Matt Yglesias

Endgame

Grain upon grain, one by one, and one day, suddenly, there’s a heap, a little heap, the impossible heap:

— Martha Nussbaum’s brilliant and comprehensive brief for marriage quality.

— Transportation in ACES.

— Womenomics is full of wishful thinking.

— Has the coalition in a box model run its course? Seems very premature to me to proclaim HCANN a failure.

— Ezra Klein says reform is impossible because the political system is so screwy, which is probably true but it’s worth noting that specific senators have agency and moral responsibility and always could choose to do the right thing.

— Cap & Trade lessons from Europe.

Song of the day: St Vincent “Actor Out of Work”.

McCain Confuses on Health Care

More adventures in tweeting from Senator John McCain (R-AZ) who tells us: “It’s not the quality of health care it’s the cost – wellness and fitness!” Like Ezra Klein I don’t really understand what that means.

One possible reconstruction is that McCain is saying that our problem is that health care costs are too high because of insufficient attention to wellness and fitness. This is, I think, a bit of a misunderstanding. It’s true that investments in wellness and fitness would be highly cost effective ways of improving public health. But it’s in the nature of the human species that even very healthy people eventually get sick and die. Consequently, it’s often far from clear whether or not healthier behavior reduces health care costs in the long run. Dying of lung cancer at 57 could be cheaper than developing Alzheimer’s and living to 97. Which isn’t to downplay the importance of “wellness and fitness”—these can do a lot to improve quality of life. But they’re more-or-less separable from the issues of who gets health insurance, what does it cover, what does it cost, and how efficiently are health care services directed.

Richard Posner Proposes Link Ban

Richard Posner’s sense of pragmatism seems to have entirely escaped him as he offered up this bizarre suggestion last week about how to maintain the financial viability of newsgathering:

Imagine if the New York Times migrated entirely to the World Wide Web. Could it support, out of advertising and subscriber revenues, as large a news-gathering apparatus as it does today? This seems unlikely, because it is much easier to create a web site and free ride on other sites than to create a print newspaper and free ride on other print newspapers, in part because of the lag in print publication; what is staler than last week’s news. Expanding copyright law to bar online access to copyrighted materials without the copyright holder’s consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder’s consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

This just seems to totally misunderstand the relationship between the linked and the linker. In my years of blogging, I have never once heard the author of an article or the editor of a publication complain to me about having linked to an article. By contrast, on a daily basis authors and editors ask me to link to their articles. This is because having published the article on the World Wide Web, the authors and editors in question want people to read the articles. If they didn’t want to get links, they wouldn’t put the article online. If they put the article online, they want to get links. And certainly if any publication were to request that I stop linking to or otherwise mentioning their content, I would be happy to grant that request without any legal coercion.

Paraphrase is a somewhat different manner, but attempting to ban it would be wildly impractical. The Posner proposal would make it illegal for me to debate the merits of Posner’s argument without first securing Posner’s specific approval. Online dialogue about political topics would grind to a halt. It would become impossible to review movies, recommend TV shows, praise songs, etc.

CAP, Wal-Mart, SEIU Join Forces in Support of Employer Mandate

The Center for American Progress, the Service Employees International Union, and Wal-Mart joined forces today to release a letter (PDF) endorsing the dual ideas of an employer mandate to provide health insurance and “triggers” to automatically reduce costs if health care spending gets too high (more on that here). You can find details on policy courtesy of my man Igor Volsky. And as Jeff Young notes, there’s important politics here:

The so-called employer mandate is adamantly opposed by the U.S. Chamber of Commerce, the National Federation of Independent Business and virtually every major business trade association in Washington. But the backing of Wal-Mart, which employs about 2 million people, could give a big boost to President Obama and Congress’s effort to levy such a requirement on companies. [...] The decision by Wal-Mart to break away from the Chamber and its ilk marks the first visible crack in the business coalition on healthcare reform.

The highly ideological behavior of the business community, and high degree of class solidarity exhibited by the executive class, has been a hugely important element of the story of American politics over the past thirty years or so. The willingness of much of the business community to break with Chamber ideology on Waxman-Markey and now on health care is an important sign of change in the air.

Competition, Profit Rates, and Freeness

Having read some excerpts (e.g.) from Chris Anderson’s Free and also Malcolm Gladwell’s takedown review, I think the whole subject could stand to benefit from a little less good writing and a bit more plodding distinction-drawing. There’s a basic valid point underlying what Anderson is talking about. In a competitive market, the price of a good ought to converge toward its marginal cost of production. And in a digital universal, the marginal cost of production is close to zero. In other words, there are fixed costs involved in creating a blog post or a song or a film or a piece of software, but the cost at the margin of distributing the good to a new consumer is almost zero. Anderson adds to this shopworn piece of economic knowledge, the insight from behavioral psychology that while people react similarly to a price of $10.15 and $10.25, human behavior when faced with a price of free is quite different from human behavior when faced with a price of ten cents. Consequently, when market competition starts pushing prices down to nearly zero, someone will realize they can gain a huge competitive advantage by pricing the good at free.

Where Anderson goes off the rails is in his suggestion that this “give it away” business model is actually a promising business model. Gladwell demolishes some of Anderson’s examples, but the problem with Anderson’s argument is completely theoretical. The convergence to marginal cost of production is predicated on the idea that you’re operating in a highly competitive marketplace. But the thing about operating in a highly competitive marketplace is that it’s impossible to make tons of money by doing this. That fact tends to get obscured in popular discussion of business in the United States, because we (or, perhaps I should say, because journalists who want to make money getting corporate speaking gigs) are very invested in a heroic model of capitalism in which wealthy entrepreneurs get rich through their competitive awesomeness. In reality, the reason that competition is good for customers is that it destroys profits. The way you make real money is by getting into situations where you’re insulated from competition. A license to operate a bar in Adams-Morgan is like a license to print money—no new bars are allowed to operate, and restaurants that make too much money off booze are getting shut down. On a grander scale, Microsoft has been able to entrench its position through “network effects” and price key software way above its marginal cost.

As sectors turn to a Free business model, they’re just going to become way less lucrative. That doesn’t mean the sectors will vanish. Nobody makes a fortune running a dry cleaning business, precisely because dry cleaners operate in a highly competitive marketplace. But dry cleaning services are very widespread, and customers benefit greatly from the fact that it’s relatively cheap. But the mere fact that dry cleaning is very successful as a technique doesn’t mean that the dry cleaning business is a good business to be in. Consider the case of YouTube, which Anderson labels a quintessential example of Free. Gladwell points out that YouTube actually loses money—it’s a terrible business. But what’s really noteworthy about YouTube, to me, is that as it exists it’s actually competing with several other, also Free, also money-losing video services. But since Google as a whole can easily afford to cover YouTube’s losses, it’s hard to see the percentage for Google management in shutting down a market-leader, or in destroying its position by trying to charge people to use it. But conceivably YouTube will just operate indefinitely as a money-losing subsidiary of a large profitable firm. And since it’s there losing money but not going out of business, it will probably be impossible for any competitors to ever beat it. And if YouTube does go out of business some new money-losing free video site will become the market leader as long as there’s some investor out there somewhere who believes, wrongly, that he’s smart enough to figure out a way to make money out of this thing. Meanwhile, as the underlying technology gets cheaper the scale of the losses should get smaller, making it ever-more-realistic to run the business at a loss and thus ever-less-likely that the money-losers will be driven out of the market and create the possibility for monopoly rents.

That’s the real lesson of Free. The combination of competition, the near-zero marginal cost of production, and the psychological significance of the zero bound means that the market-leader in video is bound to lose money. To win the market, you need to make your product Free. But while your marginal cost is near-zero, it’s not actually zero, so you’re losing money.

Senators Mobilize to Protect Insurance Industry from Competition

Olympia Snowe (R-ME) and Mary Landrieu (D-LA)

Olympia Snowe is open to a compromise on a public option, but she wants a “trigger” mechanism in order to protect private health insurance firms from the threat of “unfairly” needing to compete with cheaper alternatives:

In an Associated Press interview in Portland, Snowe said it would be unfair to include a government-run health insurance option that would take effect immediately.

“If you establish a public option at the forefront that goes head-to-head and competes with the private health insurance market … the public option will have significant price advantages,” she said.

A significant price advantage is, of course, a good thing if you’re interested in delivering quality affordable coverage to everyone. Cheaper is a good thing. But not to Senator Snowe. As Chris Bowers says “It is pretty amazing that many moderates and industry figures are actually arguing that the problem with including a public option in health care reform legislation is that a public option would lower the cost of health insurance.” Unfortunately, it’s not just a handful of moderates. The more liberal of the two Senate committees working on health reform has come up with a weak public option that would do some good but ultimately lack significant cost advantages over private insurance.

It’s worth noting that in Maine (see PDF) 78 percent of the insurance market is controlled by a single firm, WellPoint.

Franken Wins

Minnesota Supreme Court rules for Al Franken.

Political Journalism Just Can’t Quit the Ecological Fallacy

Many cars (cc photo by Sylvar)

One favorite trick of American political journalism is to notice that some states are liberal and some are conservative, then to notice that the liberal states have some characteristics, and then make inferences about the characteristics of individual liberals by attributing the qualities of the states in which they reside to them. For example, since wealthier states are more liberal, you can assert that liberal voters are richer than salt-of-the-earth conservative types. This mode of inference, though popular, is also mistaken. It’s known as the “ecological fallacy.” But that never seems to stop it. Thus, for example, there’s this from The Washington Times:

The Volvo-driving liberal and the redneck in a Chevy pickup are long-held stereotypes. But a map of car ownership – produced by R.L. Polk & Co. – overlaid on the electoral map reveals the surprising extent to which how we vote corresponds with what we drive.

Blue-staters on each coast, from Los Angeles to Seattle and from Boston to the District, are the most likely to drive foreign cars. Domestic brands have their highest levels of market share in the mostly conservative interior of the country.

Now as it happens, it does appear to be true that there are strong correlations out there between individual voting behavior and individual consumption patterns. So there’s probably some legitimate results to be found in this area if you really look into it. More enlightening than the “foreign vs domestic” issue would probably be to look at kinds of cars—who buys trucks and SUVs versus who buys conventional cars.

A Smart Take on Honduras

Manuel Zelaya

Brookings’ Kevin Casas-Zamora offers up the brief-but-informative take on what happened in Honduras that I’ve been waiting for:

As other Latin American leaders, President Zelaya fell victim to the virus of presidential reelection, an institution with questionable pedigree in a region that has paid a dear price for its fondness of caudillos. The real problem, however, was that by organizing a de facto referendum to test the popularity of his idea, Zelaya pursued his ambition with total disregard of his country’s constitution. The latter explicitly forbids holding referenda—let alone an unsanctioned “popular consultation”—to amend the constitution and, more specifically, to modify the presidential term. Unsurprisingly, the president’s idea met with the resistance of Congress, nearly all parties (including his own), the press, business, electoral authorities, and, crucially, the Supreme Court, that deemed the whole endeavor illegal. Last week, when the President demanded the Armed Forces’ support to distribute the electoral material to carry out his “opinion poll,” the military commander refused to comply with the order, was summarily dismissed for his refusal, and later reinstated by the Supreme Court. The president then cited the troubling history of military intervention in Honduran politics, a past that the country—under more prudent governments—had made great strides in leaving behind in the past two decades. He forgot to mention that the order that he issued was illegal. [...]

Now the Honduran military have responded in kind: an illegal referendum has met an illegal military intervention, with the avowed intention of protecting the constitution. Moreover, as has been so often the case, this intervention has been called for and celebrated by Zelaya’s civilian opponents. For the past week, the Honduran Congress has waxed lyrical about the armed forces as the guarantors of the constitution, a disturbing notion in Latin America. When we hear that, we can expect the worst. And the worst has happened. At the very least, we are witnessing in Honduras the return of the sad role of the military as the ultimate referee in the political conflicts amongst the civilian leadership, a huge step back in the consolidation of democracy.

His policy suggestion is that the United States and the Organization of American States should push for Zelaya to be reinstated. They point out that if Honduran civilians want to attempt to prosecute Zelaya through the civilian legal system, they can do that. One thing that I continue not to understand about this situation is does Honduras not have an impeachment mechanism through which congress can depose Zelaya? It seems to me that if the congress is inclined to go along with an anti-Zelaya military coup, there ought to have been some legal mechanism in place through which they could have changed presidents without subverting democracy.

As a more general point, my understanding of the evidence continues to be that parliamentary systems are less prone to constitutional crisis and breakdown. Latin America would do well to stop imitating us yankees and start imitating the vast majority of stable democracies. What’s more, for small countries like Honduras it seems to me that total demilitarization (à la Costa Rica) looks like a very attractive option.

Murder Down in DC

After experiencing a large decline starting in the 1990s, the number of murders in DC has been creeping up slightly the past couple of years:

So far this year, however, murder is way down:

There’s been some concern across urban America that poor economic conditions will lead to a return of the high levels of crime seen in the 1980s and early 1990s, but the historical evidence on how likely that is is mixed. Certainly, any such increase would be a very unwelcome development. Crime, after all, features a lot of tipping point and feedback loop effects. The fewer murders there are in the District in any given year, the more time and attention MPDC can afford to dedicate to investigating any given murder. The ability to devote more attention to particular cases increases the odds of apprehension which decreases the odds of violation. That, in turn, makes policing easier.

And of course with less murder there’s more resources available to deal with other kinds of offenses. A reduction in crime also encourages people to be out and about more, which creates “eyes on the street” and can further reduce crime. It also spurs economic opportunities and job creation which, in turn, reduce crime. By contrast, rising crime can swamp the law enforcement infrastructure and then start to devastate the tax base which supports it.

HELP’s Public Plan

The Senate’s Health Education Labor and Pensions committee has unveiled its vision for a public option in health insurance. As detailed by Igor Volsky this is not the “robust” public plan that would be able to piggyback on Medicare rates and force cost savings. Instead, it’s along the lines of Chuck Schumer’s “level playing field” concept. This version of the idea still has important merits, but does leave a lot of potential advantages on the playing field.

Insofar as we seem likely to go down this route, it becomes all the more vital to have the Centers for Medicare and Medicaid Services use payment reform to both make the existing public programs more efficient and also to drive systemic change throughout both the public and private sides of the system.

Deflation in the Eurozone

Ruining everything

A shocking number of American commentators and an even larger number of European policymakers continue to be worried about the specter of possible future inflation even as the opposite is happening right before our eyes:

The eurozone’s annual rate of inflation turned negative in June for the first time since the single currency was introduced in 1999. Prices in the 16-nation zone fell 0.1% in the past year, Eurostat said. The inflation rate had been 0% in May. Inflation in the eurozone has been dragged down by lower energy and food prices, and by falling demand for goods from companies and households.

This is, simply put, a disaster. In particular, the devastated economies of Spain and Ireland are never going to recover with this sort of thing going on. And that, in turn, is only going to make things worse for Germany and the rest of them. From the get-go the European response to the recession has been very misguided. And to a striking extent, the American debate continues not to recognize that the European Union has surpassed the United States of America in terms of the scale of its economy. Jean-Claude Trichet is the most important central banker in the world, and it’s extremely difficult for anything Barack Obama and Ben Bernanke try to do to work if the Europeans make poor choices.

Bishops, Baptists Organizing Against Contraception

It’s precisely because of stances like this that it’s very hard to take the “abortion is murder” crowd seriously when they say abortion is murder. Their revealed behavior indicates that they don’t actually find abortion especially problematic, but just place it on a spectrum containing a general aversion to women controlling their own sexuality:

But more conservative religious groups working with the White House Office of Faith-Based and Neighborhood Partnerships say they would be forced to oppose such a plan—even though they support the abortion reduction part—because they oppose federal dollars for contraception and comprehensive sex education. This camp, which includes such formidable organizations as the U.S. Council of Catholic Bishops and the Southern Baptist Convention, is pressuring the White House to decouple the two parts of the plan into separate bills. One bill would focus entirely on preventing unwanted pregnancy, while the other would focus on supporting pregnant women.

Atrios sees this as a reason to mock those who advocate seeking “common ground” with abortion proponents. I think we’re arguably seeing here the real fruits of seeking common ground in good faith—their real views are smoked out.

Major Insurers Routinely Underpaying Claims

Nosferatu

Nobody could have predicted that a system in which access to health care is controlled by people who earn a living by not delivering health care to sick people could lead to problems:

Congressional investigators have discovered that large health insurers in every region of the country are relying on faulty databases to underpay millions of valid insurance claims.

In a report released Wednesday, the Senate Commerce Committee said insurance companies nationwide have failed to provide consumers with accurate or understandable information about how they calculate “reasonable” or “customary” charges for out-of-network care.

Now a publicly managed health care alternative would face some bad incentives of its own and might have some problems. It’s difficult to know a priori which would be better, though the empirical experience of other countries suggests that it’s the public alternative. But fortunately, we don’t need to just guess which would be better; we can set up a system in which private plans and a robust public option compete side-by-side and see if the private sector can actually deliver a superior service at a better price.

Gideon Rachman on John McCain’s Tweets

This seems like an unfortunate slap at peasants to me:

But I cannot say Mr McCain’s twitters fill me with regret that he is not sitting in the Oval Office. They seem to be a mixture of sports scores and self-congratulation. He crowed recently about the number of followers he has on Twitter: “800,000!!! Think we can make it to one million?” Some of the senator’s tweets make him sound like a peasant. On May 19th he said: “Meeting with Dr Kissinger – the smartest man in the world.”

It’s the ideal medium for a politician who loves to make his opinions known, but doesn’t appear to have any knowledge of or interest in any area of public policy.

Because the World Needs More Blogs

Some friends and I, mostly professional political bloggers, who are all reading Infinite Jest over the summer (Infinite Summer) have decided that the world needed yet another group blog. Hence, A Supposedly Fun Blog. Enjoy.

Distributive Impact of Labour and Conservative Governments

Interesting data from Lane Kenworthy that seems to suggest that if you’re a Briton of below-average means you have pretty good reason to vote Labour:

Larry Bartels has made somewhat similar findings in the United States indicating that there are huge distributive implications for whether the president is a Democrat or a Republican. Economists have tended to be dubious that Bartels is identifying a real causal relationship, since the underlying mechanism isn’t totally clear, but the presence of similar patterns in similar societies should tend to increase our confidence that Bartels is on to something important.

Endgame

Thanks to John Roberts, the white man can finally get a break in this country:

— Why models overestimate the cost of environmental legislation.

— It would actually be a third stimulus rather than a second (we had a small one under Bush) but John Judis is right that we need one.

— Coal-loving congressfolk from Dixie might want to check out what climate change is going to do to their farms.

— TPM Media is getting a lot bigger.

— Applying economic cost-benefit analysis to a global problem that disproportionately affects the poor leads to insane conclusions.

Apparently in Australia you can advertise hard liquor on television, with brotastic results; a US ban on TV beer ads would probably improve public health and also serve as an important stimulus to print media.

Sowell: Obama Will Lead to Sharia

Via Tyler Cowen, Thomas Sowell argues that “Perhaps people who are busy gushing over the Obama cult today might do well to stop and think about what it would mean for their granddaughters to live under sharia law.”

And, yes, that was in National Review the flagship publication of the American right.

Conservatives Mobilizing the Purge “Cap and Traitors”

I’m told that the folks behind www.capandtr8tors.com are the same geniuses who were behind the tea parties movement earlier this year. The targets are the eight House Republicans who voted for the American Clean Energy and Security Act, and the threat is that “They have 5 Days from the time of their vote to change them, or we will work to vote them out of office.”

Grammatically speaking, it seems to me that it should be “tr8ors” rather than “tr8tors” but perhaps that’s overly literal.

Meanwhile, though the cause here could not be less just, it is worth emphasizing that it’s a willing to issue these kind of threats—and be somewhat serious about them—that keeps the Republican caucus fairly disciplined and effective. Democrats on the Hill know they have little to fear from left-wing critics, and consequently it’s hard to get folks in line.

Things Used to Be Worse

Mushroom cloud over Nagasaki, Japan (wikimedia)

Isaac Chotiner reads one rosy tale too many about how the British responded to the Blitz without resorting to torture, and points out that humanitarianism was hardly the rule of the day in the 1940s:

Let’s just take one example: The Bengal Famine of 1943. Scholars still dispute what exactly caused the famine–and whether there were in fact sufficient amounts of food, amounts which went unused–but there can be denying that the Churchill government’s response to this disaster was, in the historian Peter Clarke’s word, gruesome. Upon learning that people were dying at a rapid rate (the total death toll was around 3 million) Churchill simply asked, in an infamous letter, why Gandhi had not yet starved. Eventually the government responded adequately, but this was of little solace to the millions of dead Indians.

Part of the story here is just Churchill’s boundless hatred for Gandhi. But it should be said clearly that today’s sense of outrage about the depredations of the Bush administration is in part about the nature of the depredations, and in part about the fact that our ethical senses have become more refined. World War II was something like the nadir of humane conduct in world history. Back then you could be deliberately targeting enemy civilians for mass death and still be the good guy in the war. Heck, you could be Stalin and still be the good guy. It was a bad time. What’s so disturbing about Bush isn’t so much that his misdeeds have reached an unprecedented level of badness, it’s that much of his conduct seemed to reverse a trend toward better behavior developing over time.

What’s Bad for the U.S. is Bad for Canada

Stephen Harper

David Frum writes that what he deems poor U.S. economic policy could be good news for Canada:

At recession’s end, the U.S. will be forced to raise taxes heavily just to pay the interest on Obama’s debts; Canada will be positioned to maintain and even reduce taxes. Obama’s indebtedness will exert unending downward pressure on the U.S. dollar, while higher energy prices and superior economic management cause the Canadian loonie to rise.

A decade ago, incomes per capita, even in wealthy Ontario, trailed those of every U.S. state except Mississippi. Obama’s poor economic management offers the opportunity for a stunning reversal of fortunes.

For one thing, I think Frum’s wrong about the merits of the Obama economic agenda. But beyond that, if you grant Frum that premise it strikes me as extremely unlikely that poor economic performance in the United States could possibly be good news for Canada. Exports account for $461.8 billion of Canada’s $1.3 trillion economy. Of that $461.8 billion, 79 percent—or $365 billion—goes to the United States. Unless Canada wants to go through a truly wrenching transition to a completely different economic orientation (ask the Finns about this) then Canada’s economic prospects are going to be very closely linked to America’s. It’s true that poor economic performance in the U.S. could lead to an improvement in Canada’s relative standing (though if I were number three on the Human Development Index the way Canada is, I wouldn’t be too upset about it) but ultimately a rising America is likely to lift Canadian boats, and it’s very hard for Canada to sustain robust growth in the face of a sluggish United States.

The Ricci Case

As expected, the Supreme Court handed down a 5-4 decision reversing the Second Circuit’s decision on the Ricci firefighter case. As Ian Millhiser explains:

For 25 years, the United States Court of Appeals for the Second Circuit has given employers broad discretion to reconsider a promotion test whose results favor one race over another. Judge Sonia Sotomayor followed this binding precedent when she rejected several firefighters’ claim of reverse discrimination in the now-famous Ricci v. Destefano case, as she is obliged to do as a lower-court judge. Yet, as the Justices showed in today’s 5-4 decision in Ricci, they are not bound by the same constraints that bound Judge Sotomayor. Today’s ruling creates a new standard which says that an employer’s decision to toss out a hiring test must have a “strong basis in evidence” showing that the test preferred one race over another. The Supreme Court has powers that Judge Sotomayor does not, and it used that power today.

This seems like a good time to link to Ramesh Ponnuru’s smart New York Times op-ed on this case. Ponnuru makes the eminently sensible point that whether or not you like the conservative justices’ new rule, there’s nothing “originalist” about legal conservatism’s hostility toward policies designed to provide assistance to non-whites. It’s pretty abundantly clear from the historical record that the congresses that framed the Civil War amendments were not opposed to remedial measures designed to advance the interests of African-Americans. The view that the constitutional guarantee of equal treatment exists to protect the whites from unfair efforts to help non-whites is perhaps legitimate, but unquestionably an ahistorical take on the issue developed by conservatives relatively recently. I would also add that there’s a common sense difference between courts stepping in to protect a minority group from the depredations enacted by majority-controlled elected branches of government, and the idea of courts stepping in to protect the majority group from the political process.

Arena Glut

Verizon Center, Washington DC (cc photo by NCinDC)

Charles Bagli has an interesting piece in the New York Times about metropolitan areas suffering from a glut of arenas. He leads with the case of New York City, but the most clear-cut example is probably one he gets to later, Minneapolis. They have the Target Center in Minneapolis and a separate Excel Energy Arena in St. Paul for the NHL’s Wild. Meanwhile, “Both sites are losing money, and they must also compete with the University of Minnesota, which has two arenas.” On top of all that, Minneapolis just isn’t an especially large metropolitan area.

This is too bad. Unlike a football stadium, an indoor arena really can serve as an important element in neighborhood revitalization. That’s because an arena fits relatively comfortably into the urban landscape and also because, in principle, an arena can be used on a high proportion of days. But of course to get a high usage rate, you need to pack a bunch of different things—NBA, NHL, maybe a WNBA or Arena Football, concerts, etc.—all into one space. Splitting it up among two or three not only creates money-losing arenas, but deprives the arena neighborhood of the critical mass of foot traffic that can turn it into something worthwhile.

The Cost of TARP

As I’ve mentioned now and again, complaints about a “$700 billion bailout” that allegedly passed the congress last fall tend to ignore the fact that the actual fiscal cost of the TARP program is almost certain to be much lower than that. Today, via Planet Money we get the CBO’s latest estimate (PDF) of what that cost will be—$159 billion. Now of course $159 billion is a lot of money. But $541 billion is even more money, and that’s the difference between the latest estimate of the true cost and the “$700 billion” rhetoric that’s been flying around. Here’s the breakdown:

Note that a majority of the $159 billion in losses is accounted for by the auto industry bailout and the mortgage modification plan, the aspects of TARP that I think tended to attract the least criticism from the left. Of the $595 billion actually used on financial system bailouts, only $69 billion is actually being lost.