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Date: Sat, 8 Sep 2007 04:13:08 -0400 (EDT)
To: improvetheworld &AElig umich.edu
From: Daniel Reeves <dreeves &AElig umich.edu>
Subject: Re: mind the gap

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You might be right about CEOs.  I really don't understand what's going on=
=20
there.  Something about them sitting on the boards of each other's=20
companies?  We know of at least a few recent cases of gross malfeasance.

But let's shelve that for now and focus on the desert island. That's=20
actually the subject of my next email that I've been working on since=20
James came out as pro Daddy Model.

(It's true, Trixie and I agreed that whoever wins this argument in the=20
desert island case, has won the argument.)


--- \/   FROM Eva Revesz AT 07.09.08 00:42 (Today)   \/ ---

> Hello all,
>
> Sorry to bombard you with my emails. Fell behind on this site and so I'm=
=20
> responding piecemeal as I read. But what follows is an email that I start=
ed=20
> and then saved unfinished sometime last week, which was a mistake because=
=20
> that thread's been lost. But let me pick it up again because this discuss=
ion=20
> is far from over (dittoing Michelle's sentiments ... hey, all the best on=
=20
> finishing up your diss!).
>
> For starters, here's an article I found on the web (and that I comment on=
=20
> below) written by some law profs that addresses the CEO salary issue very=
=20
> convincingly, I think, and flies directly in the face of Graham's notion =
that=20
> the "system" rewards the most skilled.
>
> http://www.law.stanford.edu/publications/stanford_lawyer/issues/72/CEOPay=
Skill.html
>
> And here's a news article that cites an economists, of all people,  who s=
ees=20
> a danger in the growing disparity between rich and poor
>
> http://www.iht.com/articles/2007/03/29/business/income.4.php
>
> And here my old email....
>
> Hi Franz, Michelle, and all,
> I've been meaning to jump (back) into this discussion too for some time n=
ow,=20
> but you "guys" (meaning the male econ faction) are hard to keep up with. =
Much=20
> of it is difficult stuff to follow and digest, let alone to take to task.
> To comment on Franz's remark about Cubans' good health but lack of happin=
ess:=20
> from everyone I have talked to who has visited Cuba, the people there are=
=20
> quite happy. They (those who visited Cuba, like colleagues of mine in the=
=20
> Spanish dept) were surprised to see this, considering our perception that=
=20
> everyone is trying so desperately to flee the country. Seems that only a=
=20
> small percentage feels that only in a capitalistic, free market economy c=
an=20
> they pursue happiness.
> But then again, I've been to Mexico, and the people there appear happy as=
=20
> well, though I'll admit that I came back thinking "nice place to visit, b=
ut I=20
> certainly wouldn't want to live there." Why -- because of all the poverty=
 you=20
> see around you, surrounding the oases of plush resorts for the "rich" (ve=
ry=20
> relative term here) Americans. That you won't see in Cuba, so I think I'd=
=20
> probably come back from there not as saddened as by what I saw in Mexico.=
 In=20
> fact, that's precisely what I heard =96 one doesn't see any abject povert=
y in=20
> Cuba like you see in other 3rd world countries.
>
> So I'm tempted to apply the research that Michelle cites (great stuff,=20
> Michelle -- great response) to the global economy, meaning that we would =
do=20
> well to work to close the huge global gap between rich and poor for the v=
ery=20
> same reasons (e.g. overall health). In fact, that's probably why Bush is=
=20
> pouring billions (3 billion is the figure I remember) into curing (i.e.=
=20
> containing) AIDS in Africa. He was probably made to realize that it's in =
the=20
> interest of our own health as well. Actually, that's been so obvious all=
=20
> along it goes without saying, but all the more reason to fight for global=
=20
> equality across the board and not just specifically targeting health=20
> epidemics.
> So Danny, this fits in quite well with our phone conversation/debate, nam=
ely=20
> the "desert island" scenario and your argument that free-market economic=
=20
> principles would work there as well, meaning they would intuitively strat=
ify=20
> those who offer the most to the overall well-being (or what you guys call=
=20
> utility) of the community from those who offer the least  -- and that thi=
s=20
> "utility" stratification would be reflected in our current global society=
 at=20
> large. NO WAY, I countered!! ( didn't you say you would reconsider your=
=20
> entire position if you couldn't make it work for the "desert island" mode=
l?).=20
> And here's an good article written by some top-notch law profs whose rese=
arch=20
> proves this theory wrong, i.e., that laissez-faire market forces will NOT=
=20
> determine the most gifted and qualified, meaning those who rise to the to=
p=20
> are anything but the most competent and deserving:=20
> http://www.law.stanford.edu/publications/stanford_lawyer/issues/72/CEOPay=
Skill.html=20
> It's about the argument we were having regarding the astronomically high =
CEO=20
> salaries -- I remember you saying that no economist you know of would=20
> criticize this since it goes totally against conventional economic wisdom=
=2E=20
> Well, granted that these aren't economists, but what their research shows=
 is=20
> that the bigger the company, the less competent the CEO. (Following their=
=20
> research, no wonder someone like Bush ends up as pres. of the biggest, mo=
st=20
> powerful country in the world).
>
> Bottom line: the bigger-is-better "merger" principle of global economics =
does=20
> not hold up if you go by their research. So back to the desert island: ye=
s,=20
> the most qualified would rise to the top given the small size of the=20
> community, but there the "white collar" brains vs. the "blue-collar" braw=
n=20
> model would most likely be reversed, or at least be equalized in a way th=
at=20
> does not reflect the huge disparity that now exists between these two bas=
ic=20
> groups of labor, especially when viewed in global terms. Example: You'd b=
e=20
> paying someone lots and lots of yootles to dig a well for you, huh!!
>
> So Danny, the challenge is on: make your model work for the desert island=
=20
> scenario!
>
> Trixie
>
> P.S. Just writing this makes me feel like I'm improving the world!! (mean=
t=20
> with a strong dash of irony, of course)
>
>
>> From: "Franz Marschall" <marschall &AElig solartekt.de>
>> To: "Michelle Sternthal" <mjste &AElig umich.edu>,"Daniel Reeves"=20
>> <dreeves &AElig umich.edu>
>> CC: "James W Mickens" <jmickens &AElig eecs.umich.edu>,"Dave Morris"=20
>> <thecat &AElig umich.edu>,<improvetheworld &AElig umich.edu>,"Steven Reeves"=20
>> <steven &AElig aptigi.com>,<reeves-hayos &AElig umich.edu>,<reeves-kalkman &AElig umich.edu>
>> Subject: Re: mind the gap
>> Date: Sun, 2 Sep 2007 13:58:52 +0200
>>=20
>> Great text!
>> This puts a completly new view to the subject. If the research data is=
=20
>> real, I am convinced that too much inequality is bad for all. What can b=
e=20
>> more important than having a long and healthy live. The problem seems to=
 be=20
>> the proper balance. In Cuba, the health situation seems to be fairly goo=
d.=20
>> But how important is the happiness?
>>=20
>> Franz,
>> the darwinistic environmentalist
>>   ----- Original Message -----
>>   From: Michelle Sternthal
>>   To: Daniel Reeves
>>   Cc: James W Mickens ; Dave Morris ; improvetheworld &AElig umich.edu ; Steven=
=20
>> Reeves ; reeves-hayos &AElig umich.edu ; reeves-kalkman &AElig umich.edu
>>   Sent: Saturday, September 01, 2007 4:11 PM
>>   Subject: Re: mind the gap
>>=20
>>
>>   I have remained silent for too long!  I have to admit, that as a
>>   sociologist,  the notion that income inequality is good for society
>>   is anathema to our discipline (which is probably one reason
>>   sociologists and economists have a noted rivalry).
>>
>>   But putting intellectual/philosophical disagreements aside, from a
>>   purely rhetorical/debate perspective, I have been somewhat frustrated
>>   by the notable absence of empirical evidence used to back up the
>>   arguments that income equality is good for society or at least
>>   "fair."   Since we are loyal positivists who embrace the scientific
>>   method,  allow me to introduce some research on the matter.
>>
>>   Since my area of interest, forgive me if I focus on the health
>>   effects of income inequality.  A question which has preoccupied
>>   health researchers/sociologists, and even health economists is
>>   whether, indeed, the growing gap between the rich and poor is good
>>   for a society's health (let's use mortality, a nice objective
>>   indicator.  Dying young is less good than dying old, all else being
>>   equal).
>>
>>   There are reasons to believe that income inequality hurts everyone,
>>   even those not on the bottom.  Let's assume two states have the same
>>   average income-- $50,000.  In one state, the distribution is pretty
>>   wide, so there are people really poor and people really rich; in
>>   another, the distribution hovers around the $50,000 mark.  Which
>>   state would we want to live in, from a health perspective at least?
>>   Research suggests that it would SUCK to live in the first for a
>>   couple of reasons.  First off, in an unequal society, you are much
>>   more likely to be in the bottom than on the top, and being poor is a
>>   well-established cause of bad health.    Second, David Marmot, an
>>   epidemiologist, has argued that simply being in a stratified society
>>   can harm health.  A twenty-five-year follow-up from the Whitehall
>>   study found that the higher the position in the occupational
>>   hierarchy in Britain, the lower the mortality rate from all causes,
>>   from coronary heart disease, and from a range of diseases not related
>>   to smoking  Note that NONE of  these men was poor in any usual sense
>>   of that word. They were all in stable, office-based employment in and
>>   around Whitehall, London.  (Marmot, "Inequalities in Health," New
>>   England Journal of Medicine (12 July 2001): 134=96136).  Here, relativ=
e
>>   income deprivation mattered more than absolute.
>>
>>   But even beyond that, it seems that a society with large income
>>   inequality  hurts those at the top.  One of the more famous studies,
>>   by George Kaplan of U. of Michigan and colleagues (1996) examined
>>   income inequality among the 50 states.  Kaplan et al. showed that
>>   that income share held by the least well-off 50 percent of the
>>   population in each state was strongly correlated with the state's
>>   mortality in 1990 (r=3D-.62, p<.0001), and that this association was
>>   not affected by median state income, was consistent across age
>>   groups, and ALL income brackets.   Moreover, areas with high income
>>   inequality have not only high mortality but high crime rates,
>>   especially of homicide.  Such factors can affect everyone, not just
>>   the poorest ( M. Wilson and M. Daly, "Life Expectancy, Economic
>>   Inequality, Homicide, and Reproductive Timing in Chicago
>>   Neighbourhoods," British Medical Journal (26 April 1997): 1271=961274)=
=2E T
>>
>>   But even assuming that the "utility" gained in terms of health for
>>   rich people was unaffected by the distribution of income, it may
>>   still make "economic" sense to have a less unequal society.  It may
>>   be more efficient and maximizing everyone's utility.   Angus Deaton,
>>   a British health economist, has shown that there is a nonlinear
>>   increase in probability of dying with decreasing income (Deaton,
>>   "Health Inequality and Economic Development",Working paper, Princeton
>>   University Research Program in Development Studies and Center for
>>   Health and Wellbeing, 2001).  Meaning, that if, at low levels of GNP,
>>   a small increase corresponds to a large increase in longevity, then
>>   taking some money from rich people will have less effect on their
>>   mortality than giving the same money to the poor will affect theirs.
>>   Therefore, other things being equal, a population with more
>>   egalitarian distribution of income will have better health than
>>   another with the same average income but greater income inequality.
>>=20
>>
>>   Here are some other articles attached for more discussion on the matte=
r.
>>
>>   --Michelle
>>=20
>>=20
>>=20
>>=20
>> ------------------------------------------------------------------------=
------
>>=20
>>=20
>>
>>   > I have to respond to your yootles critique first!
>>   >  Our aim is both to decrease to next to nothing the overhead of
>>   > applying more formal mechanisms to decision-making (and more
>>   > recently, prediction and prediction+decisions) as well as convince
>>   > you there's plenty to be gained.  Bethany and I yootle every day
>>   > for every little (and big) thing imaginable.  (Being both
>>   > indecisive types it often saves us a ton of time.) Granted, we're
>>   > gigantic dorks and no one else cares yet.
>>   >
>>   > I'm of course not done defending my boyfriend Paul either.  More on
>>   > that later.
>>   >
>>   > But I'm actually delighted that we're making real progress on
>>   > circumscribing the disagreement while identifying common ground
>>   > (eg, Graham is at least right in some other fantasy universe;
>>   > Trixie won't like that concession at all!  and of course I conceded
>>   > on slavery and may do so on health care, where basic human rights
>>   > are at stake.. although Kevin may set you straight on the
>>   > healthcare issue!).
>>   >
>>   >
>>   > --- \/   FROM James W Mickens AT 07.08.31 22:21 (Yesterday)   \/ ---
>>   >
>>   >>> You're characterizing our disagreement as hinging on whether publi=
c
>>   >>> policy should optimize economics subject to moral constraints or
>>   >>> optimize morality subject to economic constraints.  I'm unclear
>>   >>> on what
>>   >>> either of those really mean for public policy.
>>   >>
>>   >>
>>   >> There's a difference in the intent of your policy and the methods
>>   >> that you will use to evaluate it. For example, suppose that you've
>>   >> devised a new tax code for an underdeveloped country. When you
>>   >> evaluate its success, will you look at how much additional wealth
>>   >> it generated, or some actual measure of utility such as the
>>   >> percentage of citizens who have access to electricity or clean
>>   >> water? I use the term "actual measure of utility" because I think
>>   >> that just examining, say, the increase in GDP is a bad way to
>>   >> measure net social welfare. The net wealth of a society is, at
>>   >> best, an indirect measure of its net welfare because aggregate
>>   >> wealth trends tell us nothing about the *distribution* of wealth
>>   >> or whether that wealth is being used to satisfy some particular
>>   >> goal. The classic example is health care. Despite rising levels of
>>   >> aggregate wealth in America, many *individual* Americans have poor
>>   >> health and inadequate access to proper medical care. Is the
>>   >> solution to this problem the creation of even more wealth in the
>>   >> hope that the health care industry will spontaneously reorganize?
>>   >> Or is the solution a targeted policy, whether it be nationalized
>>   >> health care, better health education in schools, and/or something
>>   >> else? I argue that the latter approach would be better,
>>   >> particularly since the market has thus far been ineffective in
>>   >> addressing this issue.
>>   >>
>>   >> The failure of wealth-driven policies is even more obvious in the
>>   >> international pharmaceutical market, where drug companies develop
>>   >> medicines for diseases that affluent people care about (e.g.,
>>   >> restless leg syndrome, diabetes) and ignore a huge number of
>>   >> illnesses (e.g., diarrheal diseases) that affect a much larger
>>   >> number of people who have much less money. People who care about
>>   >> net welfare should find this problematic. So, in the international
>>   >> drug market, should we pursue wealth-driven or morality-driven
>>   >> policies? In other words, should we allow drug companies to
>>   >> maximize their profits and hope that they'll turn a charitable eye
>>   >> towards the developing world, or should we force them through
>>   >> regulation, subsidies, tax credits, etc., to address the needs of
>>   >> poorer countries? History suggests that the former strategy will
>>   >> fail if you're trying to optimize for health and not profit.
>>   >>
>>   >> I understand that it is extremely expensive to develop new drugs
>>   >> and that pharmaceutical companies must be given a way to recoup
>>   >> these costs. However, it's obvious that a market system which
>>   >> focuses on maximizing their profits will not lead to a net
>>   >> increase in global health (an important utility metric).
>>   >>
>>   >>
>>   >>
>>   >>> Let me first defend Graham's point.  He concedes whole classes of
>>   >>> exceptions and I think social injustices are included, if not
>>   >>> explicitly. His argument -- that income inequality is not,
>>   >>> inherently, unjust -- remains intact.
>>   >>
>>   >> Once again, I'm claiming that economic justness does not equal
>>   >> moral justness. When you say that income inequality is "not
>>   >> inherently unjust," you should specify whether you refer to the
>>   >> economic definition, the moral definition, or both.
>>   >>
>>   >> If Graham includes social injustice in his exceptions list, then I
>>   >> suppose that he and I are in agreement. But if Graham believes in
>>   >> the entrenched, pervasive nature of social injustice, why does he
>>   >> spend so much time waxing poetic about the inherent fairness of
>>   >> economic inequality? This fairness only exists in an idealized
>>   >> model of the economy which bears little resemblance to the real
>>   >> one. The fact that Graham spends most of his time talking about
>>   >> this idealized world suggests that either a) he is a hopeless
>>   >> utopian, or b) he does not, in fact, believe that social injustice
>>   >> is entrenched and pervasive ;-).
>>   >>
>>   >> ~j
>>   >>
>>   >>
>>   >> p.s.
>>   >>
>>   >>> And just to nip a potential subthread: the non-mathematically
>>   >>> inclined are not allowed to blithely declare human motivation to
>>   >>> be irreducible to mathematics.
>>   >>
>>   >> Ah, but I claim that the mathematically inclined are not allowed
>>   >> to blithely declare that human motivation *is* reducible to
>>   >> mathematics ;-). The reason that I do not use yootles to determine
>>   >> who will pick me up from the airport is that, in the common case,
>>   >> this decision is not subject to rigorous mathematical or economic
>>   >> constraints, nor should it be. In many scenarios, I only care
>>   >> about approximate notions of fairness. I suppose that if gasoline
>>   >> were $27,000 a gallon, it might be reasonable to employ a strong
>>   >> mathematical framework to prevent tragedy (e.g., "Oh no, Todd has
>>   >> taken me to the airport fifteen times but I haven't taken him at
>>   >> all. Todd has now spent $405,000 on gas while I have escaped scot-
>>   >> free."). Absent such extreme conditions, the introduction of
>>   >> mathematics into simple human transactions will often just add
>>   >> overhead and produce little tangible benefit.
>>   >>
>>   >> It is frequently possible and fruitful to analyze people's
>>   >> behavior using mathematical models. However, that doesn't mean
>>   >> that the underlying psychology of the individual is actually
>>   >> driven by these models, or that giving the math to people will
>>   >> make it easier for them to manage their lives.
>>   >>
>>   >
>>   > --
>>   > http://ai.eecs.umich.edu/people/dreeves  - -  search://"Daniel Reeve=
s"
>>   >
>>   > Dilbert:     "...and we'll buy a dozen of these. We're trying to
>>   >              spend our budget so it doesn't get cut next year."
>>   > Salesperson: "This is great! You guys are so dumb that I don't even
>>   >              have to use my fake personality to make the sale!"
>>   >
>>   >
>>   >
>>=20
>
> _________________________________________________________________
> A place for moms to take a break!=20
> http://www.reallivemoms.com?ocid=3DTXT_TAGHM&loc=3Dus
>

--=20
http://ai.eecs.umich.edu/people/dreeves  - -  search://"Daniel Reeves"

Humans are genes' way of making more genes.  -- Richard Dawkins

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