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Why do we force prospective college students to engage in exorbitant exaggeration?

A high school student has penned an open letter to the colleges that rejected her, published in the Wall Street Journal. 

I also probably should have started a fake charity. Providing veterinary services for homeless people's pets. Collecting donations for the underprivileged chimpanzees of the Congo. Raising awareness for Chapped-Lips-in-the-Winter Syndrome. Fun-runs, dance-a-thons, bake sales—as long as you're using someone else's misfortunes to try to propel yourself into the Ivy League, you're golden.

Having a tiger mom helps, too. As the youngest of four daughters, I noticed long ago that my parents gave up on parenting me. It has been great in certain ways: Instead of "Be home by 11," it's "Don't wake us up when you come through the door, we're trying to sleep." But my parents also left me with a dearth of hobbies that make admissions committees salivate. I've never sat down at a piano, never plucked a violin. Karate lasted about a week and the swim team didn't last past the first lap. Why couldn't Amy Chua have adopted me as one of her cubs?

Then there was summer camp. I should've done what I knew was best—go to Africa, scoop up some suffering child, take a few pictures, and write my essays about how spending that afternoon with Kinto changed my life. Because everyone knows that if you don't have anything difficult going on in your own life, you should just hop on a plane so you're able to talk about what other people have to deal with.

April Fool's

The Spaghetti Harvest Goes Forward

Blast from the past

I am not going to try to convince you that I'm converting to Zoroastrianism, or leaving journalism in order to pursue my dream of becoming an artisinal cheesemaker.  But I like a good April Fool's joke as well as anyone--emphasis on good.  Here's one of the best, from the BBC in 1957: 

A political science professor argues that yes, it did. Here's why I'm skeptical.

Late last week, I came across a fascinating argument from Thomas Oatley, a political science professor at UNC Chapel Hill.  Oatley suggests that the borrowing to fund the Iraq War actually caused the financial crisis.  Basically, the borrowing increased our current account deficit, which made the whole system unstable, and in 2008, it finally collapsed.  

Now consider the Iraqi case. The sharp increase of military spending sparked by 9/11 and Iraq followed a massive tax cut (and coincidentally, we had a massive tax cut in 1964). Like Vietnam, therefore, the US borrowed to pay for the War on Terror. If the Vietnam War experience is any guide, this budget deficit must have had consequences for US macroeconomic and financial performance. The deficit was larger and persisted for longer than the Vietnam case. I argue that the choice to finance the War on Terror by borrowing rather than by raising taxes worsened the US external imbalance and the resulting "capital flow bonanza" triggered the US credit boom. The credit boom generated the asset bubble the deflation of which generated the great global crisis from which we are still recovering. Obviously, it takes a lot of heavy lifting to get from the war-related budget deficit to the global financial and economic crisis. (That's why I am writing a book. I will begin posting chapters in the next week or so here if you are interested).

Regulatory considerations and the global savings glut may be important conditioning factors. But, the more I research this the more I conclude that these factors are less important than most of us believe. Hence my decision to compare the case to the Vietnam War experience and to the Carter-Reagan buildup sparked by Soviet invasion of Afghanistan in 1979. This was financed in the same way as the other two (budget deficits) and had the same economic consequences (housing bubble and the savings and loan crisis) as the War on Terror buildup.

So, I would argue that Operation Iraqi Freedom had a huge affect on the international system: it generated the largest economic and financial crisis the world has experienced since 1929. This massive shock continues to ripple through the global economy four years later, as the EU's current efforts to resolve the banking crisis in Cyprus demonstrate.

Annals of Monetary Policy

Will Iran Be the Next Hyperinflation?

Prices are skyrocketing as the country strains under sanctions

Iran is undergoing a brutal bout of inflation as a result of its ambitious nuclear program.  In response, the United States and Europe have tightened sanctions.  Effectively, Iran is cut off from trade, and trade, as any economist will tell you, enhances the productivity of your workers.  With the productive capacity of its economy plummeting, the government has resorted to the printing press in order to keep its bills paid.  Estimates of annual inflation range from 30% to 100%.  

This may be worth it if it gets Iran to abandon its nuclear program.  The fewer countries with nuclear weapons in the world, the better; increasing the number of states with weapons increases the risks that a weapon will get into the hands of an undeterrable lunatic.  But it's terribly hard on savers, and terribly bad for the economy as a whole.  High inflation destroys the ability to plan or invest in anything other than the most basic tangible assets. 

So will they be deterred?  Will they exchange their nuclear centrifuges for the right to buy goods on the world market?  Graeme Wood went to an Iranian resort to find out what Iran's inflation looks like.  He came back uncertain as to whether this would be enough to scupper the Iranian nuclear program:  

It’s not yet clear whom the Iranian working classes will blame for destroying their retirement savings. During my trip, no one mentioned any hatred for America—I’m Canadian, so they might have confided safely—or blamed America for the country’s ills. It’s at least plausible that Iranians would attribute their suffering to their own government. “Everyone knows there is corruption, and that the economy is mismanaged and inefficient,” says Mohsen Milani, a professor of international relations at the University of South Florida. “The big question is whether [sanctions] will have an effect on nuclear issues. And I believe they will. Elections are controlled and manipulated, but the candidate who can promise to end the sanctions is likely to win.” Salehi-Isfahani, the economist at Virginia Tech, points out that wages have mostly increased quickly to keep up with prices—although government-employee salaries have increased at only half the needed rate, and the economic situation has worn down optimism. “People are adjusting to lower real incomes,” Salehi-Isfahani told me. “But I doubt very much that they have adjusted to the lack of hope. The government can’t supply that just by keeping chicken cheap.”


Saturday Puppy Video

Fitzgerald v. Giant Costco Stuffed . . . Something.  

Department of Awful Facebook Memes

My unfavorite new Facebook meme is this bit of sillyness which has apparently been spotted everywhere from the feeds of my college friends to (allegedly) that of Richard Dawkins' Foundation for Reason and Science:


I immediately knew that this was a bit of nonsense for the simple reason that Easter is an English word.  The Greeks and Romans called it Pascha, which is why Easter is Pasqua in Italian, Pascua in Spanish, and Paques in French.  How exactly did the name of a Canaanite fertility goddess skip all the way to England from the Middle East without stopping in Rome or Byzantium?

Gay Marriage at the Court

Can Gay Marriage Solve Our Adoption Problem?

So many kids in foster care are waiting for a forever home. Why not let gay couples adopt them?

During oral arguments over gay marriage, Justice Antonin Scalia remarked that there is considerable disagreement among sociologists about the effect of gay parenting on children.  Having looked into this question a bit myself, my take is that this is not correct: there is no legitimate grounds for disagreement among sociologists, because neither side has any decent empirical evidence upon which to base an authoritative pronouncement.  The studies of the subject showing that gay parenting is no different from--or even better than!--heterosexual parenting tend to be, as sociologist Mark Regnerus notes, "small, nonrandom 'convenience' studies of mostly white, well-educated lesbian parents, including plenty of data-collection efforts in which participants knew that they were contributing to important studies with potentially substantial political consequences".  

Meanwhile, the main study showing negative outcomes--authored by one Mark Regnerus--has better methods, but is not studying the children of stable, committed gay couples who chose to have a child together, because until recently, there weren't many such couples who were able to adopt.  So it's hard to disentangle any possible negative effects from the effects of divorce and other family instability.  Trying to study a tiny minority with a random sample--even a large one--is very difficult, and maybe impossible.

Thus it seems to me that any authoritative statement about the effects of gay adoption mostly reflect the normative committments of the people making the statements, not The Voice of Science.  There isn't enough evidence either way for Science to have a sound opinion.

But in some sense, what does it matter?  Arent' any parents better than no parents?  Ezra Klein notes:

Virtual Markets in Everything

Diablo 3 Director Regrets Building an In-Game Market

Is the popular role-playing game having problems with its monetary policy?

I don't play many video games.  But I do play Diablo, ever since those far away days around 1997 when a few coworkers and I used to play at night, using the office LAN.  With Diablo III, my professional and recreational interests collided once again, because Diablo III included an auction house where players could trade items for either cash or game gold.  

For those of you who do not choose to spend weekend hours clicking madly on demons so that you can collect an ever-expanding variety of virtual magic hats, let me explain that this is a big departure.  In previous versions of the game, you could sell your stuff to in-game merchants (who would often turn around and sell you more magic hats).  To sell items to another player, however, you had to go to eBay or another marketplace, and auction it off.  Then once you'd paid up, the two of you would meet up in multiplayer mode, and you'd drop your magic hat so that they could pick it up.  

Diablo III changed this.  It created an auction house that was integrated with the game client, so that you could go sell your own magic items to other players.  Transactions could happen in either cash or game gold.  And Blizzard takes a 15% cut of the real-money transactions; the commissions that used to flow to eBay now accrue to them.  Meanwhile, the merchants in Diablo III seem to have been designed to steer you to the auction house.  It used to be that they'd pay, say, 50 gold for a regular warhammer, and sell the thing for 200.  Now they'll pay 12 and sell it for 312.  The markup is so absurd that it's barely worth borrowing picking up anything except special magical items.  

As with previous games that have experimented with trading systems, I expected this to offer a wealth of interesting new economic tidbits.  

Gay Marriage at the Court

Why Gay Marriage is Worth Fighting For

Boring, bourgeois gay marriage isn't a dystopian future. And it isn't just about the legal benefits.

I confess to being surprised at the reaction to yesterday's article on the boring, bourgeois future of gay marriage.  I expected people to point out--correctly--that I can't actually know this, and to say that in their opinion, I was wrong.  It's true.  I'm making a prediction about the future, and there's no way to know whether I'm right until, well, the future happens.  

What I didn't expect was for people to take this as some sort of veiled threat to gay people that they'd come to regret this quixotic battle for gay marriage.  For starters, I don't think it's quixotic.  Marriage is awesome!  I hope many more people do it.  I wish I'd done it sooner, except of course, that I only met my husband a couple of years before we got engaged, and I wouldn't want to be married to anyone else.  

Yesterday's post, while obviously speculative, was not some sort of elaborate concern troll.  I think that gay people will soon be able to get married throughout the United States, and that this will be good for them.  I'm very happy to think of loving gay couples settling down into the profound and wonderful banality of legal matrimony.  

I also happen to think, and hope, that the gay marriage revolution will be both cause and effect of a larger trend back towards a more traditional view of marriage as a lifelong project between two people who are expected to tough it out and build a life together unless their marriage is truly awful.  

The Rent is Too Damn High

New York City, NIMBY Paradise

New Yorkers genuinely believe that their housing restrictions are normal

Apparently, there is a popular impression of New York as "of New York as a builder-friendly city that’s constantly exceeding the bounds of rational development".

At least, the New York Observer thinks that New Yorkers think so.  I confess to being a little surprised by this news.  I was under the impression--correctly--that a combination of zoning ordinances, building permits, and local NIMBY opposition had made New York distinctly unfriendly to new development, and that it would be rational to build far more units than the city currently allows.  The average cost of a new home in New York city is $461,000, and in pricey Manhattan neighborhoods it's much higher.  Moreover, that figure includes a lot of studios and small one bedrooms that drag down the average.

Of course, if you live in Observerland, this may not seem so crazy.  True story: when my husband and I were getting ready to move in together, just a year or so after I'd relocated to DC, he pulled me out onto the porch in the middle of a house tour.  It was a lovely little two bedroom house in the U Street neighborhood--not big bedrooms, of course, but if we got a loft bed . . .  

"I'm sorry, but I can't do this," he began.  Cue atrial fibrillation on my part; I'd already arranged to break my lease, and also, I'd gotten rather fond of him.

Countdown to Obamacare

Will Obamacare's Exchanges Be Ready on Time?

The exchanges are the heart of the new health care system. There are increasing concerns that they may not be up on time.

There have been rumblings for a while about the possibility that the exchanges might not be ready in time to open on October 1st.  That's the date when the law says that they're supposed to be up and running, so that everyone can buy the insurance that they'll be legally required to have on January 1st, 2014.

I've been skeptical for a while.  It's a long time since I used to work on big IT installations, and maybe things have changed a lot.  But in my day (the late 1990s), I would have said there was no way that you could, starting in mid-February, get this kind of system up in time.  And mid-February was the deadline that HHS gave to the states to declare whether or not they would run their own exchange; until then, the government couldn't be sure how many it would be running in the states that declined.

You have a system that needs to interface with the IRS, a bunch of health insurers, and over 30state government systems in order to determine eligibility, and the amount of the subsidy.  You have very strict privacy and security requirements.  And you have six months.  I'm pretty sure my company wouldn't have taken the job.  I'm definitely sure we wouldn't have finished it by the deadline.  And we didn't even have the constraints that the federal government operates under: the onerous project bidding and procurement rules designed to prevent corruption.  Our clients were mostly banks, who could just pick up money and start hurling it at any problem they chose with no petty concerns about single-bid contracts.

Of course, I was on the server side, not the development side.  And it has been a long time; maybe these projects have gotten a lot easier to roll out.  (Readers who are doing these sorts of implementations now are invited to weigh in--particularly those who think it can be done.  I've heard a lot of IT folks saying it can't happen, not so many arguing that they'll be up and running come October 1st.)

Kathleen Sebelius thinks insurance isn't really insurance unless it covers routine expenses. This is exactly backwards.

How can insurance make everyone better off?  

After all, the insurance company has to make money.  That has to mean that the expected value of the claims they pay out is lower than the expected value of the premiums their customers pay in.  In some sense, then, the expected value of your insurance premium is negative.  

But insurance does make everyone better off, because it covers very large costs that most people would have trouble paying.  Even most really good savers would have a hard time replacing the value of their house, or paying off a $250,000 judgement for an auto accident.  The expected value of those incidencts is very, very negative--more than just the value of the cash, you have to factor in the horror of being homeless or bankrupt.  When you factor in the homelessness, the bankruptcy, and so forth, the slighly negative expected financial value is more than outweighed by the positive value of being protected against personal catastrophe.  Not to mention the peace of mind one gets from not having to worry about homelessness, etc.  

This is the magic of risk pooling.  But notice that it's the catastrophe which makes insurance a good deal.  You wouldn't get much value from buying "grocery insurance".  At best, you'd be paying an extra administrative fee to route your routine expenses through an insurer, rather than paying them directly.  At worst, you'll end up with bills skyrocketing as all sorts of perverse incentives appear.  After all, if the insurer is paying all your grocery claims, why not load up on filet mignon instead of ground turkey?

Higher Education Bubble

Why a BA is Now a Ticket to A Job in a Coffee Shop

The number of jobs requiring high-skilled labor has declined.

There's a growing perception out there that a college degree no longer delivers the value that it used to.


An employee takes orders at a Starbucks in Washington, D.C on December 27, 2012. (Drew Angerer/Getty)

Too many college kids are living in Mom's basement, or working at Starbucks.  Like most personal finance columnists, I get the letters from them: what do I do?  How do I fix this? For many, the answer is grad school.  But I get the letters from grad students too.  A while back, I found myself talking to a professor whose school has a number of impressive-sounding graduate programs that were originally conceived as add-ons for a professional degree in law or medicine or business.  They are now attracting a number of students who just go for the standalone degree.  He didn't understand what the career path was for these kids, and he wasn't sure that they did either.  

"It sounds good, so they can persuade their parents to pay for it," he said, a touch guiltily. 

Marriage at the Supreme Court

Why Gay Marriage Will Win, and Sexual Freedom Will Lose

In the future, gay marriage will not only be legal, but practically mandatory.

In some sense, it doesn't really matter how the Supreme Court rules on the gay marriage case it's hearing today.  The culture war is over on this front, and gay marriage has won.  Even if it loses at the Supreme Court this term, it will win in the legislatures . . . because it is already winning in popular opinion.  Few people much under the age of sixty see a compelling reason that straights should marry and gays should not.  For that matter, my Republican grandfather is rumored to have said, at the age of 86, "I think gays should marry!  We'll see how much they like it, though."

At this point, it's just a matter of time.  In some sense, the sexual revolution is over . . . and the forces of bourgeois repression have won.

That's right, I said it: this is a landmark victory for the forces of staid, bourgeois sexual morality.  Once gays can marry, they'll be expected to marry.  And to buy sensible, boring cars that are good for car seats.  I believe we're witnessing the high water mark for "People should be able to do whatever they want, and it's none of my business."  You thought the fifties were conformist?  Wait until all those fabulous "confirmed bachelors" and maiden schoolteachers are expected to ditch their cute little one-bedrooms and join the rest of America in whining about crab grass, HOA restrictions, and the outrageous fees that schools want to charge for overnight soccer trips.

I know, it feels like we're riding an exciting wave away from the moral dark ages and into the bright, judgement free future.  But moral history is not a long road down which we're all marching; it's more like a track.  Maybe you change lanes a bit, but you generally end up back where you started.  Sometimes you're on the licentious, "anything goes" portion near the bleachers, and sometimes you're on the straight-and-narrow prudish bit in front of the press box.  Most of the time you're in between.  But you're still going in circles.  Victorian morality was an overreaction to the rather freewheeling period which proceeded it, which was itself an overreaction to Oliver Cromwell's puritanism.  (Cromwell actually did declare a War on Christmas, which he deemed to be sensuous paganism.)

Two articles say boys were systematically exploited by predators. Is private schooling to blame?

When sex scandals erupted in the Catholic Church and Penn State's football programs, we heard a lot about how the sick culture and institutions of religion and football created a safe space for pedophiles. Why no similarly harsh words for private school?

Full disclosure: I didn't go to Horace Mann.  But I went to its nearest neighbor, Riverdale.  They were two of the three "Hilltop schools", green leafy campuses in the Riverdale neighborhood of the Bronx.  The biggest sporting event of our school year was not a football game, but a basketball match, the "Buzzell Game".  It was held in memory of a Horace Mann athlete who had succumbed to polio in 1950.  

And the schools were similar in many ways, though when I was there, Horace Mann was supposed to be the brain school and Riverdale had the jocks.  Both schools had gone co-ed in the 1970s, just a decade before I arrived; my graduating class was still 2/3 boys.  The old, somewhat cloistered atmosphere was gone, but traces of it still lingered at both places. I played basketball and ran track and cross country for the Riverdale Indians, a name that was changed to the Falcons sometime after I left, and so thoroughly scrubbed that school sources now talk about the Falcons playing games in the 1950s.

So you can imagine how shocked I was to read the stories of teachers molesting students, first from the New York Times Magazine and now from the New Yorker.

About the Author

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Megan McArdle

Megan McArdle is a special correspondent for Newsweek and The Daily Beast covering business, economics, and public policy. A former senior editor at The Atlantic and writer for The Economist, Megan has a diverse work history including three small startups and a disaster recovery firm at Ground Zero.

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