The Washington Post nods approvingly at some reforms to the present patent system proposed by Sens. Patrick Leahy and Orrin Hatch:

The U.S. patent system lags woefully. One example: Patents in the United States are given to those “first to invent.” This approach is out of step with the rest of the world’s “first to file” approach and is highly inefficient. It invites people to come out of the woodwork years after a product has been on the market to claim credit and demand royalties.

The secretive and lengthy U.S. process also too often results in patents for products that are neither novel nor innovative. It leaves manufacturers vulnerable to infringement lawsuits and damage awards long after their products have gone to market.

While they’re at it they might think about banning the execrable software and business process patents.

Another problem with our patent system is actually more a problem with our legal system. The present system allows large corporations to infringe at will and disincentivizes creation. For every story like that of Robert Kearns there’s a hundred little guys whose rights were simply ignored and were worn down in the courts by big companies.

An op-ed in the New York Times proposing a new government-guaranteed annuity system highlights what I think is the greatest problem with Social Security. I don’t think the greatest defect is that it’s a Ponzi scheme as many aver. By definition it needn’t be a Ponzi scheme as long as outlays are limited to revenues. IMO the greatest problem is that for too many people there is just no level of frugality which will enable them to save enough that they can live off the proceeds for however long they live after they’re unable to work.

I have a speculative question. Add a wrinkle to Drs. Hu and Odean’s proposal linked above. Assume that contributions into such an annuity plan were mandatory and add to it a means-tested federal supplementary contribution to such a plan as a substitute for Social Security. What would be the advantages and disadvantages of such a system over the present system of retirement income?

A hip-shot reaction to the idea suggests to me that such an approach has a number of advantages over the present system but has the disadvantage that it might encourage idleness. What do you think?

I agree with a number of the points made in David Leonhardt’s post/column on the problems with higher education but I disagree vehemently with this:

We know which colleges admit the best-prepared group of high school graduates (Harvard and the other colleges atop the U.S. News ranking).

Indeed, I think that this is one of the bigger problems with higher education. This is either an exaggeration, misleading, or it’s a lie.

The key words in the statement are “best-prepared” and “group”, The flaw in the statement is revealed by an old joke:

Q: What do you call the guy who graduated last in his class from medical school?

A: Doctor

There is no uniform, reliable method for evaluating preparedness among all of the high school graduates in the country and the admissions standards are not uniform among colleges.

Q: What do you call the least-prepared (whatever that means) high school graduate admitted to Harvard?

A: “Admitted to Harvard”

While it might be true that as a group the 1,600 high school graduates admitted to Harvard every year are the best-prepared that says nothing whatever about whether as individuals they’re the best-prepared. It might be that the best-prepared 1,600 high school graduates in the country are spread out among 1,600 colleges most of us have never heard of. There’s just no way to tell. Additionally, since elite colleges in particular don’t publish their admissions standards and procedures USNWR is necessarily like an Olympic figure-skating judge: their rankings aren’t based solely on the performance you just saw but on the history of performances by the competitors. It could be in a given year that the 1,600 “best-prepared group of high school graduates” might be at San Diego State. There’s just no way to tell.

In an meritocratic utopia there would be no elite schools, on average any school would be as good as any other, there would be not only uniform admissions standards throughout the country but common admissions throughout the country (as exists among a group of upper Midwestern colleges). We are not living in a meritocratic utopia. I’m not arguing that we should be.

However, I’m skeptical of a system in which “the best and the brightest” is deemed synonymous with the graduates of a handful of (mostly) eastern colleges. Can we afford to write off so many of our best and brightest who don’t happen to bear the brand name?

For Christmas my wife gave me a game console-based fitness program, EA Sports Active 2. In our case it was for the Nintendo Wii but it’s available for XBox and PS3 as well. The entire program includes the DVD, a USB drive for saving the results the program tracks, a stretch band used in some of the exercises, and monitors that go on your left forearm and right upper thigh for monitoring pulse rate and motion. If you’ve got a Wii balance board (as we do) the program will use that, too.

I’ve been faithfully participating in the major activity of the program the “9 Week Fitness Program” for the last nine weeks. I more or less accomplished my goal—weight loss. Since beginning the program I’ve lost six pounds, a little less than a pound a week. That doesn’t sound like much but for me it’s extraordinary.

I’ve noticed that I’m a bit stronger than I was when I began the program. That, too, is extraordinary for me. Typically, it takes significantly longer for me to see results.

Discipline has never been my problem in maintaining my weight or in staying with a fitness program. The problem that I have is boredom and I found the graphics, activities, and computerized personal trainer of EASA 2 just interesting enough to keep with it. Next week I’m beginning another nine week program at an increased level of intensity. We’ll see how that goes.

Another problem is equipment. I don’t mean the equipment of the fitness system but my own personal physical equipment. I’m constructed very differently from most people. For example, my body temperature at rising is frequently around 92°F and it rarely goes above 96.5°F through the day.

The pain has been excruciating. Pain is something I live with on a day-to-day basis and the more I move the more pain I’m in. There are trade-offs in life and right now I’d rather be stronger and leaner and put up with more pain. Next year I might choose differently.

I suspect that the motion-sensing capability of the Wii and the XBox Kinect is the future both of videogaming and fitness training. As these gadgets become more sophisticated they’ll become more effective, more entertaining, and more responsive. I’m genuinely surprised that there don’t appear to be any role playing or first person shooters that exploit the features that this generation of game consoles (and add-on peripherals) brings to the party.

In a recent column E. J. Dionne makes what I believe is the incorrect assumption of believing that beneath pretense and facade there is something other than more pretense and facade:

Mayor Rahm. It will be a hoot. It could even be good for Chicago.

And in a way he has never had to do before, Rahm Emanuel will finally reveal who he really is.

One of the many dramas of a Rahm mayoralty – roll over, Fiorello La Guardia – will be its status as a controlled (or, perhaps, uncontrolled) experiment in how a brilliant political operative translates campaigning skills into governing achievement. Bill Clinton was an elected official who happened to be one of the country’s smartest consultants. Rahm is the go-to adviser who happens to be good at running for office.

Contrariwise, I believe that what you see is what you get and that Mayor-Elect Emanuel has already demonstrated his core principles: partisanship and self-aggrandizement. These are the perfect characteristics for partisan firebrand and Democratic fundraiser. I’m skeptical that they will be helpful in the one party town of Chicago. Mayor Daley’s genius was the ability to unite or at least mollify the fractious groups within the Democratic Party in Chicago contending for power and money. To date Rahm Emanuel has not exhibited those skills other than to get them to vote for him. Can they be generalized? We’ll see.

But, as Mr. Dionne observes, it is indeed time to pony up. There’s an anecdote (attributed to Reagan) about the difference between optimism and pessimism. The thrust of the anecdote is that the optimistic little boy digs furiously through the pile of horse manure, unshakeable in his confidence that there must be a pony in it somewhere. I think the anecdote as usually told is mistaken: a pessimist doesn’t fail to see the pony in the pile of horse manure. That’s a realist. A pessimist looks at a pony and sees a pile of horse manure. Mr. Dionne is furiously digging through the pile looking for a pony; I’m pretty sure I know what the pile is.

BTW, I can’t let this go by without comment. In writing this

As mayor, he’ll be forced to resolve some of the mystery that surrounds him: in the programs he cuts, expands or creates; in the taxes he raises – tax cuts aren’t an option, given Chicago’s deficits; and in how he deals with his city’s public employee unions. (Hint: Model how a Democrat can deal effectively with unions without joining your Republican neighbor in Wisconsin in trying to break them.)

Mr. Dionne displays some ignorance of Illinois, Chicago, and Emanuel. The Democrat-dominated Illinois legislature has already enacted into law what is materially the same thing as Scott Walker is trying to accomplish in Wisconsin. They just did it without public debate or scrutiny over a one day period, almost literally in the dead of night. And Mayor-Elect Emanuel campaigned on something very much of the sort. That’s why it’s hard for me to see any core principles other than partisanship in the squabble going on in Wisconsin.

I was unaware of this interesting, original research into the origins of Irish step dancing. I have seen step dancing and I have been to a football match so I think the connection is at least plausible.

Although I wasn’t able to post myself yesterday, I was able to read some blog posts. It occurred to me that there are a couple of bits of economic jargon that may prove helpful in some of the discussions of the situation in Wisconsin, the role of government, compensation, and so on. The two phrases are “market clearing price” and “deadweight loss”.

First, I want to commend Steven Taylor post at OTB disentangling the many issues that are being bundled together in the discussion of the controversy between Wisconsin’s governor and the public employees’ unions to your attention. I think it’s a very helpful contribution to the discussion.

On to the two phrases. There’s quite a bit of discussion going on about what the proper pay for public employees should be. James Joyner posted on the subject here and Alex Knapp post on it here. The tools they’re using to analyze the question are not only inappropriate, they’re counter-productive. So, for example, when James comments on teachers’ pay:

Schoolteachers, then, are part of an elite subsection of Wisconsin workers: the 25.4% who have a bachelor’s degree or higher. Many of them, in fact, have a master’s degree. Meanwhile, 45.3% of the state’s adults have a high school diploma or less.

And they do a job that we all agree is very important. Further, I think we can agree that getting an education is actually relevant to what they do on the job! Surely, then, we don’t want to pay them wages comparable to the 74.6% of workers who haven’t attained a college degree?

he’s effectively saying that a bachelors-only teacher who works a nine or ten month schedule should make more than police officers or firefighters, most of whom have high school only. Is that right? I think that the work that police officers and firefighters do is pretty important, too. I honestly don’t know whether we should be paying teachers or firefighters more and I don’t think that James or anybody else knows, either.

The confusion here is that he’s introducing a factor, investment in education, that, sadly, is irrelevant to compensation other than to determine return on investment. The way you determine whether you’re paying enough, too much, or just right is by determining the market clearing price.

The market clearing price of a good or service is the price when the quantity on offer is equal to the quantity demanded. In simplistic terms, if you turn away qualified candidates for a job, if there’s a waiting list for a job, you’re probably offering too much. We shouldn’t be trying to determine relative worth among dissimilar jobs in non-comparable circumstances in the hothouse of a bureaucract’s desk or as an exercise in abstract thought. The reason that the Soviets failed at it is not because they were evil or stupid but because it can’t be done. Trying to do so frivolous, futile, a waste of the public’s time and money, and a violation of fiduciary responsibility. It is both a crime and a mistake.

That brings us to “deadweight loss”. Alex writes:

But personally, I don’t see the point of comparing private vs. public sector compensation. For my own part, I think that public servants should be paid well. As economists are fond of pointing out, incentives matter. And good pay and benefits from the government helps to attract to the best workers to the government — which makes for a smoother running, more efficient government. Underpaying public servants, on the other hand, means that talented people will turn elsewhere — and that inevitably results in less efficient government.

There are so many things wrong with this statement, it’s hard to know where to start. For one, it fails to distinguish between intrinsic worth and extrinsic worth. If, rather than paying a starting kindergarten teacher $45,000 (as is the case in Chicago), you paid the starting teacher $4,500,000 would that result in better teachers or just teachers who are more motivated by money? I believe the latter.

I don’t believe that you want teachers whose main interest is becoming wealthy; I think that you want teachers whose main interest is teaching children. If you’re getting unqualified people, you don’t just need to increase the amount of pay you’re offering you need to raise the qualifications that are required. Doing the former without doing the latter in a bureaucratic system means although the intended effect may be to attract better candidates, the greater effect will be to pay the current (apparently unqualified) staff more. I don’t believe that produces “smoother running, more efficient government”. I believe it produces rapacious, avaricious government. Avarice is without limit. That’s why it’s considered one of the seven deadly sins.

However, there’s another reason that we should be thinking of right-pricing rather than just paying more and that reason is deadweight loss. In the sense that I’m using it deadweight loss is the loss in economic activity between paying the right price for something and overpaying for it and the loss in economic activity between doing whatever’s being done and doing what a market would have done. There is a deadweight loss of government activity. That is a fact. I am not arguing that we should have no government, merely that we should be very careful that we are getting the government we need and not a smidgeon more.

The problem with our economy right now is that we don’t have enough economic activity. If there were more economic activity people would be selling and buying more and more people would be employed. We do not have excess economic activity to burn and allocating resources inefficiently is doing just that.

A 15 hour work day gets harder with every passing year. The precinct to which I was assigned was about a mile south and east of where I live in the charming Chicago neighborhood of Mayfair. Things went very smoothly and I got along famously with my co-workers. There were only three of us so we had plenty to do.

Voter turnout was a bit lower than I think it probably was in my home precinct, just shy of 50%. That’s still a bit higher than the city-wide turnout which is believed to have been between 40% and 45%, about what I’d expected.

I spent a bit of time chatting with the local precinct captains. If what they had to say is any gauge, support for Emanuel’s election from the powers-that-be may not translate into support for his policies and programs, whatever they might be.

We had no unusual incidents during the voting, things went well, the polls opened and closed on time, and we had tallied the vote, done the required bookkeeping, and cleaned up the site by 8:00pm.

Today I’m dragging myself around.

Rahm Emanuel has been elected mayor of Chicago:

Rahm Emanuel, a top adviser to two U.S. presidents who returned to Chicago just months ago, swept into the mayor’s office Tuesday, inheriting a city reeling from recession and promising to reshape City Hall.

He achieved what was once considered almost unthinkable, collecting a majority of support against five opponents in the first Chicago election without a sitting mayor on the ballot since 1947.

In a city with its share of racial divisions, Emanuel appealed to voters across those lines. He won the predominantly white wards of his former congressional district on the North and Northwest sides. And the former chief of staff to President Barack Obama also scored substantial margins in predominantly African-American neighborhoods.

“All I can say, you sure know how to make a guy feel at home,” Emanuel, who faced a high-profile legal challenge to his residency, told a packed room at a plumbers union hall on the Near West Side. “Because of the people of Chicago, this is the warmest place in America.”

The lines quoted above are the closing lines of Mayor-Elect Emanuel’s victory speech. As most such speeches are it was pretty incoherent other than a shout-out to departing Mayor Daley. We are unlikely to see his like again. He came into office as a manager and, simultaneously, a hereditary insider. He governed as a consummate politician.

The results of the election were

Clearly, I overestimated the number of African American votes that Moseley Braun would garner and that so much of the vote that I expected to go to her would go to Emanuel instead. I expected her to get about half the black vote. She received about half that. Otherwise, the results are about what I expected.

Now Chicagoans are wondering what next? Emanuel is no Daley and I’ve been frank in my skepticism that the skills that have brought him to prominence will make him a good mayor. My greatest concern is that we’ll see a return to the status quo ante, the Council Wars of the 1980s, jockeying for position until Emanuel leaves the mayor’s office for his next position whatever that might be.

Interesting times.