Snowflakes in Hell

I’ve been reading Megan McArdle’s various posts about Ron Paul’s rather kooky idea about returning to the gold standard.  It seems to have brought the Ronulans out in force.  I love comments like this:

You are a clueless woman. I am just an engineer not an economist, and yet I know these things. A piece of sincere advice - you should stop posting on all matters economic. Focus on some birth control pills and stuff.

I am an engineer as well, and I also know a bit about economics, but I an also aware I know a tiny fraction of what Megan McArdle knows on the subject.   This sounds like a case of people hearing something they don’t want to believe, and attacking the messenger.  Truth hurts, I suppose.

You have to wonder if this sentiment is related to a string of faulty and dangerous products from China.

Clayton Cramer has this to say about the claim:

I find this claim implausible. Like nearly all human behavior changes caused by financial incentives, it operates at the margins. Where I live, the only regular destination that I can reach by foot rather than by car is my mailbox, which is a bit more than half a mile away. When I lived in West Boise, my job was 1 1/2 miles away. While I very occasionally walked or bicycled, cost was not a factor in the decision–simply because driving 1 1/2 miles was very, very cheap (about 3 1/2 gallons a month), and unless gasoline rose by $10 per gallon, the reduced driving cost was more than made up for with the inconvenience of not being to zip home to have lunch with my wife, and the cost of eating in the company cafeteria.

I agree.  One of the great ironies for me, when I was actively biking last year, was that I was spending more gas to bike than I would have if I just stayed home.   I enjoy both cycling and hiking, and both of them, for me, involve taking my bike, or my feet and backpack somewhere that I can do it.  I can cycle around my neighborhood, but that gets old.  To leave the neighborhood on the roads around here is taking your life into your hands.

So for me, higher gas prices mean less hiking and cycling, and thus I get fatter, not thinner.

Megan McArdle, writing at her blog’s new location over at the Atlantic, explains why she thinks WHO rankings of health care system quality are off. I’ve always been a fan of her health plan.

UPDATE: She has more here, here and here.

As long as some of us are blogging about “Sicko”, I thought I’d link to two great health care posts from my favorite econ blogger here and here:

In the United States, government at its various levels now accounts for roughly 45% of health care spending. (And by “now”, I mean 2004, the latest year for which OECD data are available. In 2004, of course, the government provided little prescription drug coverage. Remember that fact; it will become important later.) The United States spends about 15.3% of total GDP on healthcare. That means, for those following along at home, that government spending on health care consumes about 7.7% of GDP.

Canada spends 9.9% of GDP on healthcare. France spends 10.5% of GDP. What is the magic route by which we are going to cover all the people not currently covered by government insurance for 2.2-2.8% of GDP?

The answer to that I think is easy:  the government is going to ration health care down to that level if it’s determined to only spent 10% of GDP or thereabout on health care.  I doubt voters will be that determined, however.   Read the whole thing.

I should probably say, before I delve into the subject of gas prices, that I come from an oil family. My grandfather worked for an oil company. My father works for an oil company. So do my cousin and Aunt. I decided to make my career in another industry that’s hated for providing people with useful and essential products: pharmaceuticals.

Another blogger asks:

Speaking of Jericho, if people can go that NUTS over a TV series, why can’t John and Jane Q. Public stage an uprising against high gasoline prices? Are we sheep?

Because gas prices aren’t something that we can do anything about. They are driven by market factors that no individual or group of individuals control. Unless you want to pressure the President to nuke China and India, gas prices are going to be high.

Factors that are contributing to high gas prices:

1. High crude prices driven by volitility in the nations that provide it. Most world oil producers have shitty governments.
2. Demand from China and India driving up demand for existing oil supplies. That’s more than 2 billion people who all want to drive like Americans do.
3. Americans love to drive, and they like to drive big cars, and drive them a lot more in the summer.
4. Refinery shutdowns around the country that are a result of refiners not doing regular maintenance. Because gas prices are high, the costs of shutting down refinery units is high in terms of lost production.
5. We’ve switched from using MTBE as a anti-knock and oxygenating agent to the much more expensive Ethanol. Thanks corn lobby!
6. We haven’t built a new refinery in 29 years. Thanks EPA and NIMBYs!
7. A patchwork of environmental regulations prevents gas from one area being sold in another. The gas formulation for Philadelphia is different than for Houston.

But if you can find somewhere I can set nuts that would solve all these problems, I’d be willing to chip in.

UPDATE: A lot of folks have brought up the issue of the gasoline tax.  Getting rid of gasoline taxes, in the short term, would not lower prices.  In the long term, it would put more profit back into the industry and encourage more resources to be invested in refining and distribution, but over the short term the current price is set by where the supply equals the demand, and tax relief, in the short term, does nothing to increase the supply of gasoline.

The Pittsburgh Penguins have become the latest sports franchise to hold the state of PA hostage so they wouldn’t have to get their own financing for a new arena. Today, Gov. Ed Rendell announced a deal that would keep the Penguins in Pittsburgh. The Penguins had threatened to leave to Kansas City, MO if they could not secure a new arena when their lease with the 40 year old Melon Center expires at the end of this hockey season. In this new deal, the Penguins will get help from PA slot parlor revenue.

A Pennsylvania law signed last year allowed for a certain number of slot parlors to be built in the state. A percentage of the revenue from the slot machines will go towards reducing property taxes. Another portion of the revenue is slated for other economic stimulus projects. However, there is absolutely no evidence that a stadium provides any sort of economic boost. In fact, studies have shown that, on average, they reduce workers’ incomes by $47 per year. Further more, a 2004 study showed that teams never need help in financing the stadiums. The stadium generate enough revenue to cover construction costs and more.

People can try to spin this, saying that it’s slot machine money and not taxes that will go towards financing the arena. I contend that with Pennsylvanians looking down the barrell of a 1% increase in the state sales tax and other ills such as our crumbling transportation infrastructure and our awful inner city crime rate, the slot machine revenue could be put to better use than helping to keep hockey, a second-rate sport, in Pittsburgh. I also contend that slot machines are just another tax, one that disproportionately affects the poor - you don’t see people with a lot of money habitually gambling at slot parlors.

Lastly, Mario Lemieux completely disrespected the people who paid money to watch him play for the Penguins during his career. The Penguins have some of the best attendance figures in hockey, and it’s a sham that he would even consider giving up standing room only crowds 17,000 strong to play rent free in front of 7,000 “fans”.

This Sunday Inquirer piece sums up what’s been a bad year and a bad week for Philadelphia teachers. Teachers and aides have been attacked, assaulted, and threatened by students. Things got so bad at West Philadelphia High school that the principal was removed earlier this week. And then things got even worse by last Friday, so the school district decided to split the school up four ways to reduce the number of students.

The Philadelphia Federation of Teachers is pointing the finger at the school district for under-reporting the incidences. Also, even though incidences may get reported, violent students may just get shuffled around to different schools. Most of the time, the student stays at their current school: according to one study, 19 out of 100 of the worst cases of assault (called Level-2) result in the student getting moved. While the Philadelphia Schools CEO Paul Vallas said that students who assault teachers will get an immediate 10 day suspension and possibly get sent to an “Alternative School”, he is facing a surprise $36 million deficit. It is this hole in the budget which forced the district to cut back on hall monitors.

While the Philadelphia Federation of Teachers’ head Ted Kirsch can clamor for the district to “Put money in the schools,” he is failing to mention that two years ago, he had nearly twice the number of hall monitors than this year, and there were still 897 reported cases of students assaulting teachers. There were 791 reported incidents last year. This school year, to date, there have been 409.

When dealing with problems in a system, you isolate the component that’s causing the problems, fix it, and the system works like it’s supposed to. This is true if you’re fixing cars or writing computer software, but it’s different when it comes to the social fabric. Change one part of the social fabric, and every other component reacts, changes, and possibly disrupts other parts. The struggle in Philadelphia schools may actually have nothing to do with the amount of funding it receives, whoever is principal at West Philadelphia High, or how many bouncers you have roaming the halls.

Philadelphia is a hostile business environment with its wage tax on those working in the city regardless of where they live and those who live in the city, regardless of where they work. There also exists a business privilege tax. Philadelphia is the second most heavily taxed city in the country. Over the past 30 years, Philadelphia has hemorrhaged population and business have gone with them. So even if these students settle down and get a modicum of education, where are they going to work?

David Simon, who wrote the book Homicide: A Year on the Killing Streets and is a producer and writer for HBO’s The Wire, summed this up perfectly in an interview with Reason Magazine.

For 35 years, you’ve systematically deindustrialized these cities. You’ve rendered them inhospitable to the working class, economically. You have marginalized a certain percentage of your population, most of them minority, and placed them in a situation where the only viable economic engine in their hypersegregated neighborhoods is the drug trade. Then you’ve alienated them further by fighting this draconian war in their neighborhoods…The solution is to undo the last 35 years, brick by brick. How long is that going to take? I don’t know, but until you start it’s only going to get worse.

While Philadelphia can’t and won’t just up-and-end the war on drugs, which is a good chunk of Mr. Simon’s solution, they can do something about the business climate in Philadelphia. And by demolishing the wage tax and the business privilege tax, they will experience some truly delightful un-intended consequences when the students actually start giving a damn.

I got into stripping because I like money. This is one of the few stripper stereotypes that actually applies to me. I really, really like money. I don’t just like having it; I like reading about it, thinking about it, studying modern and historical economics, and discovering how other people think about and handle it. I don’t even mind losing it that much because I learn more about it that way.

I started my first business when I was thirteen (it wasn’t exactly a lemonade stand, either. I made more running that business than I did when I was eighteen and finally got my first “real” job as a loan processor). At fifteen I had an E*Trade account and various DRIPs. At sixteen I was an eBay Powerseller. I’ve never been highly creative or skilled in any specific area. The one thing I’ve always considered myself really good at is finding ways of turning some money into more money. The only thing missing for me was a decent source of income in the first place. That’s why I started stripping.

Very, very few strippers do this job for the sheer love of it. A few do. They tend to be frustrated burlesque performers or ex-ballerinas who never quite made it to the big leagues. The vast majority of us do it for the money. The attitudes towards the money is what differentiates us from each other. I classify dancers into five categories:

The Subsistence Stripper

In most clubs, dancers set their own schedules. In some places this means signing up for shifts a week or a month in advance. Where I am this means that whenever I feel like working I show up at one of the several clubs I am hired at and say I’m working that night. A Subsistence Stripper shows up the day before rent is due or the day after her car breaks down. She only works when she needs money. If she needs $400 to pay her rent she will stay at work until she has $450, and then pack her bags and go home, happy that she has an “extra” $50 to buy groceries the next day. These are girls who do this job because they can’t handle a job with schedules and responsibilities. If they were forced to get a “normal” job they would fall into the broader category of “people who can’t hold down a steady job.” Subsistence Strippers don’t generally pay taxes, and may even collect government benefits. Their tax evasion is unlikely to ever be detected since they don’t actually make (or spend) very much on an annual basis. This group is a small minority, but they stand out because the nature of the business allows them to continue their bad habits unchecked. Drug users are most likely to fall into this category.

The Student Stripper

Student strippers fall into two categories: students who strip and strippers who go to school. The superficial difference is which activity a dancer was doing first, but the bigger difference is in her attitude towards stripping. I greatly prefer to work with strippers who go to school. Students who strip have other income sources to fall back on, whether that is parental support or student loans. Some of them just do it for fun - a rebellious lark. Most do it for spending cash or to offset school expenses not covered by loans. Either way, they don’t have a real, pressing need for money and a lot of them don’t take the job seriously. These are the girls who are most likely to treat the job like a big party and get drunk at work or spend their money on drugs.

Strippers who go to school tend to be more serious about work, since the reason they are going to school is because they’ve been stripping awhile and want to get out of it. They are women who support themselves and are paying their tuition with the cash they earn stripping. They’re usually balancing pretty heavy schedules and want to maximize their time at work.

Students who strip can have all sorts of career aspirations, but I’ve noticed that a few professions seem to be very popular among strippers who go to school: nursing, cosmetology, massage therapy, and real estate. This makes sense, as these careers require certifications that can be achieved in much less time than a B.A.

Either way, The Student Stripper views stripping as her job for the moment - a means to an end - with the end being some sort of professional career.

The Job Stripper

The vast majority of women who strip fall into this category. For that matter, most workers in any industry in any part of the world fall into this category (that is say, the broader category of Job Workers.) The Job Stripper works 4-5 shifts a week, just like she would at any other job. Depending on the particular town and club where she works, and her own skills, she is likely to bring in anywhere from what your average college graduate working in a professional field would make to what your average doctor or lawyer makes. In other words, the Job Stripper makes enough to at least comfortably support herself. Like most people, however, she spends virtually every dollar she earns and then some. Like most people, she has anywhere from a few hundred to a few thousand dollars in the bank, but never enough to withstand any real financial hardship. On the plus side, a lot of strippers don’t even bother with credit cards, so she may not have any credit card debt. On the negative side, she’s also unlikely to have bothered with health insurance or even the most basic retirement savings, since Americans are trained to think these things are the responsibility of the employer first, the government second, and the individual last.

A Job Stripper may think that since she makes as much as a doctor does she should live at the same level a doctor does. The flaw in this thinking is that while a doctor can easily practice medicine well into her sixties or later, strippers have a relatively short shelf life. Stripping is incredibly physically demanding work. It takes a definite toll on the body. Even if a woman exercises, eats well, and avoids excessive drinking and smoking, age still shows on the face. The older one gets, the more important it is to have money set aside for plastic surgery, laser treatments, Botox, etc. to keep her looking as good as possible and maximize her earning potential. Even in a best-case scenario, most women have to retire from dancing by the time they hit their mid-forties at the very latest. In all honesty, the Job Stripper who faces retirement isn’t really much worse off than your average American who is downsized and faces a forced career change at midlife. Most Americans are woefully unprepared for retirement and saddled with massive debt to boot. The biggest disadvantage the retiring Job Stripper faces is that she may never have learned how to deal with petty, demanding bosses, boorish, judgmental coworkers with whom she’s expected to cooperate (not compete), get up at 7 AM, AND she’s going to have to take a pay cut and downgrade her lifestyle. This is the eventual unglamorous fate that awaits most strippers.

The Supplemental Stripper

A decent number of women with professional jobs strip one or two nights a week for extra money. Some of them are former Student Strippers. I have encountered women with a variety of day jobs (including multiple women with Masters degrees) who dance for extra money on the side. It’s interesting to note that most strippers who do have day jobs have a job they went to school for. You don’t meet many strippers who also work at McDonald’s because those girls realize very quickly that their day job isn’t worth keeping. Women in professional jobs tend to keep them because it’s hard to explain to your loved ones that after four years of college and another five years of building your resume you’ve decided to quit to take your clothes off full-time, even if it does mean doubling your income. Some keep their day job for the benefits, like health insurance, stock options, 401(k) contribution-matching, etc. Some eventually just quit their day job because it’s kind of depressing to work in a stuffy office all week for what you can make in one or two nights of stripping. Many of those who do find themselves moving to the next category:

The Investor Stripper

This is the category I fall into. We’re a small minority, but more numerous than most people would expect. We work as much as or more than Job Strippers. I work 4-5 days a week. Some very ambitious Investor Strippers work 6-7 days a week. We giggle and flip our hair while telling customers we like to go out to bars dressed in skimpy clothes and pick up hot guys, but we really just go home and read The Street. Investor Strippers treat stripping like a business, not a job or a party. We declare our income on our taxes and take all the deductions we can. We have health insurance, 401(k)s, and a variety of goals. I know one girl who has the goal of having a million dollars in savings and her mortgage paid off by the time she retires. Another has the more modest goal of simply amassing $100,000 and deciding from there what she wants to do with it. I simply plan on dancing until I have enough passive income to replace my income from stripping, or until I find a business that is more interesting and lucrative to me.

In my opinion, dancing as an investment is the best reason to dance, and the only reason for me. Given the social stigma and the judgment I have faced from my own family, I don’t think I would make the choice to dance for just a little extra spending money, nor would I be happy sinking it all into material possessions and a comfortable (but temporary) lifestyle. I have to make sure it pays off for me in a big way. Of course, for someone with a more open-minded family than my own this wouldn’t be as much of a consideration. Still, given the stereotyping and judgment that anyone working in the sex industry in America faces, I think all strippers should take the attitude that “the best revenge is living well.” That’s what I do.