( "stations.shp", coordsys )

Now I need to define the structure of the feature class. When I created the feature class above I defined it with the POINT geometry. So the structure is already partially defined with a Shape field. What's left is to create fields to hold the station specific structure.

gp.AddField_management( "stations.shp", "STATION_ID", "LONG", "", "", "10", "", "", "REQUIRED", "" )
gp.AddField_management( "stations.shp", "SCAC", "TEXT", "", "", "4", "", "", "REQUIRED", "" )
gp.AddField_management( "stations.shp", "FSAC", "TEXT", "", "", "4", "", "", "REQUIRED", "" )
...
gp.AddField_management( "stations.shp", "LATITUDE", "DOUBLE", "19", "10", "12", "", "", "REQUIRED", "" )
gp.AddField_management( "stations.shp", "LONGITUDE", "DOUBLE", "19", "10", "12", "", "", "REQUIRED", "" )
gp.AddField_management( "stations.shp", "LAST_UPD", "DATE" )

At this point I have a shapefile with a feature class based upon the station schema. Before adding data I must create a cursor to access the file. The Geoprocessor provides methods to create three types of cursors - insert, update, and search. Since I am creating a shapefile I will need an insert cursor.

cur = gp.InsertCursor( "/usr/local/someworkspace/stations.shp" )
pnt = gp.CreateObject("Point")

I've also created a Point object here that I will use repeatedly for each record's Shape field in the feature class.

Oracle

Now that the output structure is ready, I need some input. To query the Oracle table I will use the cx_Oracle module. This is one of the reasons why I liked the Python solution - accessing Oracle was trivial. Simply create a connection, create a cursor to loop over, and execute the query.

dbConn = cx_Oracle.connect( username, pw, url )
dbCur = dbConn.cursor()
dbCur.execute( "SELECT * FROM RAIL_STATIONS" )

Now I can start building the shapefile. The process will loop over the database cursor and create a new feature class row, populating the row with the rail station data.

for dbRow in dbCur:

    pnt.x = dbRow[10]
    pnt.y = dbRow[9]

    pnt.id = dbRow[0]

    fcRow = cur.NewRow()
    fcRow.shape = pnt
    
    fcRow.STATION_ID = dbRow[0]
    fcRow.SCAC = dbRow[1]
    fcRow.FSAC = dbRow[2]
    fcRow.SPLC = dbRow[3]
    ...
    fcRow.LATITUDE = dbRow[9]
    fcRow.LONGITUDE = dbRow[10]
    fcRow.LAST_UPD = dbRow[11].strftime( "%x %X" )

    cur.InsertRow(fcRow)

dbCur.close()
dbConn.close()
del cur, dbCur, dbConn

First, the Point object created above is used to populate the feature class's Shape field. However, before doing that the InsertCursor is used to create a new row in the feature class (this acts as a factory and only creates a new row object - it does not insert the object into the feature class). Once I have the new row from the database I can populate all of the fields in the feature class row. Finally, I insert the row into the cursor (actually, the final part is the clean up).


One problem that took me a while to figure out (since I am new to ESRI and Python) was handling dates. My first pass at populating the LAST_UPD field was to use fcRow.LAST_UPD = dbRow[11]. Consistent, right? When I did this I got the following error:

Traceback (most recent call last):
  File "createStationShp.py", line 72, in 
    feat.LAST_UPD = row[11]
ValueError: Row: Invalid input value for setting

After searching around I figured out that what was coming back from Oracle was a datetime.datetime type that was not being accepted by the feature class date type. I found that I could convert the datetime.datetime to a string and ESRI would do the date conversion properly ("%x %X" just takes whatever the date and time formats are and outputs them as strings).

Conclusion

That's it. Now I have a shapefile that I can use with my ESRI File Geodatabase architecture. The next step is to swap out shapefiles when the stations data changes (which it does on a regular basis). Can this be done without recreating the ESRI service? Stay tuned.

References

• Scripting your ArcGIS Geoprocessing Tasks (Part 1)
• Scripting your ArcGIS Geoprocessing Tasks with Cursors (Part 2)
• Oracle+Python
• ESRI - Add Field (Data Management)
• ESRI - Create Feature Class
• Project basics

Geospatial Analytics using Teradata: Part I

In October, I (along with a co-worker) will be giving a presentation at the Teradata PARTNERS conference. The topic will be on how Railinc uses Teradata for geospatial analytics. Since I did not propose the paper, write the abstract, or even work on geospatial analytics, I will be learning a lot during this process. So, to help with that education I will be sharing some thoughts in a series of blog posts.

To kick the series off, let me share the abstract that was originally proposed:

Linking location to information provides a new data dimension, a new precision, unlocking a huge potential in analytics. Geospatial data enables entirely new industry metrics, new insights, and better decision making. Railinc, as a trusted provider of IT services to the Rail Freight industry, is responsible for accurate and timely dissemination of more than 10 million rail events per day. This session provides an overview of how Railinc Business Analytics’ group has implemented Active Data Warehouse and Teradata GeoSpatial technologies to bring an unprecedented amount of new Rail Network insight. The real-time calculation of Geospatial metrics from rail events, has enabled Railinc to better assess; 1) Rail equipment utilization 2) repair patterns 3) geographic usage patterns, and other factors. All of which, afford insights that impact maintenance program decisions, component deployments, service designs and industry policy decisions.

Below is a first pass at an outline for the talk. It is preliminary and will most likely change over the coming months.

1. Describe Railinc's Teradata installation
2. Describe Railinc's source systems
1. Rail car movement events
2. Rail car Inventory
3. Rail car health
4. Commodity
3. Describe our ETL process
4. Explain the FRA geospatial rail track data
1. Track ownership complexity
5. Tie 1-4 together
1. Current state of car portal
2. Car Utilization analytics
3. Traffic pattern analytics
6. Lessons learned
1. Study of different routing algorithms
2. Data quality issues

Item 5 is the problem - how can we tie our source systems together with geospatial data in a compelling way? One idea is a portal that provides information about the current state of a rail car. How would geospatial data fit into this portal? Location is the most obvious answer, but is there something more interesting? What about an odometer reading for a rail car? Outside of the portal there are ideas around car utilization and traffic patterns. I like the last two but I need to learn more about them.

These are some issues/questions I need to answer over the coming months. Along the way I plan on sharing information about implementation details, possible business cases, and any problems I come across.

The Good Old Days

The following was sent to the Raleigh News & Observer:

Paul Krugman is pining for the old days when the banking industry was boring. His analysis is flawed, however, because the New Deal Era regulations were changed, not because of some conspiracy, but because they were dysfunctional in the face of 1970s inflation.

One aspect of the regulations limited what banks could pay out as interest on deposits. In an era when prices are rising 10% a year, a bank paying out 3% can't compete with other investments. It was the Carter Administration (yes, the Carter Administration) that first acted to undo the vaunted New Deal regulations allowing more competition among financial institutions.

The current regulatory environment may not be optimal, but going back to a highly regulated system isn't the panacea that we are being sold.

Wartime stimulus?

Sent to the Raleigh News & Observer

I'm confused. Recently, letter writers as well as last year's Nobel Laureate in economics have pointed to the experience during World War II to justify an expensive stimulus package to get the economy out of recession. We have been told that the wartime spending created a thriving economy.

Yet, Sally Buckner, writing about her experience growing up during the war, said of the time, “Americans adapted to rationing of food, tires and gasoline; saved bacon grease, scrap metal and aluminum foil.” Hence my confusion. How is it that the government spending during World War II created a supposedly wonderful economy, yet citizens had to endure such privations? I am not doubting the veracity of Ms. Buckner's comments because her experience is backed by historical evidence. (In fact, she neglected to mention that it was also a time of wage and price controls.)

Historical evidence also suggests that it wasn't until after the war, when government spending was cut dramatically, that the economy returned to one that would be considered normal (i.e., production and consumption driven by consumers and not wartime needs). This occurred even as certain economists were claiming that the reduced spending would cause another Great Depression.

Whatever

• Irony
• The government will get you coming and going
• A politician not living up to a campaign promise. Yawn.
• So, if I'm normally frugal and should start spending when should I stop spending? If I'm normally a spendthrift and should save now, when should I start spending again? If I am neither what should I do? And economists wonder why they are looked upon with such contempt.

Whatever

• I'm confused. How do I determine whether or not this type of relationship is good or bad?
• At least something good is coming from this economic downturn
• So, Barney isn't satisfied with enabling one boom, he'd like to start another
• Shovel ready
• For performance problems

Whatever

• Ancient graffiti
• Great! Let's add stupidity to injury
• What Michael Phelps should be saying
• I know that sometimes hindsight is 20/20, but in this case foresight should have been 20/20
• Online media will never threaten print media
• Even Sith Lords need work
• Arnold Kling makes the case for profits
  

The Visible and Invisible Hands

The Visible Hand:

As President Obama and Congress barrel toward the latest emergency program to resuscitate the American economy, one question is looming over their search for a cure: Can the government fashion a fast and efficient economic stimulus while also seizing the moment to remake America?

For now, Mr. Obama and his aides are insisting they can accomplish both goals, following their mantra of using the urgency of the economic crisis to accomplish larger — and long-delayed — reforms that never garnered sufficient votes in ordinary times.

The Invisible hand:

All recessions have cultural and social effects, but in major downturns the changes can be profound. The Great Depression, for example, may be regarded as a social and cultural era as well as an economic one. And the current crisis is also likely to enact changes in various areas, from our entertainment habits to our health.

First, consider entertainment. Many studies have shown that when a job is harder to find or less lucrative, people spend more time on self-improvement and relatively inexpensive amusements. During the Depression of the 1930s, that meant listening to the radio and playing parlor and board games, sometimes in lieu of a glamorous night on the town. These stay-at-home tendencies persisted through at least the 1950s.

In today’s recession, we can also expect to turn to less expensive activities — and maybe to keep those habits for years. They may take the form of greater interest in free content on the Internet and the simple pleasures of a daily walk, instead of expensive vacations and N.B.A. box seats.

...

When all is said and done, something terrible has happened in the United States economy, and no one should wish for such an event. But a deeper look at the downturn, and the social changes it is bringing, shows a more complex picture.

In addition to trying to get out of the recession — our first priority — many of us will be making do with less and relying more on ourselves and our families. The social changes may well be the next big story of this recession.

Importance of Savings

Letter sent to the Raleigh News & Observer

In a recent editorial, Paul Krugman continues his cheerleading for the economic stimulus package by disparaging the idea of tax cuts. He says that the money will simply be saved, but savings has an important social function – it provides capital that helps create a progressing economy and gives people resources to weather economic storms. It makes me wonder if Krugman really understands the nature of savings.

He also claims that "when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts." Even if this magic government multiplier idea is correct, is it really wise to attempt to maintain consumption at levels that many agreed were unsustainable during the boom? If Democrats are so eager to use this crisis to remake society, why not let society adjust to a new consumption/savings pattern that allows for sustainable growth?

Krugman wants to claim that arguments against the stimulus package are fraudulent. Some of them may be, but some of his claims in support of the package are baffling, especially coming from an economist.

Whatever

• The wish list for remaking society. "Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before." How lovely.
• Here is a way to keep track of some of that "stimulation"
  
• "Congress gave final approval on Tuesday to a civil rights bill providing women, blacks and Hispanics with powerful new tools to challenge pay discrimination in the workplace." No, just the same old tool - the gun.
• Ok, here are some kudos
• Star Wars told by someone who never saw Star Wars

Obama the Great

The inauguration coronation of Barack Obama as the 44th President of the United States is done. While I can appreciate the significance and history of this moment, it seems that people need to be reminded that Obama is still mortal. Heck! Obama probably needs to be reminded that he is mortal.

Is it just me or has everyone come to believe that this man is omniscient, omnipotent, and every other omni-* you can think of? Every ill in the country world long history of human existence seems to have an Obama solution. I mean, how could you not get behind a man who will be able to definitively determine the champion of Division I College Football?

I think the history of his presidency is already in rough draft form and he will be considered one of the top four. He will be considered a great president because of his rhetoric, his ability to inspire people, and his “courage” to propose bold initiatives. If need be, the actual effects of his policies can be rationalized later by the court intellectuals.

It could be said that there is no way for Obama to rise to these high expectations, and that he is being set up for a big let down. I don't think, however, that the kind of mass orgasm we have seen over the past several months will be tempered by anything that will occur over the next few years. Like the gods of religion who continue to exist even in the face of the science that makes them irrelevant, the cult of Obama will outweigh any rational argument.

For how could any problem be the fault of Obama when he has staffed his administration with the brightest among us? Wise technocrats will be creating policy and the “right” people will now be in charge. Any difficulties we may face will inevitably be the result of some deficiency in ourselves.

Maybe I'm just too cynical. If so, Obama should be able to fix that as well.

Some other musings:

• Is dissent still patriotic?
• Party pooper
• Just plain yuck!
  

Alternate titles for this post: Omni-bama, The Great and Powerful Oz-bama, Oh, bama!

Failed Ideology

Sent to the Raleigh News & Observer

In advocating Obama's stimulus package, Paul Krugman takes another swing at Milton Friedman by comparing Friedman's monetary theory to the fiscal policy theory of John Maynard Keynes (i.e., large-scale deficit spending by government). Krugman says that “[t]he failure of monetary policy in the current crisis shows that Keynes had it right the first time.” This does not logically follow, however, because the failure of one theory cannot prove the validity of another. Maybe both theories are wrong.

The evidence showing that the large-scale government spending of the 1930s did not get us out of the Depression should show that Keynes' theory was flawed. Claiming, as Krugman has done in the past, that it was the massive spending during World War II that ended the Depression is a flawed notion as well because a command-and-control economy of rationing, price controls, and military production is not economic prosperity. In fact, it wasn't until the dramatic drop in spending after war that the economy got back to normal.

Krugman has claimed that it was a failed ideology that got us into the current situation. I’m afraid that Krugman’s ideology may make matters even worse.

No Herbert Hoovers

Paul Krugman, in his quest to justify increased government spending, claims that “the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.” This statement, however, is deceptive because every year of the Hoover administration saw an increase in federal spending.

One program, in particular, that the Hoover administration created was the Reconstruction Finance Corporation. The RFC gave billions of dollars in aid to state and local governments, banks, railroads, farms, and other businesses. It also provided funds for public works projects.

Now, it is true that Hoover attempted to balance the budget, but he did so by raising taxes. Claiming that he “slashed spending” is deceptive, and coming from Paul Krugman, it is most likely purposefully deceptive.

HT: Steve Horwitz

Bad Economics

I sent the following to the Raleigh News & Observer:

I know that it seems like common sense that the government should go on a spending spree now that consumers are becoming more frugal, but this is just bad economics even when it comes from a Nobel Laureate.

The "internal improvement" projects that are being called for must be paid for by taxpayers in some fashion. This will only crowd out private investment and prevent a more sustained recovery. Also, these projects will be allocated by the political process and not by consumer sovereignty. Without profit and loss considerations we will just be building bridges to anywhere.

We've just popped a bubble financed in part by private debt and irresponsibility. Let's not start another one with public debt that will burden the country for decades. Getting our houses in order, so to speak, both publicly and privately is needed now more than ever, even if it does mean short-term pain.

Whatever

• Unnecessary Greatest Hist albums
• With apologies to Led Zeppelin, "though the names may change sometimes, money always reaches the power"
• Oh geez...
  
• Rock or Vote
• Why we should let housing prices keep falling
• "Socialism is good for thee but not for me"
  

Whatever

• So, why should I believe him now?
• Radley Balko has some good incites into the recent McCain/Obama debate
• The Dark Knight/Toy Story 2 Mashup
• Earth from above
• Markets in everything
• Old school Star Wars
• Credit crunch? What credit crunch? Maybe it is only the big, "well-connected" banks that need help. The sky is not falling.