Division of Labour: September 2004 Archives
September 30, 2004
The Reimportation Question

Professor Bainbridge asks what's the conservative position on importing drugs from Canada.

shouldn't the conservative position be one of promoting markets and individual choice by allowing foreign drug sources to compete for the dollars of US citizens?

I'd certainly agree with him if in fact we were talking about "foreign drug sources" but we're not. Here we are talking about American drugs being sent to Canada and then Americans buying them back. Wait a second! Why would we do something like that? Think about it. In a normal rational world it would make no sense to make a drug in say New Jersey, ship it to Windsor, and then ship it back to New Jersey. But we don't live in a normal rational world. We live in a world where Canada imposes price controls on drugs.

From an economic point of view reimportation is less about importing drugs than importing price controls. And I KNOW what the conservative position is on price controls.

Furthermore, as a libertarian I support the right of American drug companies to market their products in other countries under the condition that the drugs not be resold. This is common practice in many businesses. Airlines prevent people from reselling tickets. My university charges some students $20k and others $2k per year. It is perfectly within our rights to prohibit a student from enrolling at $2k and reselling the spot to someone for $20k. Similarly, it seems to me that it's perfectly ok for drug companies to sell to Canada (at their ridiculous price controlled prices) under the condition that they not be resold to the U.S.

P.S. I've noticed a lot of my students are buying cheap international editions of American textbooks. I got on them a bit about this too.

UPDATE: A reader wrote in with this, "I don't know about the reimportation of drugs equaling the reimportation of price controls. The analogy between a spot at Capital and drugs isn't complete, because the spot at Capital doesn't move... it's more of a lease. Drugs, once they are sold, are gone: if we are transferring property rights then the right to re-sell must be included, right?"

My reply: In a private property rights regime buyers and sellers may contract in any way they see fit. In this case, the drug sellers want to impose a contractual condition on the buyers that they not resell the product. This is not inconsistent with liberty. Indeed to prohibit this sort of contract would be inconsistent with liberty.

Consider another example: Suppose Coca-Cola wants to secure a contract to supply pop [we are in the midwest so it's pop] at Ohio State University. OSU, being big and having some degree of market power, is able to secure a low price on the Coke products supplied by the firm. But Coke also wants to sell to nearby High St. businesses at its usual retail prices. So it gets OSU to agree contractually not to sell Coke off-campus. Now, suppose Coke decides to buy up lots of Coke products at the low prices and then resell to High St. businesses thus undercutting Coke's own position on High St. Clearly OSU has violated the terms of the agreement and this should not be permitted. I argue the drug case is very much the same.

So my position is not against reimportation per se. It is against reimportation when such reimportation violates the contractual terms of the sale. Also please note that my argument against reimportation is based on contract theory not public policy grounds. I do reject the FDA's ridiculous argument that only THEY can determine what drugs are safe.

Posted by Robert Lawson at 09:31 AM  ·  TrackBack (90)

McCloskey On "What Would Jesus Spend"

Pretty good article, although I think she's incorrect that the modern economist accepts savings as good. There still seem to be too many economists who believe that thrift is bad for the economy. An excerpt:

Nothing would befall the market economy in the long run, says the modern economist, if we tempered our desires to a thrifty style of life--one old Volvo and a little house with a vegetable garden and a moderate amount of tofu and jug wine from the co-op. The balloon theory sounds plausible if you focus on an irrelevant mental experiment, namely, that tomorrow, suddenly, without warning, we would all begin to follow Jesus in what we buy. Such a sudden conversion would no doubt be a shock to sales of SUVs at Ford and Toyota. But, the economist observes, people in a Christian Economy would at length find other employment, or choose more leisure.

That's the relevant mental experiment, the long run. In the new, luxury-less economy it would still be a fine thing to have light bulbs and paved roads and other fruits of enterprise, and more of these would be better than less. "In equilibrium"--a phrase with resonance in economics similar to "by God's grace" in Abrahamic religions--the economy would encourage specialization to satisfy human desires in much the same way it does now. People would purchase Bibles in koine Greek and spirit-enhancing trips to Yosemite instead of paperback Harlequin romances and package tours to Disney World, but they would still value high-speed presses for the books and airplanes for the trips.

Posted by Joshua Hall at 09:14 AM

September 29, 2004
Something Else Seared in John Kerry's Memory

No, this is not a crack about Kerry's recently acquired orange tint. (On second thought, I just can't resist: Maybe, in an effort to pander to Floridians, he's consumed too much orange juice. Perhaps while monkeying around in the NASA spacesuit over the summer he developed a Tang addiction. Maybe he's modeling a new Heinz ketchup color.)

I'll simply let today's OpinionJournal column from James Taranto explain:

John Kerry has a new explanation for why he voted to defund the troops in Iraq and Afghanistan, the Associated Press reports:

On the eve of a foreign policy debate with President Bush, Democratic presidential candidate John Kerry said in an interview that his explanation of why he voted in favor of additional funding for the war in Iraq before voting against it was "one of those inarticulate moments" in the campaign. . . .

"It was just a very inarticulate way of saying something and I had one of those inarticulate moments," Kerry said in an interview broadcast Wednesday on "Good Morning America" on ABC. "But it reflects the truth of the position. . . . I thought that the wealthiest people of America should share in that burden. It was a protest."

So his way of lodging a "protest" against "the wealthiest people" is to vote to withhold money from troops in the field. Well, at least he's articulate.

Both Powerline and the far-left Daily Kos note that Kerry claimed to have made the comment in question "late in the evening." But the Washington Post reported at the time that it was during "a noontime appearance." Is Kerry lying, or is he just too confused to know what time it is? Neither answer inspires much confidence.

ADDENDUM: For what's worth (probably very little--remember you're getting it for free), I think the Kerry shares in the Iowa Electronic Markets rate a "buy" at their going rate of 30 cents. All sorts of things that might swing the election in Kerry's favor could still occur--a significant turn for the worse in Iraq, a terrorist attack, George Bush's syntax in the three debates ...

Posted by E. Frank Stephenson at 11:58 PM  ·  TrackBack (119)

September 28, 2004
Name That Team

So the Expos are apparently moving to Washington DC. Presumably the team will get a new name--Expos is so Quebec and Senators is so passe. So let's offer up some suggetions:

Washington Loopholes
Washington Metros
Washington Bureaucrats
Washington Monuments
Washington Scandals
Washington PACs
Washington Politicians
Washington Bullets (since DC's gun control laws may be repealed)
Washington Insiders
Washington 527s
Washington Lobbyists (hat tip: Peter Gammons)
Washington Crackheads (in honor of a former mayor)
and, my favorite, the Washington Rent-Seekers

Send suggestions and I'll add them to the list.

UPDATE: The good suggestions are just pouring in:

Washington Mudslingers
Washington…
…Kings (a.k.a. Sultans, Kaisers, Czars, Emperors, and Holy Ones)
…Planners
…Apparatchiks
…Beltways
…Republicrats
…Strange Bedfellows
... Porkers (or Porkbarrels or just Pork)
... Deficits
...Filibusters
...Fatcats
... Special Interests
...Wafflers (I saw this one on Southern Appeal)
...Vetoes
...Bills
...Supremes
...Pages (a reference to a 1980s Capitol sex scandal)

Then there are the DC
...Deadbeats
...Doormats (appropriate given the Expos place in the standings)
...Deadweight Losses (might hold this one in reserve for a season like the 2003 Tigers)
...Diplomats
...Doldrums

Hat tip: George Leef, David Rossie, and co-blogger Bob


Posted by E. Frank Stephenson at 01:25 PM  ·  TrackBack (3)

Law Professor Logic

Below is an exchange between Northwestern University Law professor Frank Cross and NPR's Jennifer Ludden on the Saturday 9/25 program "Weekend All Things Considered":

LUDDEN: We've just heard what sounds like a persuasive argument that excessive lawsuits may hinder the economy. Do you agree?

Prof. CROSS: In general, no. You have to understand the bigger picture. The US does have more tort liability than other comparable countries, but what that loses sight of is that we have much less government regulation than those other countries. And I think that's a good tradeoff, and I think the evidence shows it. In fact, while he says that our business climate suffers, if you look at the international surveys, you'll find the United States at the very top in terms of the rating for business climate ahead of all the Western European nations, which have less tort actions but have much more regulations.

This argument is a classic red herring. What matters is not whether the U.S. has the best business climate (this isn't a race where there is a prize for first place), but whether our legal system is conducive to our achieving the highest possible standard of living (conditional on other factors that affect growth). While some like Prof. Cross might argue yes, many others would strongly disagree.

Here's more of the exchange:

LUDDEN: Can one actually calculate the cost of lawsuits on the economy?

Prof. CROSS: You can calculate how much money is paid out in lawsuit damages. What you can't calculate is all of the effects of litigation, and a lot of those are positive. If you can't sue people for fraud, there will be more fraud. And, in fact, you find that the stronger the laws against securities fraud, the stronger and healthier the securities markets are. Also, you have to look at the health benefits. Litigation has undeniably produced some areas of major health benefits. One good example is anesthesia. Anesthesia used to be a dangerous procedure; there were a lot of lawsuits that resulted, perhaps not all of them justified. But those lawsuits motivated much safer practice of anesthesia.

While potential tort liability may create some desirable incentives for care as Prof. Cross asserts, the incentive effects are not necessarily all positive. For example, doctors may practice defensive medicine in order to avoid liability. For evidence, click here.

Posted by E. Frank Stephenson at 11:09 AM  ·  TrackBack (28)

Broken Window Fallacies Everywhere

Florida's had another hurricane so, just as night follows day, Greg Fields of the Miami Herald is peddling the broken window fallacy again. On NPR's "All Things Considered" yesterday, Fields told host Robert Siegel that "hurricanes tend to make communities wealthier." He then proceeded to discourse on the "Jacuzzi effect"--a notion that damage induces people to add amenities to homes while they are rebuilding the damage. Even if this "effect" exists, it doesn't mean that people are wealthier--wealth is measured by more things than Jacuzzis. (Here's a link to a recording of the program; the Fields/Siegel story is the second one down.) For a link to Field's blathering after Charley, see my previous post on Charley-nomics.

Tyler Cowen and Don Boudreaux also have posts on recent perpetrators of the broken window fallacy. Boudreaux's post is especially nice because, like my Charley-nomics post, he recounts Paul Krugman's flirtations with the broken window fallacy in the aftermath of 9/11.

Posted by E. Frank Stephenson at 09:19 AM  ·  TrackBack (134)

September 27, 2004
Round-up of Interesting Stuff

A Clint Eastwood character once said, "A man's got to know his limitations." At the moment, one of this blogger's many limitations is that I have nothing more interesting on my mind than some of the posts I've found elsewhere. So, with a bit of commentary added, here's some good stuff from other blogs or websites.

1. Since economists use futures markets to forecast the next president, it should come as no surprise that there is a market to forecast the next Nobel Prize winner. Marginal Revolution's Tyler Cowen has the post; my only surprise is that Anne Krueger isn't listed since there's chatter about her and Gordon Tullock sharing a prize for their (separate) research on rent seeking.

2. Arnold Kling's EconLog has a nice post about and link to a Business Week article on wages and outsourcing. Just as our good friends supply and demand would predict, the increasing demand for labor in China and India is leading to increased wages there and narrowing the wage gap between those countries and the U.S.

3. Today's Washington Post has an encouraging article on Iraq. It reports that recruiting for the reconstituted Iraqi police force is going well even in the face of insurgent attacks. Regardless of one's take on the justification or lack thereof for the war, it seems to me that all should agree that getting Iraqi forces up and running is an important step towards the U.S. getting out.

4. The Sports Economist has a nice post about and link to an article about conduct fines in the PGA Tour.

5. Cafe Hayek's Don Boudreaux links to a NYTimes article on research by Columbia's Frank Lichtenberg finding that some 40% of increased longevity in the last two decades is the result of new drugs.

Posted by E. Frank Stephenson at 02:09 PM  ·  TrackBack (109)

Economic Freedom and Civil Society

A new study by the Comparative Nonprofit Sector Project presents estimates of the amount of non-profit activity in 35 countries.

I was interested to see if economic freedom correlated with their estimates. I used the FTE Volunteer hours estimates (see Table B.2 on page 58 of this publication (.pdf)) divided by the labor force (source: World Bank). This gives the amount of volunteer time as a percent of labor force time.

The scattergram below shows the volunteer variable (FTEVLF) on the vertical axis and the 2002 Economic Freedom of the World (EFW) rating on the horizontal.

civilsocietyefw.jpg

People who care about civil society would do well to remember that a free (and rich) economy is a big boost to their various causes.

Hat tip to co-blogger Frank and Marginal Revolution.

Posted by Robert Lawson at 09:57 AM  ·  TrackBack (281)

A structural deficit?

Today's Columbus Dispatch reports that Ohio is facing a $5 billion deficit. The reporter writes:

It’s called a structural deficit — the amount of revenue lacking just to fund existing program costs and obligations for another two years.

Hogwash. There is nothing "structural" about Ohio's fiscal mess. Put simply, this state has suffered through a string of governors and legislatures that spend money like drunken sailors on shore leave.

According to the census bureau, Ohio's total general expenditures increased from $24 billion to over $42 billion from 1992 to 2002. That's a rate of growth of 5.8% per year.

Meanwhile personal income grew at an annual rate of 4.19% and inflation plus population growth grew at just 2.82% (population growth was only 0.3% per year).

Had the state budget increased at only the rate of personal income growth--thus assuring that the state would spend a constant share of people's incomes--the budget today would be over $6 billion less. We'd have a surplus today not a deficit.

Had the state budget increased at only the rate of growth of population and inflation--thus assuring the state would spend the same real amount per person--the budget today would be over $11 billion less. We'd be talking about radical tax cuts.

Posted by Robert Lawson at 09:10 AM  ·  TrackBack (31)

September 24, 2004
Kerry and CIA

Below are remarks from John Kerry at a Columbus OH campaign event yesterday:

America needs leadership that tells the truth. George Bush just yesterday said, he was just -- the CIA was just guessing on Iraq. Just guessing, America? The CIA?

They’re not just guessing. They’re giving the president of the United States their best judgment. It’s called an analysis. And the president ought to read it and he ought to study it and he ought to respond to it.

Isn't this the same CIA that thought Iraq had large stockpiles of WMDs? Based on recent history it seems that president is correct is treating CIA predictions with skepticism and that Kerry's high regard for the "analysis" might be a bit too strong.

For the full Kery transcript, click here.


Posted by E. Frank Stephenson at 04:35 PM  ·  TrackBack (5)

Dubious Statistic?

In an effort to discourage student alcohol abuse, there is a flyer posted at my college that reports lots of factoids about harms arising from drinking. For example:

In the U.S. 65 of every 100 people will be involved in alcohol-related crashes in their lifetimes.

Perhaps the 65% rate of involvement with alcohol-related crashes is accurate, but it strikes me as highly unlikely. Yes, I know that the phrasing "involvement" includes people riding with drunks and people who are hit by drunks, in addition to the drinking drivers themselves, but it still strikes me as implausibly high. Any thoughts?

UPDATE: Reason's website has an article about the junk science of teen drinking.

Posted by E. Frank Stephenson at 01:35 PM  ·  TrackBack (2)

Winery Visiting

The Weekend Journal section of today's Wall Street Journal has a good article on reader experiences with tasting clubs, wedding wine, and visiting wineries. It reminded me of a delightful afternoon I spent in Sonoma when I was in California for the Western Economic Association meetings.

Some friends and I were touring some of the larger Sonoma wineries when we decided to stop at a much smaller winery, Homewood winery. We hadn't been in the tasting room for more than 15 minutes when the owner/operator of the winery came in to relieve his only employee. We spent the next several hours discussing and drinking wine, as well as learning a lot about the difficulty of being a one-man winery.

The owner David Homewood was so generous with his time (and wine) that it pained me that I could only purchase four bottles to take back on the plane with us. Hopefully the Institute for Justice will one day Free the Grapes! so I can order wine from David cheaply and legally. If you're ever in Sonoma, I urge you to stop by Homewood Winery.

Posted by Joshua Hall at 12:45 PM

September 23, 2004
Should Schools Be Allowed to Reject Transfers?

Craig Depken links to a Washington Post story about how traditional non-profit colleges are trying to block legislation that would make it easier to transfer credits from for-profit schools such as the University of Phoenix and Devry.

I don't see what the problem is. Setting aside the issue of why the federal government is even involved in contractual relationships between colleges, why is this lobbying wrong? Depken calls it a barrier to entry, but I'm not so sure it is. Nothing is preventing schools from starting and offering degrees.

Instead what we have is a self-enforced barrier to trade. Sure not accepting credits from for profits is a barrier, but lots of things are barriers. Restaurants won't let you bring in outside wine without a corkage fee, for example. That's a barrier, but I don't see how it warrants government intrusion.

From the perspective of a non-profit school it might be optimal to limit all transfers, from for-profit or non-profit schools. Imagine you are a small liberal arts college in an urban area with a large state university. Despite your higher sticker price, students want to attend your college because of the personalized attention you give your students and the value of coming from a semi-selective institution.

Your optimal policy is probably not to accept transfer credits, or at least a lot of them, because students will have a strong incentive to take as many classes at the cheaper state university and then transfer to your institution. Why should you, as a non-profit business, allow that?

Posted by Joshua Hall at 12:07 PM

Libertarian Bumper Stickers

From www.TheBumpersticker.com. Here's a good one:

Government: Causing More Violence Than It Prevents Since 100,000 B.C.

Posted by Joshua Hall at 11:46 AM

No Econ Blogging for Me

Not to continue to break things us with non-econ blogging topics, but it's hard to blog on econ topics as I'm up to my ears in economics (or not, depending upon how you view the mathematization of econ training).

I thought I'd pass along this item from "Sports Illustrated on Campus," which was distributed with the student newspaper here at WVU.

Seems that Shaquille O'Neal returned to his alma mater (LSU) recently. During a Q & A with some students, one bold student asked him if he'd ever do a sequel to Kazaam. (for those of you who don't know, Shaq was the star/producer of Kazaam which was a box office and critical dud).

Shaq's response: "Only if I could do a love scene ... with your mother!"

I don't know why this struck me as funny, but I've always been a fan of snappy (note I didn't say witty) comebacks. Perhaps it comes from playing "the dozens" so much in middle school.

Posted by Joshua Hall at 09:28 AM

Oprah, the IRS, and Deadweight Loss

You may have heard of the giveaway of a $28,000 Pontiac to all 276 audience members at the 19th season premiere of Oprah show. She said Ponitac would be paying all the taxes on the car. While Pontiac will pay the sales tax and other fees, Pontiac is apparently not going to pay the income taxes on the $28,000 gift. (That's not a tax on the car, that's a tax on you.) Depending on your marginal tax rate, this could increase your tax liability by $7,000.

My story: When I was in high school and college I worked summers at a car dealership doing odd jobs like washing cars, detailing new deliveries, etc. Every so often we'd have one of those cheesy car giveaways. I remember one in particular. We we giving away a new Z-28 Camaro. On the morning of the promotion, the boss pulls in the Z and another nondescript Camaro (not a Z-28 version) and tells me to detail them up. I asked why he wanted the second car done. He said "Oh that's the one we're really giving away. ;-)" It turns out that after they "give away" the Z they then go on to explain the income tax implications to the lucky winner. They then proceed to talk the winner into selling the fancy car back to the dealership and taking the less valued car in its place. The difference in price between the two cars is then given to the winner to pay their taxes. Sure they don't get the fancy car they'd expected but at least they come out even on the day after taxes.

This is a great example of deadweight loss. The winner not only lost the money she has to pay in taxes, she also lost the Z-28 and had to settle for the regular car.

Posted by Robert Lawson at 08:51 AM  ·  TrackBack (2)

September 22, 2004
Lutheran Crusaders?

The sports team nickname of the university I work for is Crusaders. Eugene Volokh guest blogging for Glenn Reynolds approves of one man's desire to end the use of the same nickname at a Catholic high school.

Eugene's argument is subtle and quite soundly libertarian. First, he argues against government bans of such names (at least at private schools--he is silent about public schools). This is a sound libertarian position of course. Then he follows with an endorsement in principle of private groups (such as the high school athletic association) banning such nicknames and argues more generally for public opinion and civil society to step in to eliminate the use of such offensive names.

I think it is vitally important that libertarians couple their arguments against government power with explanations showing how civil society would deal with such problems without the use of government. In a civil society, we have to work with other people peacefully and the price of working with others is that we don't always get to do as we please. In this case, it is quite consistent with the libertarian philosophy for the high school athletic association to refuse to acknowlege teams with offensive nicknames. Politically correct? Yes! But so be it.

Back to my university. I have never been a fan of the name Crusader here and neither are a bunch of other faculty who recently asked that it be changed. I don't necessarily support their case (mostly I don't care), but I admit they have a point on the merits.

My beef is different. I can't quite get over the fact that my university is not Catholic where the nickname at least makes some sense; rather it is affiliated with the Lutheran Church. It used to be the Fighting Lutherans once upon a time. That at least made sense as Luther wasn't exactly a pacifist. But the Crusaders were (um) Catholic the last time I checked.

Btw, they use a Spartan helmet for a logo so the confusion abounds around here.

Posted by Robert Lawson at 11:10 PM

Strikeouts Are Just Another Out

Knowing that Bob's a Cincinnati Reds fan, I thought I'd pass along this free article from the good folks at Baseball Prospectus on Adam Dunn's approach of the single season strikeout record. I think they hit the nail right on the head:

Dunn's strikeouts are a side effect of his power and patience. He works deep into counts, risking strikeouts, and takes big swings that miss. Cutting down on his strikeouts should be a goal only if doing so allows him to hit the ball hard and far more often.

Bonds hit .302/.375/.504 when he set the record in 1970, and was one of the 15 or 20 best players in the National League. Dunn is among the top dozen hitters in the NL this year, and a worthy successor to Bonds. Here's hoping he plays out his season, 190 be damned.

Posted by Joshua Hall at 09:03 PM

For the Urchins

Craig Depken reports that the folks shilling for a new stadium for the Dallas Cowboys have now resorted to the "for the children" strategy. He writes:

One [pro-stadium mailer] saying a vote for the stadium is a vote for the children of Arlington. Why? Because the Cowboys will give $500,000 per year to local youth sports programs for the next thirty years. The donations are not indexed to inflation, so assuming 3% inflation the $500,000 contribution in 2034 will be worth about $205,000.

This is spot on, but it misses a bigger point. The Cowboys stadium will cost something like $300 million dollars. If the pro-Cowboys folks are so concerned about kids then wouldn't the $300 million work out to $10 million per year for 30 years. In other words, there would be 20 times more annual funding available for kids if the stadium is not constructed. (One caveat: Texas law might limit the use of tax revenue in ways that would prohibit a "for the urchins" tax referendum.)

Posted by E. Frank Stephenson at 03:31 PM  ·  TrackBack (3)

September 21, 2004
Sabato Talk

I've just returned from a delightful talk by UVA politics guru Larry Sabato. See his website for his current thinking on the election.

Wisely, Sabato would make no prediction about the winner on Nov. 2; however, his current analysis shows a narrow Bush lead. (He has all states going Democrat or Republican as in 2000 except NH switching to the Democrats and Wisconsin switching to the GOP.)

Sabato did offer a prediction about Nader--that his 2004 vote would be about 1/3 of the 3% he garnered in 2000. At face value this suggests that Nader may be a non-factor (unlike 2000 when he siphoned enough votes from Gore to allow Bush to win NH, FL, and the election), but it ignores the fact that Nader's 1% or so will come disproportionately in swing states. Robert Novak has more.

Posted by E. Frank Stephenson at 10:47 PM  ·  TrackBack (261)

The Regulation Tax

Economists teach that business regulations have tax-like effects: higher prices and reduced output. Yet, politicians treat regulations as if they were free.

I got a taste of this in talking to the fellow next to me on the flight home from Hong Kong last week. He works for Brunswick's marine division (they make boat motors as well as bowling balls and cue sticks) and he was coming to a week-long seminar on how to comply with the Sarbanes-Oxley law. He was complaining that his small division has few managers, each wearing multiple hats, and that they were having great trouble complying with all the new rules.

If you want to learn more about the law, Professor Bainbridge has a post about Sarbanes-Oxley.

UPDATE: This was e-mailed to me by a friend.

I just popped out to your blog and wanted to add a few comments on Sarbanes Oxley. I can only echo the comments of the person you met on the Hong Kong flight. This law has created a whole new level of auditors, accountants, and second-guessers within our company. Most of the things these inquisitors implement or suggest seem to have little to do with good business, ethical compliance, or preventing another Enron. When asked to explain why we are doing something new, we are told “because of Sarbanes Oxley” as if that explains a good business reason for the change. So far, the only outcomes I see from the law are that legislators can feel good about “doing something” and businesses are burdened with yet another layer of expensive regulations.

Posted by Robert Lawson at 07:25 PM  ·  TrackBack (158)

Congratulations

To Roy Cordato for his letter to the editor in today's Wall Street Journal.

Demand Supply/Lesson

Any first-year economics student could tell you that unless 1970s-style price controls are instituted, there is no chance that the demand for oil will "outstrip" supply ("Oil Demand Could Outstrip Supply by Late Next Decade," Sept. 9). In the event that oil becomes more scarce over time, reversing trends of the past 140 years, prices will rise, quantity demanded will fall and consumers will continue to get all the oil they want.

Posted by Joshua Hall at 01:27 PM

Soccer Socialism

In an otherwise fine article (sub. req.) in the weekend edition of the Financial Times, the author shows just how deeply socialism runs in the minds of Europeans. The article argued that soccer was becoming a unifying force in European society as nationalist rivalry is being replaced with a broader interest in the sport. (It occurs to me that the argument would apply to the Superbowl in the U.S. as it transcends the sport itself and has become a cultural force even among non-football fans.)

This is ok as far as it goes, but check out this little zinger buried in the story.

The European football championship has become a sort of festival of European harmony that probably deserves funding from the European Union as a large-scale enactment of the pan-European ideal.

I think he is serious. In the print edition they highlighted this statement in a box. How sad it is that people can't even conceive of civil society (and sport represents a big part of civil society) without state funding.

(To be fair, we Americans aren't too pure on this point ourselves what with our stadium funding problems.)

Posted by Robert Lawson at 10:32 AM  ·  TrackBack (113)

Sen on Hayek

The Financial Times has an article (sub. req.) by Amartya Sen on the legacy of F.A. Hayek on the occasion of the 60th anniversary of the publication of The Road to Serfdom.

Both Sen and Hayek place great emphasis on the role of markets in promoting human freedom even though their conceptions of freedom differ. Here are a couple quotes (along with my comments) from the article. If you can get a copy, it's worth a full read.

It is the perspective of seeing markets and other institutions in terms of their role in advancing freedoms and liberties of individuals that Hayek brought into singular prominence. It may be pointed out, in contrast, that despite the title of Milton Friedman's famous book (with Rose Friedman), Free to Choose, the criteria by which Friedman tends to defend the market mechanism are not liberty and freedom, but prosperity and utility ("being free to choose" is seen as a good means - a fine instrument - rather than being valuable in itself). Even though a few other economists, James Buchanan in particular (and, to some extent, John Hicks), have presented insightful ideas on a freedom-centred line of reasoning, it is to Hayek we have to turn for the classic articulation of this way of seeing the merits of the market mechanism and what it gives to society.

I agree that placing freedom as a centerpiece goal alongside efficiency (or utility or whatever you call it) and equity is hugely important. Take note though of the cheap (and incorrect) shot at Friedman.

In The Road to Serfdom, he gave powerful reason to indicate why explicit provision has to be made by the state and the society for the deprived and the dispossessed.

This is true, but only to a point. Hayek most certainly would not agree with Sen that today's welfare state, at least not at its current size, is freedom-enhancing. Indeed, Sen's continued faith in the state is amazingly naive especially as he acknowleges the following.

A third contribution of Hayek is of particular interest to those on the left of the political spectrum. Hayek's critique of state planning is mainly based on a subtle psychological argument. He was particularly concerned with the way centralised state planning and the huge asymmetry of power that tends to accompany it may generate a psychology of indifference to individual liberty. As Hayek put it: "I have never accused the socialist parties of deliberately aiming at a totalitarian regime or even suspected that the leaders of the old socialist movements might ever show such inclination." One of Hayek's central points was that "socialism can be put into practice only by methods of which most socialists disapprove".

Anyone who's been through an Indian customs line should identify with this.


Posted by Robert Lawson at 10:07 AM  ·  TrackBack (117)

Robert Barro on Keynesian Models

An odd feature of the standard Keynesian model is that anything that makes people feel wealthier actually makes them wealthier (although the perception and actuality need not correspond quantitatively). This observations raises doubts about the formulation of Keynesian models, but says little about the effect of budget deficits.*

* Robert J. Barro, "The Ricardian Approach to Budget Deficits," Journal of Economic Perspectives vol. 3, no. 2 (Spring 1989), pp. 47-48.

Posted by Joshua Hall at 08:52 AM

The Cost of Flying

According to USA Today (9/21/04, B1 "USA Today Snapshots"), here are the percentage of federal taxes and fees that constitute an airplane ticket:

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Posted by Joshua Hall at 08:40 AM

The Difference Between Influence and Corruption

William F. Buckley:

Anybody who believes that influence isn't a factor in life was never asked to write a letter to a Congressman asking him kindly to endorse the application of Joey from next door to enter West Point. That's how much of life works. Influence is not to be confused with corruption. Influence can get you to the head of the line to get your driver's license; corruption is when you fail the test, but get the license anyway.

Hat Tip: Craig Newark.

Posted by Joshua Hall at 08:27 AM

The Reason Your Wife or Girlfriend Always Calls You

It's probably because the slope of her marginal utility curve for relationship time is less steep than yours, says Glen Whitman.

Posted by Joshua Hall at 08:18 AM

Bush vs. Clinton on Crime: A COPS Lament

Yale law professor John Donohue, writing in The Economists' Voice, argues that Clinton's policies (primarily the COPS program) were more effective against crime than the Bush administration's policies have been. While his thesis might well be correct, his evidence is unconvincing.

First, and least important, Donohue offers no actual evidence on crime rates. Might this be because crime has remained at a relatively low level during the Bush years?

Second, Donohue bases his argument almost exclusively on the decline of the COPS program. (The only other factor considered is the assault weapons ban.) However, he ignores other factors related to crime such as higher unemployment associated with the 2001 recession. (Georgia's David Mustard and his co-authors have a nice paper on the relationship between labor market conditions and crime.)

Third, and most importantly, Donohue's desire to pin the blame for the withering of the COPS program on Bush ignores an inconvenient little fact--Bush didn't become president until January 20, 2001 and his first budget didn't become effective until October 1, 2001 (or even later if Congress missed the deadlines in its budget process). Why does this matter? Because the decline in COPS started before 2001. Examining Donohue's Figure 1 reveals that the decline in police per 100,000 population (which Donohue evidently thinks is affected solely by the COPS program) actually started to decline in 1999. OOPS! Viewed in terms of the funding for COPS--depicted in Donohue's Figure 2--the declne actually started back in 1998. Moreover, the largeest decline (from some $1.2 billion to $500 million occured between 1999 and 2000. (Remind me again who was president then?) While Donohue is correct that "COPS hiring funds have fallen every year Bush has been in office," his argument that Bush is uniquely responsible for "undermining Clinton gains" is highly selective.

Finally, suppose for a moment (but only a moment) that Donohue's argument that Bush is solely responsible for defunding COPS is correct. He seems to implicitly assume that the program's existence is chiseled in stone regardless of other needs or events. By contrast, one might argue that the crime reductions of the 1990s (which Donohue concedes were due more to "other forces" than to Clinton policy) made reallocating funds from COPS to, say, fighting terrorism a prudent policy.

In sum, this article is a disppointing beginning for The Economists' Voice. If it is an indication of what we can expect in the future, the Russ Roberts's skepticism is warranted.

Follow-up reading: My student Dan Alban and I wrote a COPS piece for the Novermber 2000 Ideas on Liberty. Heritage's David Muhlhausen also has a number of articles (some analysis and others commentary) on COPS. (Note that I've only given Mulhausen's papers a quick read and, although they look pretty good, I cannot vouch for the quality of all of them.)

Posted by E. Frank Stephenson at 12:38 AM  ·  TrackBack (24)

September 20, 2004
Random Musings

Back from Hong Kong....

(1) Hong Kong at night is the most amazing man-made thing I've ever seen. It's the Grand Canyon of human action. It makes Manhattan look positively shabby by comparison.

(2) I just added De Gustibus to our blogroll. This is a blog run by one of my students and some of his peers.

(3) The inside word on why our conference was denied permission to meet in Shanghai is that Beijing is punishing the Unirule Institute. The institute has had four recent conferences rejected. Sigh. The more things in China change, the more they remain the same.

Posted by Robert Lawson at 11:06 AM  ·  TrackBack (2)

Michael Munger is on a Roll

But the particular brand of mob rule we call democracy ignores, or actively lies about, all these things. Still, "democracy" is a thing we all admire, right?

Actually, I think we do, or claim to. That's okay, people get to be wrong about what they believe. But what bugs me is the hypocrisy of so many people who claim to favor democracy, because they actually favor the opposite. What most liberals mean by "favoring democracy" is this: "I favor using the coercive powers of government to implement through the court system, backed by Federal marshalls and the Army if necessary, a particular brand of policy that is honestly supported by less than a quarter of the U.S. population." In other words: We got guns! We don't need no stinkin' persuasion.

As they say, read the whole thing.

Posted by Joshua Hall at 06:23 AM

September 18, 2004
Sports Musings

1. Craig Depken continues to do Heavy Lifting on the plan to fleece Arlington TX taxpayers for a new stadium for the Dallas Cowboys. (Why not fleece Dallas since it has "naming rights"?) He has some particularly good stuff about the (to put it mildly) lousy economic impact study done by stadium proponents.

2. My friend John Charles Bradbury over at sabernomics.com has put together a fun statistical model for estimating how much major league baseball players are worth based on their performance. One can have loads of fun tinkering with players who are over/underpaid.

3. Regarding Josh's Barry Bonds post: First, an anecdote that might help put Bonds in perspective. During a recent Braves game, one of the announcers stated that Bonds has drawn more walks than Chipper Jones and J.D. Drew combined this season. Jones and Drew are both high OBP players who draw 100 or so walks a year; it's not like saying Bonds walks more than Ichiro (see below).

Second, as amazed as I am by Bonds (see next item), I find the hype over his hitting HR number 700 a bit excessive. Yes, he's the third player to do, but he was also the third player to ever hit 698 or 699 (or 701 as he did today). Much like "Dow 10,000." the 700th HR is given more significance than it warrants because it's a nice round number.

Third, a question to ponder. Is Bonds performance over the past 4 seasons the best string of 4 seasons ever put together? I'm inclined to think so, but it's been awhile since I read Allen Barra's "Clearing the Bases."

4. I'm much less impressed by Ichiro's quest for the single season hit record. While it is probably good entertainment for Seattle fans who have little else to cheer this season, I wonder if he wouldn't be more valuable to his team's on-field performance (admittedly a lost cause at this stage of the season) if he'd be more selective at the plate. He's only drawn 43 walks in nearly 700 plate appearances; I'd be surprised if he draws 2 or more walks in the last two weeks of the season.

5. In Friday's WSJ, Allen St. John previewed this weekend's Yankees-BoSox series. An excerpt:

Perhaps more importantly, Boston's new closer, Keith Foulke, sports a 1-1 record, a 1.86 ERA, and is 2 for 2 in save opportunities, stats that trump Mariano Rivera (0-1, 3.12 ERA, 2 for 3 save opportunities).

This comparison struck me as being based on too small a sample (especially the save opportunities) to be meaningful. (The ERAs were both based on 7 appearances vs. the other team before this weekend.) But what do I know? While channel surfing last night I saw Foulke pitch well and Rivera take the loss.

6. As a transplanted North Carolinian, I'm pretty much at home in Georgia. The one big exception--football vs. basketball. Folks here are nuts about the former (I'm still practicing the Go Dawgs bit); folks in NC prefer the latter. (When's the last time you heard any upbeat news about Duke or UNC football?) Given my preference for roundball, I was disappointed by the ACC's recent expansion moves. I fear the loss of home-and-home regular season scheduling will diminish the conference; the addition of Va Tech and Miami basketball won't help matters either.

Posted by E. Frank Stephenson at 11:49 PM  ·  TrackBack (5)

Thugs for Kerry: An Update

Southern Appeal links to a statement from IUPAT General President James A. Williams that seems to confirm the legitimacy of the photo of a goon tearing up a little girl's Bush-Cheney sign. Unless, of course, he's also the victim of a hoax.

Here's my previous post for background.

Posted by E. Frank Stephenson at 10:53 PM  ·  TrackBack (284)

September 17, 2004
Vision of the Anointed

Over the summer, I belatedly read P.J. O'Rourke's Parliament of Whores and Thomas Sowell's The Vision of the Anointed. O'Rourke was funny as usual, though government follies present lots of easy targets. The Sowell book, in contrast to his both sloppily-written and anecdotally stale Basic Economics (for a review click here), was one of his better efforts.

A couple of news items in the past week brought to mind Sowell's arguments. In his book, Sowell documents a tendency among the anointed (read leftist busybodies) to seek "solutions" to social problems (as opposed to trade-offs or choices necessitated by finite resources). True to form, news headlines announced that Howard Dean's new book offers solutions.

In the book, Sowell also remarks on the anointed's habit of focusing on intentions and motives rather than results. The teeth-gnashing over the expiration of the entirely symbolic assault weapons ban reads like a case study right out of Sowell.

UPDATE: Yale law prof John Donohue, writing in The Economists' Voice, gives us another fabulous example of the anointed opining on the expiring assault weapons ban:

For these [loopholes], I would be surprised if the assault weapons ban had a
particularly large impact on crime, although it likely provided some modest
benefits. At a minimum, though, the law sent a message that there are limits to
how much firepower private citizens can be allowed to possess.

For a more general discussion of The Economists' Voice, Russ Roberts of Cafe Hayek has a nice post.

Posted by E. Frank Stephenson at 04:21 PM  ·  TrackBack (173)

Real High School Senior Photos

At OU, the freshman record was a yearbook containing the senior photos of incoming freshman. I distinctly remember one guy who was posed wearing a Calgary Flames jersey and a hockey stick. I thought that was a bit weird and when I met him and found out that 1) he didn't play hockey and (2) wasn't that big of a Flames fan, I found it to be even weirder.

Turns out he wasn't that bad.

(Hat tip: Craig Newmark).

Posted by Joshua Hall at 04:03 PM

September 16, 2004
"Let Them Go Naked"

Marie Antoinette Heinz Kerry is apparently showing her concern for the little people again.

MORE SERIOUSLY: There has been substantial recent movement in the Iowa winner-takes-all market. The share prices are now indicating a 60% probability of a Bush win.

As my previous posts have indicated, I have been underwhelmed by the Bush predency. That said, Dan Rather's phony documents bit (fake but accurate--what a motto!) and classless antics such as this (the smiling punk in the green hat deserves a beating) are making me more and more hopeful that the Iowa markets are correctly forecasting the outcome in November.

UPDATE: There are suggestions in the blogosphere that the photo linked above (the smiling punk in green hat) is fake. Take my comment above with a grain of salt unless you can verify it elsewhere. (Hat tip: David Rossie.)

NOW THE UPDATE AS DAN RATHER MIGHT HAVE WRITTEN IT: Concerns have been raised about the authenticity of the photo but I'm sure it's true that the mean man destroyed the young girl's sign.

ADDENDUM: Given my disappointment with Bush and my disdain of Kerry, an obvious alternative is voting for the Libertarian candidate. (By the way, who is the Libertarian candidate?) Between now and November, I'll be looking into his positions and background. Unfortunately, I've heard that he's not an attractive candidate. Even if that assessment is incorrect, he has no realistic chance of winning.

Posted by E. Frank Stephenson at 11:30 PM  ·  TrackBack (38)

Higher Education?

After reading this post by Craig Depken (of Heavy Lifting fame), I know my friends at UT are glad that the Econ department is housed in Arts & Sciences.

Posted by Joshua Hall at 03:02 PM

Barry Bonds is hitting ...

.341/.386/.707 (BA/OBP/SLUG) after falling behind 0-2.

The average NL hitter bats .194/.235/.303 after falling behind 0-2.

Unbelievable.

Hat Tip: Joe Sheehan at Baseball Prospectus. (Sorry, no direct link as it's in a premium content article.)

Posted by Joshua Hall at 02:55 PM

September 15, 2004
Income v. Wealth in Hong Kong

After taking my morning run along the Gold Coast in Hong Kong I felt like I'd smoked a pack of cigarettes because of the smog. It's a lot better than the air pollution I saw on trips to Manila and New Delhi, but still it is pretty bad.

At first as I reflected on this I was surprised. After all Hong Kong now has a per capita income almost as high as the U.S. and higher than most of Europe. Why aren't they investing more in pollution reduction?

I think the answer might be that the demand for a cleaner environment is a function of wealth more so than income. Hong Kong clearly generates a lot of income, but it has only done so at this level for the last several decades. This is still not enough time to have accumulated as much wealth as we have in the U.S. (which had led the world in income for 200 years).

UPDATE: Apparently the air pollution problem is much simpler to understand. It's coming over the border from the electricty factories in China that burn crappy soft coal.

Btw, we woke up to beautiful blue skies this morning--a big improvement over the gray hazy smog of the last few days.

Posted by Robert Lawson at 09:43 PM  ·  TrackBack (96)

Handouts, Hurricanes and More

The human suffering and misery caused by hurricanes is enormous but in a year when hurricanes have targeted the U.S. coastline with regularity I began to wonder if FEMA should be dishing out billions of dollars in aid.

It is not that I don't want to help, but why should the government provide assistance every time a natural disaster occurs. The lesson when a hurricane strikes should be to build stornger structures (as was done after Andrew) or build farther away from the water.

It doesn't make sense to argue that Floridians are surprised that hurricanes hit their state. Florida along with Louisana, Texas, and North Carolina account for most of the strikes to the U.S. coast. Hurricanes in Florida are a predictable fact of life, like flooding along rivers, or a blizzard in Minnesota. If you live in an area where you are subject to a predictable form of natural disaster then the residents of that area should self-insure to protect the property they own. They should not expect the federal government to provide what they could have paid for themselves if they had planned ahead.

Here's hoping that Ivan weakens, for the obvious reason, that lives will be saved and property spared. But also for the not so obvious reason that someone will have to pay to clean up the mess, and those persons are likely to be you and me.

Posted by at 04:50 PM  ·  TrackBack (296)

Topless Caddies

This might make some putters flutter. Click here for the story; sorry no guys no photos.

Posted by E. Frank Stephenson at 12:11 PM  ·  TrackBack (143)

September 14, 2004
Customer Satisfaction Insights?

WARNING: What follows is a cheap shot, but I just couldn't resist.

An ad Sept. 9's WSJ for an upcoming "Executive Roundtable" caught my eye. The ad featured photos of 11 corporate officers and pitched the program as "An unprecedented opportunity to gain insights for enhancing your organization's focus on outstanding customer service."

That's all well and good but one of the featured corporate execs is the Chief Information Officer for the IRS. He's probably a perfectly fine chap, but isn't getting customer service pointers from the IRS a bit like getting medical advice from Dr. Jack?

Posted by E. Frank Stephenson at 12:38 PM  ·  TrackBack (108)

September 13, 2004
On Retirement Plans and Social Security

Bob's recent post on retirement plans prompted a couple of thoughts:

1. Regarding Roth IRAs vs. traditional IRAs: One way to view a Roth is as an insurance policy against higher future tax rates. (With a Roth, one's contributions are made on an after-tax basis and withdrawals are tax-free. With traditional IRAs, 401k plans, and the like, the contributions are made on a pre-tax basis but the withdrawals are subject to tax.) Since it is probably much harder for Congress to change the tax status of Roth withdrawals than it is to up the general income tax rates (which apply to traditional IRA withdrawals), Roths provide something of a hedge against higher taxes.

2. On grounds of individual freedom, I am all for switching Social Security over to a system based on personal accounts. (In a really radical moment, you might even get me to utter something about there being no need for government to mandate retirement savings in any form public or private.) I do, however, have a concern about plans for personal accounts. (Click here to see Rep. Paul Ryan's version; I link to his plan because it is a typical reform proposal not out of an intent to specifically criticize his plan. Indeed, I commend him for his initiative.) My concern is with provisions to guarantee workers at least as much Soc. Sec. benefits as they would receive under current law. My fear is that this provision (which is probably included as a political tactic) would lead to substantial moral hazard problems. I can invest in, say, a risky IPO and reap the benefits if the investment is successful or fall back on my govt. guaranteed Soc. Sec. benefit if the investment is not successful. Don't get me wrong--I think prudent retirement investment decisions might well include some degree of risk, but the "heads I win, tails you lose" aspect of the Ryan plan would give people an incentive to engage in even riskier investing.

Posted by E. Frank Stephenson at 05:48 PM  ·  TrackBack (103)

German Courts--Not a Laughing Matter

Craig Depken posts on German prosecutors' hairsplitting over whether an assailant threw a red, green, or yellow tomato. Unfortunately, this is par for the course for a criminal justice system that let the man who stabbed tennis player Monica Seles off with a two-year suspended sentence and which could only manage to sentence someone complicit in the murder of 3,000 people to 15 years in jail.

Posted by E. Frank Stephenson at 05:14 PM  ·  TrackBack (34)

September 11, 2004
Media Bias

From David Brooks's Sept. 11 column:

Professors, on the other hand, are classic paragraph people and lean Democratic. Eleven academics gave to the Kerry campaign for every 1 who gave to Bush's. Actors like paragraphs, too, albeit short ones. Almost 18 actors gave to Kerry for every 1 who gave to Bush. For self-described authors, the ratio was about 36 to 1. Among journalists, there were 93 Kerry donors for every Bush donor. For librarians, who must like Faulknerian, sprawling paragraphs, the ratio of Kerry to Bush donations was a whopping 223 to 1.

So journalists' campaign contributions are even more heavily tilted toward Democrats than are notoriously lefty academics and actors. This factoid should pretty much end what little debate remains about media bias.

Hat tip (yet again) to my colleague Wilson Mixon.

Posted by E. Frank Stephenson at 11:14 PM  ·  TrackBack (28)

I Especially Liked...

This version of Games Economists Play (especially Modigliani's Revenge).

Posted by Joshua Hall at 11:25 AM

Risky Business

In the debate between "defined-benefit" pension plans like social security and many other public and private corporate pensions and "defined-contribution" plans like 401-k's, IRA's, etc, the advocates of the former often argue that their plans are safer.

It certainly appears so on the surface. Defined-benefit plans typically guarantee the individual retiree a certain income (based on some formula of previous earnings). Defined-contribution plans, where people invest in assets like stocks and bonds, leave the individual at risk if their investments don't work out.

But this logic is a sort of fallacy of composition (much like Frank's recent post on too much choice). What's safer for the individual investor may not be safer for the whole group.

We should remember that social security (as we all know) suffers from tremendous risk related to demographic and productivity trends. Private defined-benefit pensions (often run by unions btw) are invested in, you guessed it, stocks and bonds, and suffer from the same risk at the group level as individual investors in 401-k's. In addition, such plans are at much greater risk of corruption (and even theft) by corporate, union, and public officials in charge of running them.

For example, Lucent wants to cut employee retirement benefits.

Posted by Robert Lawson at 08:12 AM  ·  TrackBack (33)

September 10, 2004
Too Much Choice?

Today's Washington Post has an article (based on a Swarthmore psychologist's book) arguing that people can be made worse off by having too many choices. On one level, this notion is so obvious that it isn't interesting--I could do my shopping faster if Wal-Mart stocked only the items that interested me and if I didn't have to waste time walking past the products that don't interest me. Of course, the problem with the too much choice hurts me notion is who--ahem--chooses what items would be eliminated from my set of possible choices. Even if by dumb luck the person or agency deciding on what products would no longer be available managed to correctly eliminate the infernal sweet potato from my choice set, some unlucky sweet potato lover would be worse off. Ultimately, we're better off allowing consumers as wide an array of choices as their purchasing habits make it worthwhile for stores to provide.

Russ Roberts of Cafe Hayek also skewers the too much choice notion.

Posted by E. Frank Stephenson at 04:47 PM  ·  TrackBack (131)

New Blogger

In a previous post, I touted Jeff Gropp's homepage of nifty quotes. I can now do one better--Jeff has agreed to join our merry band of bloggers. Welcome Jeff.

Posted by E. Frank Stephenson at 04:04 PM  ·  TrackBack (199)

Hong Kong Here I Come

I'm off to Hong Kong next week to attend first the Atlas Economic Research Foundation's Asian Resource Bank Meeting and then a Symposium on 'The Role of Government in Asian Economies' sponsored by the Hong Kong Center for Economic Research and the two leading market-liberal think tanks in China, National Economic Research Institute and the Unirule Institute of Economics.

This meeting was originally scheduled for Shanghai but had to be moved to Hong Kong at the last minute for reasons that I'll post about when I return.

Anyway, this will be my first trip to the place that has always held the number one spot on the economic freedom index.

Oddly enough, some people think Hong Kong is a socialist hell hole. Go figure.

Btw, I'm supposed to have high speed wireless in the hotel, so I hope to blog some next week.

Posted by Robert Lawson at 10:30 AM  ·  TrackBack (120)

September 09, 2004
More from Marie Antoinette Heinz Kerry

Madame Kerry says opponents of her husband's scheme to further socialize medical care are "idiots." Count me in.

Posted by E. Frank Stephenson at 01:45 PM  ·  TrackBack (232)

Root Causes

USA Today has a story on children being taught about the root causes of terrorism. Listed among the causes are overpopulation and poverty. Never mind that many of the 9/11 hijackers did not come from poor families and never mind the research finding that, if anything, there is a positive relationship between income and terrorist activity.

Instead of the root causes of terrorism drivel, would someone please investigate the root causes of this form of child abuse?

Hat tip: Wilson Mixon

Posted by E. Frank Stephenson at 01:34 PM  ·  TrackBack (27)

September 08, 2004
Never too young to be a skeptic

So I'm driving the nine year-old to ballet class and I pull over to the side of the road to make way for a fire truck on a call.

She asks, "Why do you have to pull over when a fire truck is coming?"

I answer mindlessly, "Well it's the law."

She replies, "Yes, but is there a reason?"

Posted by Robert Lawson at 06:21 PM  ·  TrackBack (34)

WSJ and Nobel Economists

The WSJ recently asked some Nobel Prize winners about current events and for their predictions for the future. Selected responses were printed in Friday's WSJ; the full responses are on wsj.com. (A paid subscription is required but both Russ Roberts and Don Boudreaux of Cafe Hayek have posts/excerpts.)

Asked which countries should be emulated, Berkeley's George Akerlof responded that Sweden should be emulated "because it takes care to support those who are in need, and it maintains near full employment." Since at least one (perhaps flawed) study finds that Sweden is poorer than Mississippi, Akerlof's choice reminds me of Churchill's quote:

"The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."

(DePauw's Jeff Gropp has this Churchill quote and lots of other goodies on his homepage.)

Regarding the full employment part of Akerlof's response, I seem to recall a quip from Milton Friedman about creating lots of jobs by hiring people to dig and then refill holes. Unfortunately, a quick search by Mr. Google failed to find the quote.

UPDATE: Thanks to reader Trent McBride who sends along a link to a posting about Sweden's stifling labor market regulations.

Posted by E. Frank Stephenson at 04:00 PM  ·  TrackBack (22)

Media Concentration III

Clear Channel, run by a Bush-loving Texan, has added Air America's leftist radio programming to its Columbus OH station. (Happy listening, Bob.) Yet another argument against the media concentration nonsense.

On the media bias front, here are some outrageous shenanigans from the AP. No wonder our humble medium is eating away at old media.

Posted by E. Frank Stephenson at 12:23 PM  ·  TrackBack (25)

September 07, 2004
More on Political Sign Restrictions

I fired off an e-mail to Eugene Volokh of the Volokh Conspiracy blog about my city's political sign ordinance that I had posted about last week.

Here's what he said:

Subject-matter restrictions such as this are *not* content-neutral. They are viewpoint-neutral, but not content-neutral (since they apply to speech related to campaigns but not to other speech), and are therefore unconstitutional. See, e.g., Carey v. Brown (1980).

Here's the case on findlaw.

I have an e-mail in to the city's attorney already.

UPDATE: Today I received the following reply from the city's attorney.

Dear Mr. Lawson: Thank you for your inquiry. While municipalities have broad powers to regulate signage, there are several decisions by Ohio courts striking down as unconstitutional laws specifically targeted at political advertising . Accordingly, the city has not issued citations for violations of Section 1230.06(b) on private property. In my opinion, the city can lawfully prohibit signage in the public right-of-way. Why then has this subsection not been repealed? While unenforceable, I believe that most candidates (particularly in local elections) have used the section as a voluntary guideline for campaign signs. Over the years, my further sense is that residents, without regard to their personal politics, have viewed a community guideline and voluntary compliance with it favorably.

While the idea of leaving unconstitutional (and hence unenforceable) laws on the books does irk me a bit, I guess this is a reasonable stance. Basically, the city is trying to get us to collude to not put signs up too early. All in all not a bad idea.

Posted by Robert Lawson at 11:13 PM  ·  TrackBack (23)

Sportsmanship is dead!?

Big umpiring mistake in tonight's US Open match between Jennifer Capriati and Serena Williams. In the first game of the third set with Williams serving and the score duece, Williams hits a clear winner down the line. The ball was completely inside the sideline and the line judge called it in. Unbelievably the chair umpire calls the advantage to Capriati not Williams. As I'm writing this (the match is still going on) it isn't clear if the umpire overruled the line judge or if she mistook the line judge's call. Williams argued to no avail and ended up losing the game.

I imagine we'll find out exactly what happened afterwards, but my question is this: where the heck was Capriati? She had to know the ball was in and was incorrectly called out and the score was wrong. Yet she chose to say nothing!

No class.

UPDATE: This is what Capriati had to say afterwards (quoted from story linked above):

``I didn't even, like, look at it. It was close. I was just going to what the umpire said,'' Capriati told the crowd afterward, drawing some boos and murmurs.

``Believe me, I've had things go against me many times, plenty of times. I deserve to get a call once in a while.''

Still, no class.

Posted by Robert Lawson at 09:30 PM  ·  TrackBack (37)

No-Labor Day Weekend

No politics or economics for me this weekend!

On Saturday and Sunday, co-blogger Josh and I played vintage base ball at the 13th Annual Ohio Cup festival. We both played pretty well and the team was 3-2 on the weekend. The weather was perfect and the fellowship among our fellow base ball enthusiasts was a great way to officially end the summer.

On Monday, the family and I travelled to Ashland to spend the day with co-blogger John and his wife. He's got two wonderful young yellow labs. And I got to drink a pint of his very tasty homebrew. Thanks John!

Posted by Robert Lawson at 10:07 AM  ·  TrackBack (39)

September 06, 2004
Labor Day

This 2000 article from the Ayn Rand Institute is a good antidote the typical socialist Labor Day tripe.

Posted by E. Frank Stephenson at 02:05 PM  ·  TrackBack (124)

September 03, 2004
Exploiting the Proletariat

One of the premises of minimum wage laws and so-called living wage laws is the notion that workers have no bargaining leverage with employers who, in the absence of such laws, would pay them a mere pittance. Consider then the following conversation between NPR's Linda Wertheimer and a delegate to the Republican convention:

WERTHEIMER: When we talked to convention delegates at the golf party, we got a ground-level view of the health-care issue from Chris Cavey(ph), a Republican delegate who has a three-person insurance office in Hampstead, Maryland.

Mr. CHRIS CAVEY (Republican Delegate, Maryland): I have a young lady who, on Thursday, just--I mean, we're talking three days ago, four days ago, whatever--came into my office and gave me her two weeks notice because my agency does not currently provide a health-care benefit for my employees.

WERTHEIMER: Cavey says he'll have to take a financial hit and find a plan; he wants to hang onto a valued employee.

(The story aired on the 8/30 edition of "All Things Considered.")

Posted by E. Frank Stephenson at 02:51 PM  ·  TrackBack (289)

New Life for the Interstate Commerce Clause?

A federal appeals court strikes down part of Ohio's tax incentive program for attracting new businesses.

"The effect of the Ohio . . . tax credit is to encourage further investment in-state at the expense of development in other states. We conclude that Ohio’s . . . (corporate-franchise) tax credit cannot be upheld under the commerce clause of the United States Constitution."

While I applaud the result and am happy to see the Commerce Clause get some respect, even I think this is a pretty broad reading of the clause. I haven't read the decision, but under this logic even general tax cuts might be struck down!

And the fact that Ralph Nader is behind the case doesn't exactly make me feel easier about the case.

Prediction: The Supreme Court will take this case or one like it soon to settle the issue.

Posted by Robert Lawson at 01:25 PM  ·  TrackBack (122)

September 02, 2004
Bush v. Kerry

I just received the new Reason magazine with cover pics of Kerry and Bush and the headline, "The Good News is One of These Guys Will Lose. (The Bad News is One Will Win.)" Sorry, the issue isn't online yet.

The article by Jesse Walker and Terry Colon gives "Ten Reasons to Fire George W. Bush...And Nine Reasons Kerry Won't Be Much Better." Money quote:

Making [libertarians] pull for a santimonious statist blowhard like Kerry isn't the worst thing Bush has done to the country. But it's the offense we take most personally.

Posted by Robert Lawson at 04:03 PM  ·  TrackBack (116)

Working Family Gibberish

Among the sillier bits of political rhetoric is the bipartisan nonsense that "working families" is a synonym for low-income or middle-income families. (For a Bush example click here; for a Kerry example click here or here.)

As my colleague Wilson Mixon and I wrote in 2001 piece for Ideas on Liberty, it is actually high income families that work the most hours. Using 1997 data from a Heritage Foundation study, we found that average weekly household hours of work by quintile were 12.8, 32.5, 46.2, 64.5, and 74.3. Hence, families in the highest quintile work about 2.25 times the hours that a family in the 2nd quintile works and 1.6 times the hours that a family in the 3rd quintile works. (I presume that the 2nd and 3rd quintiles contain the politicians' "working families.") Of course this shouldn't come as a great surprise--after all, more hours of work generally lead to higher income.

ADDENDUM: Bruce Bartlett dissects the "middle-class squeeze" nonsense.

UPDATE: For a more recent Heritage Foundaton analysis of income distribution measurement issues, click here. Hat tip to Heritage's Andrew Grossman.

Posted by E. Frank Stephenson at 10:09 AM  ·  TrackBack (129)

Political Yard Signs

My city (constituting a mighty 2.5 square miles with a population of about 12k) has an ordinance (Chapter 1230.06 of the Zoning Code (.pdf)) prohibiting political campaign yard signs until within 30 days of an election.

Here's the relevant section:

All candidates for public office, their campaign committees or other persons responsible for the posting on private property of campaign material or special announcements, shall not install signs more than thirty days prior to the election or referendum, and shall remove such material within three days following the election or referendum.


For at least a month now there have been dozens of signs around the city for Kerry (and more recently for the Democratic sacrificial lamb for Senate, Eric Fingerhut). There are no signs for Bush or any Republicans that I have seen. By law none of these signs should be displayed until Oct 2.

Now I should be clear that I think these laws are silly. Indeed I think they should be unconstitutional. I think the framers intended the 1st Amendment to apply for more than one month a year! But alas (sigh) our Supreme Court has apparently ruled that "time and place" restrictions on political speech are acceptable constitutionally if they are "content neutral". In my (untrained, unlawyerly) way of thinking, their failure to enforce the code when only one party is violating it questions the "content neutrality"of the city's enforcement.

I have a complaint in with the city (from the first week of August) and a reply from them (Aug 16) to "look into the matter." I bugged them again today. I'll let you know the result.

As far as I'm concerned the best result would be for them to abolish the darned ordinance.

Posted by Robert Lawson at 09:31 AM  ·  TrackBack (23)

September 01, 2004
To vote or not to vote?

At today's opening convocation, my university president gave a talk titled, "To be or not to be (involved)," in which he took the opportunity to urge everyone to vote in November. He noted the really low voter turnout among younger people.

I have always voted myself, but these sorts of "you should vote" pleas leave me feeling a bit uneasy.

Here are just some of the reasons the president and others give for voting:

(1) It is your civic duty/responsibility to vote. Hmmmm. I have all sorts of responsibilities that I have taken upon myself: to work at the university, to pay my mortgage, to provide for my family, etc., etc. But a "civic" responsibility isn't something that I choose, rather it is something that is forced upon me by society. I reject that such duties can be legitimately imposed on a free person. I have no duties except those that I voluntarily choose to have.

(2) Voting matters. This is most certainly and obviously true in the aggregate. Who can doubt that the world we live in today is very different with W as president than it would have been had Gore been elected? But voting advocates claim not only that the outcome of the election is important (it clearly is) but that your individual vote is important. It clearly is not. To put it bluntly, your vote will not matter. Here I reasonably define "matter" to mean "affect the outcome of the election."

Furthermore, this is a good thing! We have a name for places where one person's vote matters: Dictatorship. The whole idea of liberal democracy is based on the notion that we need to diffuse power among "the people" and not concentrate it in the hands of the monarch or dictator.

(3) Democracy is a good thing. Actually I agree with Michael Munger that democracy is overrated but at the same time I think it is worth something. All things being equal, I'd rather live in a democracy than a dictatorship (unless I'm the dictator that is).

But why is this an argument for you to vote? Surely the democracy can survive without your vote. It already does with only about 50% voter turnout in the U.S.--less in many other countries. At some point, I suppose, if voter turnout gets too low it could call into question the legitimacy of the system, but I don't think we're anywhere near this point.

[UPDATE: I thought of one more reason that you sometimes hear but the president didn't mention explicitly.]

(4) Voting to get goodies for yourself. Very often voting advocates, at least when speaking to a targeted audience like young people, will argue that they need to vote to protect programs that benefit them such as student loan programs, etc. While I admit to liking the honesty of this approach--you should vote in order to steal from everyone else--it is morally repulsive. Voting, if it has any value at all, should be about providing for things of common interest like national defense. If you vote simply to get more stuff for yourself, then you're just participating in theft pure and simple.

---
So why do I vote if I reject most of the usual reasons for voting? Simple. It makes for good coversation with other people. Voting is sort of like talking about the weather. Talking about the weather really doesn't matter--it'll rain no matter what we say about it--but it's something we enjoy doing. That's how I feel about voting. (That and I like the little "I voted today!" stickers they give out.)

Bottom line: Vote or don't vote. It really doesn't matter much one way or the other.

Posted by Robert Lawson at 11:36 AM  ·  TrackBack (293)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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