Division of Labour: February 2005 Archives
February 28, 2005
My friend in Georgia (the country) asked me to buy a notebook pc for him here in U.S. and bring it to him. He said they are about $600-800 more for comparable models in his country than in the U.S. So we checked out the options and settled on a nice machine and he agreed to pay me back when I got there. (He did repay me and all is well on that front.)
The only problem is that the price included a $150 mail-in rebate so I cut the price to him accordingly and now I await the rebate check. Given my co-bloggers' previous posts on rebates here, here, and here, I admit to being worried that I was going to get stuck on some technicality. Imagine my relief when I received this e-mail today. I'll be even happier if the check actually arrives!
Hello ROBERT LAWSON,
We are happy to inform you that your rebate submission for Circuit City $150 Notebook Computer Reba has been received and is currently being processed. Please allow 8 weeks from the postmark date of your submission for processing your rebate. You should receive your rebate at the address below:
If this is not the correct address or if you have any additional questions, please contact the Circuit City Rebate Center at (888) 213-9761 or visit us online at www.circuitcityrebates.com. Your rebate order number is XXXXXX, Please reference this number during your call.
Thank you for shopping at Circuit City.
Posted by Robert Lawson at 04:27 PM
You navigate like a straight male
A story at New Scientist reports on psychobiologist Qazi Rahman’s findings about the differences in map-reading strategies between men and women, gays and straights. (Hat tip: Tyler Cowen at Marginal Revolution.)
The stereotype that women are relatively poor map readers is borne out by a reasonable bulk of scientific literature, notes Rahman. […]The new study might help researchers understand how cognitive differences and sexual orientation develop in the womb, he says.
(1) Please, nobody show this story to MIT biologist Nancy Hopkins. She might faint or throw up.
(2) Since the UNLV administration professes to be interested in what the peer-reviewed academic literature has to say about possible gay-straight differences with respect to time-preference, perhaps they’ll commission Rahman to apply his research methods to that question?
Posted by Lawrence H. White at 03:49 PM
Sex Change and Spousal Support
The Moores divorced after 25 years of marriage. Mr. Moore was ordered to pay his ex-wife spousal support that would terminate if she remarried or cohabitated with another male. After the divorce, the ex-Mrs. Moore had a sex change operation and began cohabitating with a female.
In Moore v. Moore, Mr. Moore petitioned for an end to the spousal support payments. This was clearly something that was not contemplated at the time of the initial award. The ex-Mrs. Moore was no longer a female and he was cohabitating with someone of the opposite sex. The court rejected the petition for an end to the spousal payments because the ex-wife’s financial circumstances had not changed.
This case certainty makes us rethink the basis for spousal support. Is it to correct gender inequities in our society or is it to reinforce investment in a marriage contract? If the purpose is to correct gender inequities then we certainly can argue that since he is no longer a she that spousal support should end? However, if the purpose of spousal support is the repayment of investment in a contract that was broken by the other partner, then gender or switching gender should be irrelevant. It also should be irrelevant whether the party receiving the support has remarried or is cohabitating, since the lost past investment is the same regardless of future living arrangements. The payments should also be independent of the ex-wife’s financial circumstance; otherwise, they create a disincentive for future investment in human capital.
Doctor's Office Transcript
Doctor: Mr. Lawson, what seems to be the problem?
This 90 second experience cost me a $15 copay and about 1 hour. I imagine my insurance company will get hit for $40-60 for the visit too.
Why oh why won't they let me go straight to the pharmacist for this?
Posted by Robert Lawson at 02:51 PM
Reply to Professor Bainbridge on Social Security
Professor Bainbridge has graciously responded to my attempt to de-mystify for him the so-called “transition costs” of moving from Social Security to personal accounts. I made the point that there is no additional fiscal burden when those who opt-out of paying the payroll tax today also opt-out of receiving enough future benefits. “Enough” here means “enough to completely repay the Treasury debt that replaces their payroll taxes with accumulated compound interest.” The transition then requires no additional taxes (or benefit cuts) and consumes no potential tax cut.
Another way to put the point, as I noted on Saturday, is to recognize that the Treasury’s borrowing does not represent new debt, but merely a debt swap. The future dollars that would have been paid to the retirees who opted-out are now to be paid to the holders of the replacement Treasury debt. (The obligation to make a future Social Security benefit payment is a debt in the relevant economic sense, whether or not the accounting rules require the government to record it as such.)
In response to this point, the good professor offers a “quibble”. Let me take it piece by piece.
Read More »
Professor Bainbridge writes:
As I understand it, Social Security is effectively funded on a pay as you go basis in which current workers taxes are not saved but rather are used to pay benefits to current retirees (ignoring the voodoo economics of the trust fund).
Accordingly, switching to private accounts will immediately reduce Social Security revenues as some current workers opt for them. As a result, the government will have to borrow now.
Correct. The federal government will now have to borrow by issuing Treasury bonds. It will owe principal and interest payments to the holders of those bonds. But correspondingly, it will be relieved of the obligation to make equivalent future SS benefit payments.
The government will also have to pay interest on the debt starting immediately. In contrast, the offsetting reduction in benefits will not take effect for many years, when those workers who opted for private accounts finally retire.
The Treasury could avoid the need to pay interest in the short term, before the reduction in benefits takes place, by issuing long-term zero-coupon bonds. Or equivalently, if it issues ordinary coupon bonds, it can roll over the maturing coupon-payment part of the debt until the benefit reductions kick in. Either way, the present value of the stream of payments on the Treasury debt remains equal to the present value of the reduction in SS benefits.
So here's my question for White: do you have hard data showing that the present discounted value of the future reduction in benefits at least equals the present discounted value of the bonds and interest paid on them? If not, what I learned about capital budgeting tells me it's a bad deal. No?
I’m not sure what “hard data” means in the context of a hypothetical scenario, but I take it that the question is: how can we be sure that the PDV of the benefit reductions equals the PDV of the stream of bond payments? The answer is simple. We can be sure by setting the “price” of opting-out (the ratio of future benefits foregone to payroll taxes removed) at the Treasury’s borrowing rate. If the Treasury can borrow at a 3% real interest rate, then a worker who opts-out $100 in payroll taxes today also opts-out $100 * (1.03)^n in future benefits, where “^n” means “raised to the nth power”, n being the number of years until the benefits were due.
The Bush plan sets the opt-out rate at 3%. That’s clearly on the high side, as Arnold Kling has noted, because the Treasury is currently paying only about 2% real for 20-year money in the indexed bond market.
Professor Bainbridge adds:
Anyway, does anybody really think that you can sell this idea to the public?
Well, who knows? But it's hard to see why anyone non-spiteful would oppose it, once they understand that (1) opting-out is optional – anybody who wants to is free to remain in the traditional Social Security system, and (2) no matter how many people opt-out, their opting-out doesn’t imply any need to increase taxes or cut benefits for those who remain. The hard part will be getting the public to understand these points.
Let me be clear about (2). Social Security has a future funding gap which will not be closed without either hiking its stream of tax income or lowering its stream of benefit outgo. My point is that allowing opt-out into personal accounts, at a price equal to the Treasury's borrowing rate, does nothing to widen (or narrow) that gap.
As far as the funding gap goes, I agree with Professor Bainbridge that “the best solution would be to raise the retirement age and switch the benefit calculation to price indexing,” i.e., close the gap entirely by lowering the stream of benefit outgo. I say this even though I myself have reached the age of AARP eligibility. (I almost said "regrettably reached", but then I considered the alternative.)
« Close It
Posted by Lawrence H. White at 11:51 AM
The Things You See at 3 a.m.
Allergy season is upon me and I was awake in the wee hours of the last two nights as a side-effect of an allergy medication. (This is a perfect example of Thomas Sowell's admonition in "The Vision of the Anointed" that there are not solutions to problems, just trade-offs. Tonight I plan to choose sleep over medication.) So while surfing the veggie-vision about 3 am Sunday morning, I found myself reading the Fox News crawl line. In a blurb about how the Pope had led Sunday prayers over the past 26 years, the ticker added even "4 days after being shit in 1981." Not surprisingly, it was changed to "shot" about 10 minutes after I first saw it. Somewhere there's an intern who's got some explaining to do ...
ADDENDUM: My Sunday-Monday overnight viewing consisted of the frightening PBS/HBO film "Dirty Bomb" and about half of "Fast Times at Ridgemont High," a film capable of inducing some scary memories among those of us in high school in the early 80s.
Posted by E. Frank Stephenson at 11:26 AM
"Firm hits brakes on 'road kill' candy"
Apparently the animal rights folks have no sense of humor. Story here; hat tip Mini-me (glad to hear from you, it's been awhile).
Posted by E. Frank Stephenson at 10:59 AM
The Seattle Times clues us to a creative new piece of social engineering:
Paul O'Neill, President Bush's first treasury secretary and a former chief executive officer of aluminum giant Alcoa, proposes having the government stake every American baby at birth to an investment savings account. […]
I like the idea of tax-free retirement savings accounts, and I like the idea of replacing the current system of using payroll taxes to make transfer payments to retirees. I have only two small amendments to offer to O’Neill’s plan. Instead of having strangers fund the account through taxes, let’s have the child’s parents (or other relatives or friends) fund it. And let’s let them choose the amount they put in.
Posted by Lawrence H. White at 12:28 AM
February 27, 2005
Seducing Dr. Lewis is a French Canadian (English subtitles) film about a small decaying town's attempt to lure a doctor to their community. A factory promises to locate there if they can get a doctor to sign on. The lengths they go to seduce the big city doctor to their sleepy village are quite hilarious. As comedies go, I'd give it a solid A-.
While nowhere near as libertarian as the 2003 Best Foreign Film Oscar winner, The Barbarian Invasions [previous post], this one had a couple "libertarian moments" including a couple scenes where the characters extol the virtues of work and decry the welfare trap that they are in. And of course, the entire movie is an example of the law of supply at work.
Posted by Robert Lawson at 06:01 PM
Econometrics and the Oscars
In Friday's Wall Street Journal was an econometric analysis of the upcoming Oscars. article here (reg. required).
The upshot of the article is the probit analysis by Andrew Bernard at Dartmouth, he of winter Olympics medal predictions. His analysis suggests that the best picture award is more likely to go a movie that is not a comedy, has more nominations, and has more Golden Globe awards. Other fields had a significantly insignificant impact on the odds of a film winning the top award.
The journal explained the probit analysis as such:
The science behind the Weekend Journal formula is, well, science. Math geeks, read on.
Pretty decent explanation of the probit approach. Econometrics might become more "maintstream" thanks to Dr. Bernard.
Posted by Craig Depken at 12:01 PM
February 26, 2005
The myth of “transition costs” in Social Security choice
I’ve been making the point that letting people opt out of Social Security is “self-financing” if done right. Letting Ms. Smith move $100 of her payroll taxes into her own savings plan is a break-even proposition for the federal government if she also signs away just enough future benefits to retire the debt that the government incurs replacing her $100. (Because Ms. Smith’s payroll taxes are used to pay current retirees, the government needs replacement cash to continue paying current retirees). Namely, Smith signs away her claim to future payment of $100 plus interest, with the real interest rate she "pays" set equal to the Treasury’s real borrowing rate. The transitional debt then requires for no additional taxes or benefit cuts. Opponents of Social Security reform who cite “trillions of dollars of borrowing costs” as a fiscal irreponsibility are being frightened by a phantom: there is no additional cost to taxpayers.
Here’s another way to make the same point, courtesy of 2004 Nobel laureate Ed Prescott. The debt incurred to replace Ms. Smith’s payroll taxes, because it matches the cut in the government’s obligation to pay her future benefits, does not even represent new debt. It merely swaps one debt for another. Instead of owing Ms. Smith $100 plus interest, the government owes a bondholder exactly the same amount.
"There are no transition costs," Prescott said at the Cato Institute Feb, 9. "Re-labeling debt is not a cost."
Hat tip to Sean Hackbarth at The American Mind.
Now, to be precise, it is not necessarily a mere “re-labeling” to substitute full-faith-and-credit Treasury debt for legally-non-binding Social Security obligations. The Treasury debt is legally more secure (as would be Ms. Smith’s personal retirement account balance), not subject to arbitrary reduction via Congressional changes in the payment schedule. But you will be hard-pressed to find an advocate of the Social Security status quo who will call it a virtue of the current system that it cleverly gives Congress the option to cut future payments. For those who regard the currently promised level of benefits to future retirees as a sacrosanct obligation, just like the Treasury’s obligation to repay its bonds, the transition-to-choice debt swap really is a mere re-labeling.
Posted by Lawrence H. White at 09:11 PM
Interesting New York Fact
The residents of just 20 streets on the east side of Central Park donated more money to the 2004 presidential campaigns than all but five American states.*
*"The Town of the Talk," The Economist, 19 February 2005.
Posted by Joshua Hall at 08:20 PM
Why I Am Not A Conservative
"You almost began to want to put the wall back up."
- Robert Bork in the December 31st Washington Times, reacting to the spread of American popular culture in Eastern Europe.*
* "Quotes," Reason, April 2005, p. 13.
Update: Don Boudreaux has thoughts.
Posted by Joshua Hall at 07:00 PM
Principle-Agent Problems in Arlington
From last week's Ft. Worth Star-Telegram is this article about the Cowboys trying to ink a naming rights deal for their new stadium in Arlington. Rumored to be betweeen $10m and $15m per year? That is considerably more than recently signed deals and therefore I doubt that the number is true. In the range of $4m to $6m I could buy into, but we will see.
Along with the naming rights announcement, the team announced that HKS has been selected to build the stadium. This is an interesting choice because every stadium they have built has been ever more expensive. They built the Ballpark in Arlington for $195m in 1994, then built Miller Field in Milwaukee for $400, then American Airlines Arena in Dallas for $450m and now the new football stadium for $650m. I'd like to get a piece of that action.
The best part of the story, however, was the picture of Jerry Jones handing our good mayor, Robert Cluck, a Dallas Cowboys Jersey with Cluck's name on the back.
Linked here to avoid copyright infringement.
Yep, the old principle-agent problem is revealed again. When do I get a Dallas Cowboys jersey with MY name on the back? Suppose I shouldn't hold my breath.
Posted by Craig Depken at 05:31 PM
Another Book to add to the Reading List
Risk and Business Cycles by Tyler Cowen. Judging by Cowen's post at Marginal Revolution, it might provide several answers to questions I have about Austrian Business Cycle theory in light of modern macroeconomics. As someone who is sympathetic to ABC theory, my first semester of graduate macroeconomics was an eye-opener because it made me see why ABC theory is so easily dismissed. Had I taken graduate macro before hearing of ABC theory (especially classical ABC theory) I probably would have done the same thing (which would have been a shame).
Posted by Joshua Hall at 09:42 AM
February 25, 2005
A Prolific Artist
Michelle Malkin has found another work of Churchill’s art that may have dubious origins.
How about a scavenger hunt?
I picked up a film recommendation from the folks in Georgia/Armenia. They all raved about the 1977 Soviet comedy Mimino. A DVD with English subtitles is availalbe, but unfortunately Netflix doesn't have it in its stock. I'll post on it if I can find a copy.
Also, I spent a very interesting part of an evening touring the Sergei Parajanov Museum in Yerevan, Armenia. Parajanov was a famous Armenian Georgian filmmaker in the Soviet Union who was arrested and jailed on several occasions. He was also an accomplished folk artist and the musuem had hundreds of interesting pieces on exhibit: pic, pic, pic, pic, pic, pic, pic, pic, pic, pic, pic, pic, pic.
Posted by Robert Lawson at 11:40 AM
Even more bad behavior
From today's Chronicle of Higher Education (sorry, reg required):
A GEOGRAPHY PROFESSOR at Oklahoma State University at Stillwater who plagiarized numerous times over his long career will no longer be allowed to teach after a university investigation confirmed allegations that were first revealed in The Chronicle. The professor, George O. Carney, has 15 days to appeal the university's decision.
Folks, in today's world it doesn't pay to cheat in academic research. Woe to those who cheated in the past before the computers, searchable databases, and the explosion of people actually doing research. I have a feeling that we will continue to see people "outed" as plagiarizers and fabricators.
For the youngsters out there, my advice is to keep your nose clean.
Posted by Craig Depken at 11:39 AM
"97-year-old woman among 19 detained during drug raid"
Story here--amazingly this is not the first time grandma has been found in a drug raid:
"The great grandmother had been roused from another drug house on NE Shaver one year ago."
Posted by E. Frank Stephenson at 10:53 AM
A Picture is Worth a Thousand Legal Briefs
In one simple cartoon, Mike Lester of the Rome News-Tribune sums up the importance of the Supreme Court's finding for the homeowners in Kelo v. New London.
Posted by E. Frank Stephenson at 10:46 AM
Art Plagiarist Too?
The Rocky Mountain News reports that Weird Churchill may have plagiarized a work of art by Thomas E. Mails. You can judge for yourself.
Does art plagiarism count for academic misconduct if you are not in the art department? Is plagiarism an expression of free speech? If my speech is free so is yours.
Maybe we shouldn’t be too hard on Churchill. Is it right for us to apply our European ethnocentric concepts of academic integrity and private property? As the noble savage that Churchill is, he has a right to the common property resources that were given to us all by the Great Creator. Is it Churchill’s fault that God first put the idea for this painting in someone else’s head? Churchill knows that private property is only a tool used by technocrats to suppress the disadvantaged of the world. Only when property is free will we all be free. By appropriating someone else’s work without attribution, Churchill strikes a blow against the evils of capitalism. Is it not the ultimate culmination of capitalist thought to take artistic expression and turn it into a piece of property to be sold in the market like a banana? And isn’t ethnicity just an expression of racial oppression? Why can’t we freely appropriate each others ethnicity? What better way to do away with stereotypes than to permit us all to be whatever we want to be. If Churchill wants to be an Indian instead of a cowboy, then he should be an Indian. But, why can’t we all be Indians?
No doubt, as an additional strike against the capitalist pigs, Churchill will now place the copyrights for all of his own works (the non-plagiarized ones) in the public domain so that they can be distributed at a price that reflects their true worth to society.
February 24, 2005
But will we also find out how Tony Nelson became an astronaut?
Evidently the spate of movies based on bad TV shows (Beverly Hillbillies, Starsky & Hutch, etc.) hasn’t completely run its course yet.
Gurinder Chadha, director of the charming Bend it Like Beckham and the recently opened (to mixed reviews) Bride and Predjudice, spills the dirt on her next project:
Q: What's next?
Gee, why am I not looking forward excitedly?
Posted by Lawrence H. White at 06:00 PM
And you thought the FCC has become too Puritanical?
The Pakistani news service Online reports that Pakistan’s government has heavily fined a Pakistani actress, Meera, for kissing on screen (!) in an Indian film. What's the crime? The news service (which declares itself completely independent of the Pakistan government) explains matter-of-factly that the Ministry of Culture views any Pakistani actor working abroad as an ambassador, and “no actor or actress is allowed to spread vulgarity as we live in an Islamic state.”
The Institute for the Secularization of Islamic Society obviously has its work cut out for it in regard to Pakistan. By the way, in case you were wondering, the name “Pakistan” means “Land of the Pure”.
Posted by Lawrence H. White at 05:27 PM
What's in a campus name?
Southwest Missouri State University -- if you've never heard of it, you are forgiven, assuming you live outside Missouri -- is lobbying hard for the Missouri legislature to change its name to simply Missouri State University, a name that remarkably has gone unexploited to date. At present Missouri's set of tax-funded universities has a top tier consisting of the four research-oriented campuses of the University of Missouri system (Columbia, aka Mizzou; St. Louis, my campus; Kansas City; and the engineering school at Rolla), a second tier consisting of four large teaching-oriented schools with bidirectional names (Southwest Missouri State, aka SMS; Northwest Missouri State, which wants to convert itself into a fifth UM campus; Southeast Missouri State, aka SEMO; and Truman State, nee Northeast), and a third tier of smaller schools I know little about.
Southwest wants the new name in order to escape the image of a “regional” or “compass” institution, and therby to attract better students. According to the campus president SMS, with close to 20,000 students, is the largest institution in the United States with a “multidirectional” name. I guess he thinks a bidirectional name bespeaks third-tier status, and I'd grant that there's some truth to that. But the new non-directional name bespeaks first-tier status, like that of Ohio State, which for SMS is over-reaching a bit.
He says the name change isn’t about funding:
Keiser said SMS has asked for more state funding in the past and will continue to do so regardless of whether the name is changed.
The bill to change de-directionalize SMS also inflates the names of four other schools:
• Central Missouri State University would become University of Central Missouri.
For all these schools, including SMS, the objective is name inflation. Well, why not? If students get inflated grades, why shouldn't campuses get inflated names?
I wish that my own campus could change its name from UMSL, which the locals pronounce “Umm-sull”. If we reversed the first two words to make it Missouri University – St. Louis, or MUSL, we could pronounce the resulting acronym “muscle”. Think of clever advertising possibilities! But I suppose my proposal won’t fly – the Kansas City campus wouldn’t want to be known as “muck”.
Posted by Lawrence H. White at 02:54 PM
"Man Can Sue Woman For Sperm Theft Distress"
A court makes progress in defining the property rights over sperm:
"She asserts that when plaintiff 'delivered' his sperm, it was a gift -- an absolute and irrevocable transfer of title to property from a donor to a donee," the decision said. "There was no agreement that the original deposit would be returned upon request."
Story here; hat tip Drudge.
Posted by E. Frank Stephenson at 12:26 PM
After the Soviet's left Georgia, the Georgians rushed to privatize the private housing stock as quickly as possible. Most people in the cities live in those awful square Soviet-style apartment buildings so the question was how to private these units. In the end, the tenants were given property rights to their individual flats but the buildings themselves have never been privatized and are basically common property.
The result is predictable and sad. The heat doesn't work, roofs leave, landscaping is nil and the building exteriors are crumbling. Meanwhile, the individual flats are quite nice on the inside--but how long before the buildings fall apart?
Here's a pic of the typical building.
Posted by Robert Lawson at 10:43 AM
Me No Kemo sabe
Weird Churchill admits he is not an indian. I am crushed. I guess he was just as confused as Columbus.
Thanks again to Pirateballerina.
Hold the presses!! I may have been too quick to the post. He may not have denied being an indian. We have to get to the bottom of this. Doesn't the truth of his historical analysis depend on whether he is really an indian? Faux indian speak with forked tongue.
Initial Observations on Southern Caucasus
I'm back from Georgia and Armenia. It was a busy and productive trip. Here's a few quick notes on the trip. I'll have a few detailed follow-ups later.
1. While no one laments the end of Soviet rule, there have been big problems since Georgia, Armenia and Azerbaijan became independent nations. Chiefly among them is the fact that travel and trade between the countries is now difficult if not impossible. The border between Armenia and Azerbaijan is completely closed to people and goods in fact as a result of a border war between the states. Also the language differences (and historically religious differences) are important barriers too. It is as if Cincinnati, Columbus, and Cleveland had three different languages and religions. Though Russian is still a common language it is becoming less common now as time goes by. The speeches and seminars were held in Russian (I had a translator) but everyone complained that their Russian is rusty from years of relative disuse. Some younger folks aren't learning Russian at all.
2. There is basically no central heat in T'bilisi, Georgia except in western-style hotels. This includes government buildings! Everyone uses portable electric space heaters--and the electric power is unreliable. The lecture I gave at T'bilis State University was in a room that was about 60 degrees F.
4. The Armenian Central Bank is directly across the street from a strip bar. Cool. Talk about your network economies!
5. Georgia had had a problem with their "road police" shaking down drivers in the country side. Solution? They fired the entire lot and abolished the road police completely. They then hired several thousand new regular police and increased their pay dramatically. Result? No more shakedowns and it's possible to drive through the country without getting stopped.
Posted by Robert Lawson at 08:45 AM
February 23, 2005
More bad behavior...
From today's Chronicle of Higher Education: "Israeli Physician Quits Faculty Posts Amid Accusations of Research Misconduct" (sorry, reg required).
Here's the upshot of the story:
A professor at Tel Aviv University's medical school has resigned from his faculty and hospital positions after being accused of falsifying research data and forging the signatures of eight colleagues.
Posted by Craig Depken at 01:53 PM
Why Peer Review?
To avoid things like this. A German anthropologist has systematically lied about the age of certain artifacts. How many dissertations were written using this guy's bogus "dates" as facts?
Needless to say, it wasn't a good strategy for the professor:
Yesterday his university in Frankfurt announced the professor had been forced to retire because of numerous "falsehoods and manipulations". According to experts, his deceptions may mean an entire tranche of the history of man's development will have to be rewritten.
Posted by Craig Depken at 12:07 PM
What isn't in the encyclopedia?
Well, at least the 1911 Encyclopedia Britannica?
Items without entries that quickly came to my mind: movie, television, and computer. I am sure there are others.
One of the more interesting reads was the entry on Taxation.
Posted by Craig Depken at 11:52 AM
Barry Bonds endorses vintage baseball
At least that’s one interpretation of what he was ranting about in yesterday’s news conference:
You want to go back to the 19th century and 18th century, rehash the past and open up a lot of things. We'll crush a lot of things in sports if that's what you want. We can go back to the 1800s and basically asterisk a lot of things. If that's going to make you happy, go ahead.
Barry’s endorsement will no doubt cheer co-bloggers and vintage base ball enthusiasts Bob and Josh.
Posted by Lawrence H. White at 10:42 AM
Of Genomes and Lemons--Better to Feel Good than to Do Good
A recent news item:
"The U.S. Senate on Thursday unanimously approved legislation to bar health insurers and employers from discriminating against people with a genetic predisposition to disease."
Since there is no feasible way to ban consumers from getting genetic tests, this legislation might create a "lemons market" for insurance as my former student Mike Rupert and I explain in this "Freeman" article. Ironically, the bill is not likely to help the people with the greatest genetic predisposition for illness but it will make it difficult for people with good genes to buy insurance at favorable rates.
The fact that the bill passed the Senate with no opposition reminds me of Steve Landsburg's chapter in "The Armchair Economist" calling for the end of bipartisanship. Virtually anything that can get those 100 gasbags' approval isn't worth having--of course, most of what passes along partisan lines also isn't worth having.
Posted by E. Frank Stephenson at 10:21 AM
I Bet This Won't Last Long
Earlier I posted on freedom of association in the workplace. Here's an example that I bet won't last long--a NJ casino has set limits on the weight that wait staff (known as Borgata Babes) can gain. Even though the casino applies its policy to both male and female employees, I bet the policy is untenable.
Posted by E. Frank Stephenson at 09:45 AM
More on Kelo v. New London
By the way, the pro-takings/economic development crowd likes to crow that people who lose their property are paid a fair price. If the price is so @#$! fair then why the need to confiscate it rather than acquire it via voluntary exchange? Boudreaux is spot on when he calls takings "thievery."
Posted by E. Frank Stephenson at 09:36 AM
"Economists Gain Star Power"
Our merry band of bloggers found lots to like in yesterday's WSJ. Ralph posted on the review of a book on Galbraith (I liked Samuelson's quip that Galbraith was the noneconomists' favorite economist--some of that Samuelsonian charm is evident in his nephew Larry Summers); the p.A2 article on the labor market for star economists caught my eye. Some excepts are here; I especially liked the bit about 15% of Harvard undergrads majoring in econ (there's hope for the place yet) and the discussion of Harvard economist Caroline Hoxby. She's done some fabulous work and she was very generous when a student of mine contacted her about his honors thesis on school competition.
Posted by E. Frank Stephenson at 09:23 AM
Public Taking for Private Good
Kelo v. City of New London has just been argued before the Supreme Court. The case involves the use of emminent domain for private profit.
"The plight of Connecticut homeowners whose homes may be condemned to make way for commercial development pulled at the heartstrings of Supreme Court justices on Tuesday."
February 22, 2005
Hans Hoppe vs. the King of Swaziland
I wonder how we might reconcile the actual behavior of Africa’s last pure monarch (reported by Craig below) with the prediction Hans-Hermann Hoppe has made (at p. 95 of the linked article) about the behavior of a pure monarch, aka “private government owner”, by contrast to a democratically elected official, aka “government caretaker”:
A private government owner will tend to have a systematically longer planning horizon, i.e., his degree of time preference will be lower, and accordingly, his degree of economic exploitation will tend to be less than that of a government caretaker;
The deductive logic of Hoppe’s prediction is straightforward enough (his conflation of planning horizon, measured in years, with degree of time preference, measured in percent per year, is unimportant here). The problem lies with its practical applicability. The reason the King of Swaziland seems to be grabbing and consuming all he can, while he can, may be that the King suspects that his ownership is unlikely to endure very long. If this kind of insecurity is a common problem for real-world monarchs (and shouldn’t we expect it to be, given the logic of rent-seeking and the history of coups and inter-monarch warfare?), then there is little to no real-world relevance to Hoppe’s prediction of lower time preference (which assumes secure monarchical ownership). There is accordingly little to his associated conclusion that pure monarchy is better for the public than democracy.
Question for political historians: what percentage of monarchs have held ownership of the government to a ripe old age and successfully passed it on to their heirs?
Posted by Lawrence H. White at 05:03 PM
More from Swaziland
A couple of weeks ago, I pointed out some of the antics of Africa's last pure monarchy in Swaziland - the post discussed virgins and cows.
Evidently the good king is at it again.:
Swaziland's King Mswati has barred photographers from taking pictures of his growing fleet of royal limousines amid criticism that the luxury car purchases are an embarrassment to one of Africa's poorest countries.
Posted by Craig Depken at 04:04 PM
Petrol commodity traders kick ass
Brings a warm feeling to my heart, seeing people willing to stand up to eco-bullies, defend private property, and fight for capitalism like that. Greenpeace made themselves look foolish in more ways than one.
UPDATE: Further reading shows that most press coverage of the incident has been remarkably kind to Greenpeace. A BBC account quotes a Greenpeace spokesman at three-sentence length regarding the issue of climate change, but carries no mention of the traders forcibly repelling the protestors!
The Forbes account has this amusing juxtaposition:
A trader who spoke on condition of anonymity said the activists ran around the floor, blowing whistles to disrupt trading.
Invading someone’s workplace, deliberately getting in their way, trying to create a deafening noise by blowing whistles (Forbes also mentions the use of foghorns; another account adds rape alarms), in order to disrupt their work, is “nonviolent and peaceful”?!
Posted by Lawrence H. White at 03:39 PM
Celebrity and Central Planning
Dan Seligman has a nice book review of a new biography on John Kenneth Galbraith in today's Wall Street Journal. (February 22, 2005; Page D10).
Posted by at 12:40 PM
This blog seems to continually return to the question of rebates. Why do firms utilize rebates? The four principal reasons given in posts are related to:
1. Promotional efforts.
I have no problem with the first three reasons. The last, however, I find troubling. If consumers dislike rebates and if a substantial amount of fraud is associated with rebates, why haven’t these concerns been addressed in the private market? Frank mentions the Easy Rebate program at Staples as a market oriented attempt to reduce uncertainty surrounding the rebate process. This seems, however, a minimal and belated response to a problem in asymmetrical information. Why isn’t there a Housekeeping Seal of Approval of a United Labs for rebates? Certification would enhance the returns to the first three behaviors and reduce the return to the last. What say you?
February 21, 2005
Actress Sandra Dee, title star of the pathbreaking 1959 beach-culture film Gidget, died yesterday of complications from kidney disease.
As the perky blonde pint-sized teenager nicknamed Gidget (from the combination of "girl" with "midget"), Dee hung out at the beach with the local surf bums (Moondoggie played by James Darrin; the Big Kahoona [sic] played by Cliff Robertson; not to mention Hot Shot, Stinky, Lover Boy, Lord Byron, and Waikiki) and learned to surf herself. (The shots of the stars surfing in the movie were filmed using the cheesiest rear-projection special effects.) The screenplay was adapted from the book Gidget by Frederick Kohner, based on the real-life story of his daughter Kathy.
Without the popularity of Gidget, there would have likely been fewer Frankie-and-Annette beach party movies, and much less prominence for surf music (of either the vocal Beach Boys variety or of my personal favorite, the instrumental Dick Dale variety). Audiences would have been thinner for the immortal surfing documentary The Endless Summer.
P. S. Deborah Walley replaced Dee in 1961's Gidget Goes Hawaiian. Cindy Carol played the role in 1963's Gidget Goes to Rome. (James Darrin reprised his role as Moondoggie in both films.) Sally Field played the title character in the TV series Gidget.
Posted by Lawrence H. White at 09:50 PM
Clarifying the benefits of Social Security choice
Last week, Professor Bainbridge raised several “questions for my fellow conservatives who support private [Social Security] accounts”. Here’s his key question:
2. If we can achieve significant savings and ensure the health of the system [by re-indexing benefits and by raising the retirement age] is there a non-ideological reason for introducing private accounts?
The next day he reported:
Curiously, even though I was explicitly seeking non-political explanations for Bush's reform proposals, most of the comments I've seen have involved concepts like freedom of choice rather than efficiency. Which worries me.
Let me see if I can clarify for him the benefits of Social Security choice. (Btw, I wouldn’t call myself a “fellow conservative,” but the label I would prefer isn't so important given that we're trying to be non-ideological here.) There are basically two major benefits:
1. The option to open a personal account (in place of payroll taxes and SS benefits) would give wider choice to the individual, enabling him to earn better returns on his retirement savings and to tailor his savings plan to his specific life-cycle situation and risk preferences. While Professor Bainbridge would be right to call this greater “freedom of choice,” it also means greater efficiency. We normally achieve greater efficiency (some gain, nobody loses; technically economists call it a “Pareto-improvement”) when we remove political restrictions on trade that keep an individual away from his preferred position. And we would do so here. There isn’t a conflict here between the two goals of more freedom and more efficiency.
Imagine a proposal to levy a new payroll tax to fund something (housing, clothing, medical care) that workers had previously bought for themselves. Imagine that almost all workers get less benefit per dollar than they had been getting, and that the one-size-fits-all nature of the program suits some workers particularly badly. The loss in efficiency is clear. Social security choice is an effort to undo, at least partially, a program of that sort.
2. Switching from an unfunded (pay-as-you-go or “Ponzi”) defined-benefit system to a funded defined-contribution system would dramatically increase real capital formation in the economy. By “real capital formation” I mean, retirement income would come from securities ultimately backed by machines and factories (corporate stocks and bonds) rather than from IOUs backed by nothing but claims on future taxpayers. (Martin Feldstein has made the point for years that Social Security has crowded out private savings and capital formation; he summarized it here.) Private accounts, were they widely adopted, would allow Americans in general to enjoy a higher standard of living. Perhaps this is the kind of efficiency gain Professor B. seeks?
Professor Bainbridge adds:
Even proponents of private accounts concede that the transition costs will require trillions of dollars of government borrowing. Do we conservatives really want revenge on FDR and the New Deal at that price? Personally, speaking as a small government fiscal conservative kind of guy, I'd give up personal accounts if any money thereby saved was spent on deficit reduction or, better yet, an income tax rate cut.
The good professor is simply confused about the "price" of personal accounts here. As even opponents of private accounts concede, the proposed move to personal accounts, with workers who opt-in paying an appropriate price in reduced benefits, is self-financing. It will require borrowing, yes, but it will not require additional taxes or benefit cuts to repay the transitional debt. The debt will be repaid with the cash freed up by the voluntary benefit reductions for those who opt in. Conversely, giving up the Bush proposal for personal accounts will not make a single dollar available for deficit reduction or an income tax rate cut.
Posted by Lawrence H. White at 06:54 PM
How easy is it to destroy the earth?
The good folks concerned about global warming imply that all of us driving down to the Blockbuster are contributing to the death of the planet. It seems that their reasoning is: if it is so easy to destroy the planet, then it must be easy to save the planet.
Posted by Craig Depken at 04:14 PM
IRA / Sinn Fein implicated in Northern Bank heist
In December, you may recall, £26.5 million in currency was stolen from the Northern Bank in Belfast, two-thirds of it in the Bank’s own banknotes. (Northern Ireland – mirabile dictu – has four private banks issuing their own note liabilities, denominated in pounds sterling.) Police in the Republic of Ireland have now seized some £60k worth of Northern Bank notes at the home of one George Hegarty in Douglas, County Cork. Mr Hegarty is “said to be a member of Sinn Féin,” the political party affiliated with the terrorist Irish Republican Army. (Sinn Féin and the IRA operate on both sides of the border.)
Because the Republic of Ireland uses the euro, and not the pound sterling, Northern Bank notes cannot be spent there. It is hard to imagine a large sum of Northern Bank notes finding its way to County Cork for any reason other than to let hot money cool off.
Meanwhile, “Gardaí [police] in Cork city yesterday released without charge a 47-year-old man they had arrested in Passage West on Friday afternoon after receiving a report that burnt Northern Ireland bank notes were found near his home in the south Cork town. Gardaí believe he was asked to mind the money by a senior figure in the Provisional IRA in Cork after police began trying to recover money which the paramilitary group was trying to launder.”
It is hard to imagine deliberately burning banknotes for any reason other than to destroy evidence of a crime.
Sinn Féin spokesman Gerry Adams of course denies any Sinn Féin involvement.
Why would the IRA resort to bank robbery? Perhaps because, in the world after 9/11/2001, it has been harder for the terrorist army to gather donations in New York and Boston, which used to be among their chief fund-raising sites.
Posted by Lawrence H. White at 12:39 PM
Quick Hits on Social Security
A quick prefatory remark: I favor drastically reducing if not eliminating Social Security. I assume, however, that such a change is not likely and make my comments below accordingly.
1. It's been reported that President Bush "has not ruled out" hiking the $90,000 taxable wage base as part of a Social Security reform package. Instead of raising taxes on high wage workers, why not cut their benefits a bit? After all, many are in households with incomes well above $90,000 and, more importantly I think, these are the folks for whom all the gloom-and-doom privatization scenarios are least likely to occur. Many, probably most, already have private retirement/investment accounts so they would be fairly informed about the nature of such accounts, would have little additional cost for setting up new accounts, etc.
2. A few weeks ago I came across an idea that struck me as pretty clever. (Unfortunately, I can't recall the source so I am unable to give credit to whomever came up with it or to provide a link with a more complete explanation.) An alternative plan for Social Security would be to hike the retirement age; perhaps 67 for the onset of benefits and 70 for normal/full benefits. Such a move would more than solve the solvency problem; the excess taxes of 3-4 percentage points per worker would then become forced savings and go into an "early retirement account." If the account performs well over time, people could tap the accounts beginning at age 60 or 62, if not they keep working until eligible for Social Security benefits. People could also choose to leave the accounts as bequests instead of drawing them down. Such a plan reduces much of the work disincentives inherent in the current structure of SS (I assume most folks would retire by 70 regardless of the SS program but many are now induced to retire at 62 or 65) while socializing the risk/burden of income for folks who, in many cases, could not return to the work force if they exhausted their savings by, say, age 75. (No, I have not gotten squishy--reread the comment at the top of the post.)
Posted by E. Frank Stephenson at 06:35 AM
Rebates--Maybe the Glass is Half Full
In an earlier post, Michael commented on the price discrimination scheme/scam of rebates. (He was following up on an Arnold Kling posting at EconLog and has a link to Kling's post.)
In late December, I bought a shredder and one of the scanner/copier/printer combos for my home office from Staples. (Note the timing of the purchase--since I had some consulting income last year, Uncle Sam kindly picked up about 45% of the tab.) The two items came with combined rebates of $30. Staples has a web set-up called "Easy Rebates" where one can enter a couple of long numbers from the purchase receipt instead of clipping UPCs, mailing receipts, etc. About 4 weeks later I had my rebates.
One happy rebate recipient--so what? But wait, as they say in the bamboo steamer commercials, there's more. Last night, while watching Michael's Blue Devils defeat Wake Forest (hard to take ACC hoops out of this NC native), on came a Staples commercial. What was Staples pitching? Its "Easy Rebate" program. Evidently the capitalist pigs at Staples have figured out that it is good business to provide and advertise a consumer-friendly rebate program. And this is just what the folks using rebates as scams need--some good old fashioned competition. As Dickie V. might have said had he been calling the game--Wow, can you believe it?
ADDENDUM: There's a certain health insurance company that I'd happily direct Michael's wrath and attorney wife toward. A few years back I filed a claim (I didn't have my card when I went for treatment so I put the bill on my credit card). After several months of no response, I called the company and was told it never received the claim. Though I'm no great fan of the postal service, I think this is unlikely (my mortgage company, two credit card companies, etc. have always received my mail). So I sent a new claim, return receipt. The bastards' response this time came promptly--the (12 month?) deadline for filing a claim had elapsed.
Posted by E. Frank Stephenson at 05:51 AM
February 20, 2005
Truth in Advertising
Gale Brewer a member of the New York City Council has proposed a bill that would require movie theaters to advertise the actual start time of a movie, rather than the time the previews are supposed to begin.
According to the New York Sun.
---She decided to introduce legislation, Ms. Brewer said, after receiving more than a dozen complaints from her constituents about having to sit through previews and commercials for 15 minutes or more every time they go to the movies.
A news release that her office circulated yesterday put her view more bluntly, saying theaters deliberately mislead patrons to ensure a "captive audience for unrelated advertising material and previews."---
Here is another proposed law in Connecticut."We're being robbed of our freedom of choice because we're not told when the actual movie will begin," said State Rep. Fleischmann, a Democrat.
If anyone has a pointer to unabridged copies of these proposed regulations, I would appreciate the link. Thanks.
Does the proposed law increase or decrease efficiency? What's your view?
February 19, 2005
We aren't the only ones
Evidently the United States is not the only society that insists on warning its population about every possible danger that lurks in the shadows. Japan also has a proclivity for warning signs, including one about monkeys?
Posted by Craig Depken at 03:43 PM
February 18, 2005
Dining in the Nude
A New York restaurant in now clothing optional. Ever mindful of selection bias, let's just hope it's not a buffet.
(Found on Drudge. He also links to this story about some idiot protester throwing a shoe at Richard Perle. Are leftists so infantile that they have throw shoes insteading of articulating a sensible argument against Perle?)
Posted by E. Frank Stephenson at 03:25 PM
PAWs vs. PIWsInteresting article by Arnold Kling about the ongoing fight between the producers and the politicians. He draws the battle lines between Prodiguous Accumulators of Wealth and Power Intoxicated Washington. He includes an interesting table:
Posted by Craig Depken at 02:37 PM
You know what assuming does...
I assumed Ward Churchill had a doctorate. I was evidently wrong.
From today's Chronicle of Higher Education (sorry, reg required):
Newly released documents show that a vice chancellor at Boulder urged other administrators to hire Mr. Churchill in 1990, even though he did not have a doctorate. He earned tenure the next year, bypassing the usual six-year review. The documents were released by the university to Dan Caplis, a talk-show host on a Denver radio station, who shared them with the Rocky Mountain News.Here's the Rocky Mountain News article about his odd tenure decision.
About his Native American heritage there are some questions. However, his wife and spokesman dismisses claims that there is no evidence that he is Native American:
She said Mr. Churchill had verified his heritage numerous times. More important, she said, the federal government has used criteria other than bloodlines to recognize people as American Indians, including "self-identification and recognition by the community" of Indians.
Oh, I see.
The Churchill case is a rock that many people in academia don't want to look under. It is definitely easier to castigate Larry Summers for his comments than to question the quality, intentions, and qualifications of the ethinc studies department. Perhaps all the hubbub about Ward Churchill is fabricated and drummed up by the right wing conspiracy, but to have a department head without a doctorate in what he is supposedly teaching, researching, and administering?
Posted by Craig Depken at 12:11 PM
Franklin on Harvard
While reading the NY Times on the reaction at Harvard to Summers's remarks, Ben Franklin's description of Harvard came to mind.
While I was in the midst of these unpleasant Reflections, Clericus (who with a Book in his Hand was walking under the Trees) accidentally awak'd me; to him I related my Dream with all its Particulars, and he, without much Study, presently interpreted it, assuring me, That it was a lively Representation of HARVARD COLLEGE, Etcetera.
I remain, Sir,
The New-England Courant, May 14, 1722
Larry Summers in Print
Dr. Summers also wrote a letter to the faculty in which he says:
At the request of Professors Grosz, Hammonds, Skocpol, and others, I am making available a transcript of my remarks at the January 14 conference as well as the questions and answers that followed. Although I had intended them as informal and speculative, and was reluctant to reopen wounds, I want to be responsive to the concern expressed on Tuesday that our new task forces be in a position to move past the discussion of my remarks and move on with their important work. Links to the transcripts of my NBER remarks and my opening remarks at Tuesday's Faculty meeting are attached at the bottom of this message.
From what would have been the first minute or so of his speech:
The other prefatory comment that I would make is that I am going to, until most of the way through, attempt to adopt an entirely positive, rather than normative approach, and just try to think about and offer some hypotheses as to why we observe what we observe without seeing this through the kind of judgmental tendency that inevitably is connected with all our common goals of equality.
Nice try, Dr. Summers. Those who don't want to consider positive hypotheses just aren't going to cooperate, just like Dems won't cooperate with Pres. Bush so they can claim he is a "divider not a uniter."
It seems that those who are knee-jerk against what Summers discusses in his comments have only one form of analysis: the normative. Perhaps these folks think the positive went out of style after Newton. Perhaps the positive simply doesn't jive with what they want to be true and therefore the easy thing to do is ignore the positive (what is) and immediately debate the normative (what could/should be).
In printed form, the speech is 12 pages long. Can we expect everybody at Harvard (and Stanford, Princeton, MIT, and Columbia) to take a few minutes and actually read what Dr. Summers said? Unfortunately, I doubt many will read it.
To many of the good folks in Cambridge, Dr. Summers has already committed the ultimate sin. As Ralph posted below, Ward Churchill might keep his job longer than Dr. Summers. After all, the only thing Dr. Churchill might have done is lie on his vitae (I have seen no real proof, only rumor).
Posted by Craig Depken at 12:34 AM
February 17, 2005
Students for Academic Freedom?
I didn't know about this group, but others might. Here's a list of student complaints sorted by university name. Some of the complaints are pretty humurous, others are absolutely terrifying.
Ward Churchill only mentioned once (Feb. 3, 2005).
Posted by Craig Depken at 11:49 PM
Attack of the Killer TASERS
The latest hype is that taser’s are dangerous to your health. This is only really news if you thought that a zillion volts surging through your body and flopping around on the floor like a fish was a healthy whole life experience. The taser controversy is the latest attempt by the media to manufacture another crisis.
The media creates the news as much as it reports it. This crass promotionalism blatantly appears in the promos for the evening news. “Shooting at the mall! Tune in at 6 for full story.” When you tune in, you find out the mall is not the local town mall, but some place a thousand miles away. Moreover, the full story could have easily been reported in the same amount of time the promo took to hype it. The news media show the maximum disregard for their audience when they announce, “Hurricanes, tornadoes and the black plague on the way. Watch the evening news with Dan Blather for details.” Thanks, but I might be dead by then.
Aren’t they just responding to market forces? Sure, but if that is the case then caveat emptor. It would be refreshing if they just admitted to want they were doing. But no, they claim they are news professionals. That assumes a professional-client relationship. It assumes that they know what is best for the client and that they have a responsibility for the client’s welfare. We can quibble over whether the current list of talking heads is more knowledgeable than their audience. In most cases, however, it is clear that the hype comes before the truth.
I don’t doubt that tasers can be harmful, but what’s the alternative, a bullet through the heart or a baton up side the head? When we focus on the alternatives, the crisis losses its urgency and the news losses its impact. We then have to engage in a boring analysis of benefits and costs. It should be obvious by now that there is an unhealthy alliance of plaintiff attorneys and news media. For them this is a win-win situation. Taser deaths and court cases make good stories and bring big damages. And if they do succeed in getting tasers banned, then it’s guns and batons all the time. That means more deaths, more news and more damages.
Think taxes don't matter?
From this report
Posted by Craig Depken at 04:52 PM
Lileks on "Society" Helping Mothers
My wife subscribes to several parenting magazines. While many of them have useful recipies and information on new products and places to visit, every other month there is an article lobbying for more government involvement "to help out working moms." These articles are targeted to their readers so the articles are not about government helping low-income single mothers. Rather, they are about "society" (e.g. government) helping middle-class mothers deal with the stress of being a mother and working full-time.
As usual, James Likels sums up my feelings on these articles perfectly:
The day I expect "society" to take care of my child in a meaningful way is the day I give society the right to take her away and do a better job if I don't schedule daily flash-card phonics sessions. I suspect that we are talking about two different groups - those mothers who genuinely need help because they made some horrible decisions and find themselves with many children and no fathers, and those who can't quite strike the perfect balance between Corporate Warrior Princess and UberSuperPerfectRoleModelLove-GusherMom, and hence get, well, excessive and control-freakish. I think the former group needs our help, and the second group needs a big frosty glass of chill-the-hell-out with a kicky pastel umbrella.
Posted by Joshua Hall at 12:32 PM
Far OUt, Man
Never thought I would see the day that anyone was too far left for Antioch.
Churchill v Summers
Who is more likely to be fired, Weird Churchill or Larry Summers? My money is on Summers. He did the unforgivable. He suggested researchers might look into a testable hypothesis on the innate differences between men and women. Like Galileo, he has recanted his errors. But, as a warning to others who might suggest politically incorrect inquiries, he must be punished. Who knows where unfettered research might lead. Is not liberal thought at the center of the universe?
Churchill, on the other hand, simply made an assertion that three thousand technocrats deserved to die. He never suggested any areas of fruitful inquiry, nor did he raise a testable hypothesis. He was simply providing us his insights and feelings, which take on added importance because there is a possibility he could be part of an oppressed minority. Academe obviously feels that Churchill’s right to express his feelings is more cherished than Summer’s right to raise testable hypotheses. As Ann Coulter points out, Churchill is more likely to be fired for his smoking than for his lack of scholarship.
My bet is that Summers in on the next train to the gulag while Churchill sings Rocky Mountain High.
Freedom of Association in the Workplace
In this column that recently appeared in my local paper, Bob Barr takes on the Michigan company that plans to begin testing employees for tobacco use. An excerpt:
"Federal laws strictly regulate the extent corporations may use polygraphs in hiring and firing decisions, for example. And there are strict legal limits on how companies may deal with employees found using mind-altering drugs. But companies apparently are free to arbitrarily test employees for tobacco use and terminate them summarily for so doing. Obviously, off-duty smoking by its employees is more important to Weyco corporate leaders than employee theft or cocaine use.
How far this nonsense will be allowed to go is uncertain. Smokers are held in such low regard by government and the law these days, it is hard to imagine anyone in authority defending former Weyco employees.
But if companies are allowed to do what this company is doing, it is easy to imagine other "undesirable" employee activities to which the corporate watchdogs will turn their attention in their never-ending search for the perfect, Stepford employee."
Barr seems to be suggesting that some sort of law against companies performing tobacco use tests would be desirable. (An alternative reading would be that he thinks workers shouldn't allow the firm to get away with testing; presumably this would involve workers changing to employers that do not test.) I disagree. Although the testing does strike me as overbearing, I think government should stay out of the matter. If firms want to have Stepford employees then they should be able to try to do so. I say try to do so because if the firm is too intrusive then workers will demand a pay premium to work there or they will choose to work for less overbearing firms.
Here's another example of an employer exercising its freedom of association: Drinking a Bud costs Miller employee his job.
Of course, I can't understand why anyone would drink either Miller or Bud. Evidently I'm not alone.
Posted by E. Frank Stephenson at 08:26 AM
February 16, 2005
Lance Armstrong will be riding in this year's Tour de Georgia, with two stages in my fair city.
Posted by E. Frank Stephenson at 04:43 PM
Citizens Against an Atheist Mayor
Well, it seems I was a bit premature in blogging that the Chattanooga mayoral race featuring "the other Ann Coulter" wouldn't be interesting. Au contraire--a kerfuffle has arisen about her alleged atheism and a group, whose name I used as the title of this post, has sprung up in opposition to her candidacy.
Posted by E. Frank Stephenson at 04:39 PM
The NHL Season? Stick a Fork in It
The NHL cancels its season. Yawn.
Posted by E. Frank Stephenson at 04:32 PM
Fragile Flowers at Harvard
From today's New York Times is the latest about the crisis at Harvard over Larry Summers. Yesterday a faculty meeting was held to discuss Summers's leadership at Harvard:
"Many of your faculty are dismayed and alienated and demoralized," Dr. Arthur Kleinman, chairman of anthropology in the Faculty of Arts and Sciences, said at the meeting, referring to a "crisis concerning your style of leadership and governance."
Please. "Alienated" and "demoralized"? Over what? How do these folks ever weather the storms of academic publishing? Idiotic referee and editorial decisions are made all the time which require a thick skin. Perhaps the good folks at Harvard never receive rejection letters and are therefore supersensitive to the "storm of controversy" that Larry Summers has unleashed.
But the fragile flowers haven't had their full say yet:
Great. A whole week of lunches, wine spritzers, and "tsk tsk"ing about how Larry Summers has set women back fifty years or some such nonsense. What a shame.
The folks who are so outraged about the statement of a hypothesis are supposed to be the best of our best. This, in my opinion, is the bigger scandal of the Larry Summers speech - the best scientists and academics in the world have been revealed to be nothing more than scared and small.
However, there were two voices of reason at the meeting. One was an Larry Katz, an economist. No surprise there. The other? A professor of Yiddish literature? Good on 'ya!!
How quickly the left turn against their own - kinda like it was in another country about eighty years ago.
Posted by Craig Depken at 01:41 PM
Paul Krugman, journalist, quotes Eliot Spitzer, economic historian
A gem from Krugman's latest column, guaranteed to bring a smile to those of us who teach economic history for a living:
In fact, by taking on Social Security, Mr. Bush gave the Democrats a chance to remember what they stand for, and why. Here's my favorite version, from another fighting moderate, Eliot Spitzer: "As President Bush embraces the ownership society and tries to claim that he is the one that is making it possible for the middle class to succeed and save and invest - well, I say to myself, no, that's not right; it is the Democratic Party historically that created the middle class."
I guess Krugman has learned the first rule of advocacy journalism: there’s no need to make an indefensible claim yourself when you can quote someone else doing it for you.
I would have thought it was the Industrial Revolution that created the middle class, seeing as how countries without industrialization did not develop a middle class, no matter what kind of democratic politics prevailed. Do Krugman and Spitzer really believe that the US lacked a middle class before Franklin Roosevelt's tax-and-transfer policies?
Posted by Lawrence H. White at 12:19 PM
Two "Dogs Playing Poker" paintings cleaned house at Doyle New York's annual Dogs in Art Auction, fetching a staggering $590,400, the auction house said.
I remember those paintings. There were copies hanging on the walls of that house my friend rented one summer at the Jersey shore – walls done in sea-green fake-wood paneling. The floors were done in orange shag carpeting.
They have an annual Dogs in Art auction?!
Posted by Lawrence H. White at 11:53 AM
Wage = discounted marginal value product
Sports columnist Bryan Burwell of the St. Louis Post-Dispatch, addressing the NHL hockey players (who have finally agreed in principle to a salary cap but are holding out for a more generous one):
Dear players, ESPN replaced the programming of your games with a bunch of fat guys in sunglasses, chomping on cigars and playing poker, and the TV ratings for that time slot improved!!!!
Call me crazy, but I don't think you have any leverage.
Posted by Lawrence H. White at 11:39 AM
The ACLU is upset that Ohio has approved "Choose Life" license plates. I’m a bit surprised that some courts have ruled such plates unconstitutional. I wouldn’t think the government has a duty to be content neutral in this regard. The government takes stands on all sort of issues (don’t smoke, abstinence, etc.) and we don’t expect the government to give equal time to pro-smokers or promiscuity advocates. This looks to me to be another example of the “abortion exception”.
But I’m no lawyer…
Posted by Robert Lawson at 10:59 AM
Did Miners 'Owe Their Souls To The Company Store?'
According to Price Fishback, the answer was no.
Economic theory and empirical evidence offer several reasons to doubt the monopoly view of company stores. First, company stores faced competition not only from local stores but also from other mines to the extent that mine employers hired in a competive labor market. In nonunion areas like West Virginia, company store prices were part of an employment package, including wages and housing, offered to mobile miners in a labor market with hundreds of mines.
Prices apparently were higher at isolated mines, in part due to higher transport costs, but scattered evidence suggests that higher prices were offset partially by higher wages. Finally, miners were typically not in debt to the stores nor paid entirely in scrip. Scrip was offered as an advance on payday, when miners, on average, received 30 to 80 percent of their earnings in cash after deduction for rent, fuel, doctors, and store purchases between paydays.*
* Price V. Fishback, "Did Miners 'Owe Their Souls to the Company Store'? Theory and Evidence from the Early 1900s," Journal of Economic History, 46 (December 1986): 1011-1029.
Posted by Joshua Hall at 10:13 AM
February 15, 2005
Don't bury my head in ice
Maybe human life was naturally set to maximize the ... benefit of time alive [net of] its marginal cost, in terms of day to day human strife and problems.
Problem is, what is the "naturally set" lifespan? The lifespan of a Stone Age hunter-gatherer? Thanks to capitalism, human life expectancy is much longer now than it used to be, and we don't need to send the superannuated out to die in the snow.
Personally, I doubt that paying more than a few bucks to have my dead head kept on ice would be a wise bet, given the implausibility of being successfully re-animated. It seems to me more plausible -- but still in the realm of science fiction -- that before I die I can be cloned and my clone loaded with my memories, a la Dr. Ninestein on the cult tv show Terrahawks. (Wow, my second Terrahawks reference this week!)
Posted by Lawrence H. White at 05:38 PM
Why take risks with your retirement savings? I'll tell you why ...
The St. Louis Post-Dispatch on Feb. 5 published a long letter I had sent them that was essentially the same as my blog entry you already read here on "Pareto-Improving Social Security Privatization". On Saturday they published a letter in response that raised the following questions:
But if it's so simple for Ms. Smith to earn 5 percent on her $100 investment, why would anybody buy the Treasury note that pays only 3 percent? Could it be that Ms. Smith's investment promises a higher rate of interest because it is riskier than the old, boring Treasury not? Isn't it the case that while her investment might return 5 percent, she also might lose part or all of her money instead?
The author, Andy Ayers, humbly identified himself as "merely an interested citizen, unstudied in economics".
Here's my reply:
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Allowing a worker (call her Ms. Smith) to opt out of Social Security if she so chooses, to invest her funds privately, is a winner for her -- and a loser for nobody else -- at the right price. The “right price” means that if Ms. Smith chooses to opt-out $100 of payroll taxes today, she agrees to give up enough of her future benefits to retire the debt that the US Treasury must incur to replace her $100. Her opting-out then imposes no cost on others: it is self-financing, requiring no additional taxes or benefit cuts. She gains a wider range of investment choices, some possibly much better for her; nobody loses. The current Bush reform proposal sets the opt-out price at 3%, which is on the high side given that the Treasury currently borrows at slightly below 2% in the market for 20-year TIPS (inflation-adjusted) bonds.
Letter-writer Andy Ayers (Feb. 12) professes to be puzzled by the following questions about personal investment choices: “But if it’s so simple for Ms. Smith to earn 5 percent on her $100 investment, why would anybody buy the Treasury note that pays only 3 percent? Could it be that Ms. Smith’s investment promises a higher rate of interest because it is riskier than the old, boring Treasury note?”
The answers are fairly straightforward. Investors buy Treasury notes when they want zero risk, for example when they are parking funds for short periods. Investments that pay higher returns (corporate bonds, stock mutual funds) do of course carry higher-than-zero risks. It doesn’t follow that nobody should ever invest their retirement savings in anything but Treasury notes; quite the contrary. Suppose that Ms. Smith has 20 or more years until retirement. Any competent financial advisor will tell her that the risk of a diversified stock portfolio not out-earning an all-Treasuries portfolio over the next 20 years is minimal compared to the additional return she can expect to earn. (The additional return on stocks is known as the “equity premium”.) Losing all of her money – a scary possibility Ayers raises – has zero probability for a well-diversified portfolio. 20 or more years from retirement, it is perfectly prudent to invest nearly all of her savings in a stock index mutual fund.
Ms. Smith would not be well served by those who advise her to choose only Treasury notes for her retirement savings – or by those who would limit her to no choice at all.
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Posted by Lawrence H. White at 04:43 PM
Off to the Caucasus
Unless internet access is unexpectedly good, I'll probably not blog until late next week. I'll bring back a full report.
Posted by Robert Lawson at 03:51 PM
Why don't economists pipe off about engineering?
From his working example, which requires cutting executive pay in half and to double the pay of the lowly workers:
Posted by Craig Depken at 12:42 PM
It just keeps getting better...
So, Michael Jackson is rushed to the hospital and and now lawyers in Vienna are filing suit in New York for the tsunami of 2004 that occurred, literally, on the other side of the planet. What's the cause for the suit?
A group of Austrian and German victims of the Asian tsunami disaster are to file a lawsuit demanding that Thailand, French hotel chain Accor and US forecasters prove they reacted adequately to the disaster, their lawyers said.How does a forecaster in Hawaii or San Diego prove that they responded adequately?
(Story seen at Drudge)
Posted by Craig Depken at 12:06 PM
Yeah, but who pays for it?
How much are we willing to spend to close the racial academic achievement gap? From the introduction to the current issue of "Future of Children" comes this open-ended proposition:
For the present, however, we believe that by far the most promising strategy is to increase access to high-quality center-based early childhood education programs for all low-income three- and four-year-olds. Such a step would measurably boost the achievement of black and Hispanic children and go far toward narrowing the school readiness gap. So what should these programs look like? First and foremost, the education component of these programs must be of high quality. This means having small classes with a high teacher-pupil ratio, teachers with bachelor degrees and training in early childhood education, and curriculum that is cognitively stimulating.
Hmmm...I am only slightly familiar with the literature in this area, but it seems that the usual suspects have once again been trotted out as a panacea. It sounds like the authors think (parents') income is the primary indicator for being unprepared for school, not necessarily race or ethnicity. What is the optimal teacher-to-pupil ration? 1/10? 1/5? 1/2? 1? What is "high quality?"
Oh, if only certain people were put in charge of certain things all would be better in the world in ten to twenty years.
Here is the full issue.
Posted by Craig Depken at 11:44 AM
Ann Coulter for Mayor?
Sunday afternoon I loaded Pee Wee in the car and headed for the (very good) Creative Discovery Museum in Chattanooga. As we were driving into the city, I saw a billboard plugging "Ann Coulter for Mayor." Thinking of the fun that might ensue should the blond writer with a stiletto pen run for elective office, I was disappointed (though obviously not surprised) to learn that the mayoral candidate is a city planner with the same name.
Posted by E. Frank Stephenson at 09:18 AM
The Greedy Hand
I must have missed something, but isn't reduced fuel consumption the purpose of hybrid cars? And wouldn't one expect California, a state with oodles of environmental laws, vehicle regulations, and the like, to favor reduced fuel consumption? The reason I pose these questions is that California is now so concerned about the erosion of gas tax revenue from hybrids that it is contemplating a "tax by the mile" scheme instead of a traditional per gallon gas tax. Although many public finance economists would buy the notion that tax by the mile is more efficient than tax by the gallon because it is a more finely tuned user fee for roads, hybrid autos shouldn't be the reason for moving to such a scheme.
Posted by E. Frank Stephenson at 09:08 AM
How much would you pay for a 10 inch television set?
How about $3,345.99? Doesn't sound like a good deal today, but in 1947 the Philco 10in was $395. The super-duper 20in x 15in model was a mere $795 or $6,734.33 in 2004 dollars (calculated using the BLS inflation calculator). Doesn't sound like a good deal, but if the Philco was the best-of-the-best then people paid about what we (but not me) would pay for a top-of-the line 60 inch Plasma or LCD. Ain't technology grand?
Information found at the Ad*Access database at Duke University.
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Posted by Craig Depken at 01:37 AM
What was and what could be?
We have all heard one argument for the flat tax is that the income tax return would be the size of a postcard. I doubt we could ever get tax returns to be that short, even with a flat tax. However, in the distant past (at least) we had something pretty close.
Here is the tax return for F.D.R. in 1934. Pretty straightforward and relatively simple to read and (seemingly) to complete. FDR was able to earn roughly $1100 in taxable interest in that year.
Compare FDR's returns to, say, the 2003 returns of John Kerry (JFK only earned about $1200 in taxable interest in 2003), John Edwards (who earned earned roughly $12,000 in taxable interest in 2003), and President Bush (who earned approximatley $402,000 in taxable interest in 2003)
Today's returns are just a bit more complicated.
These presidential tax returns (and others) are available at the Tax History Project.
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Posted by Craig Depken at 01:21 AM
February 14, 2005
Life imitates cult tv
Those familiar with the ‘80s tv puppet show Terrahawks (produced by Gerry Anderson of Thunderbirds fame) have seen this idea before.
Btw, the complete dvd box set of Terrahawks is available for a song here. Only recommended for truly diehard fans of Anderson's work.
Posted by Lawrence H. White at 11:24 AM
February 13, 2005
Canadians can break Orville Redenbacher
or Zip.ca. Using any email address (I used firstname.lastname@example.org), Canadians can get a coupon for a free box of popcorn.
How many free boxes would break either company? This sounds like it could be a hoax, but the coupon seems legit.
Yesterday's Star-Telegram had an Associated Press article about Ad Banner Click Scams in which firms pay people to click on their competitor's banner ads. They don't purchase anything but the competitor's advertising expenses are artificially increased. It is a clever application of raising your rivals' costs. Perhaps competitors of Zip.ca....well, you get the picture.
Posted by Craig Depken at 06:47 PM
Radio Documentary on Vintage Base Ball
Posted by Joshua Hall at 11:00 AM
February 12, 2005
Should retirement saving be compulsory?
Will Wilkinson, at his blog Fly Bottle, comments:
I would enthusiastically endorse the Larry White plan [for letting people opt out of Social Security] if it was possible for the state to credibly commit to refusing benefits to people who fail to invest.
That’s a potentially reasonable caveat: the political reality may well be that the majority, faced with news accounts of destitute old folks, would vote to reach into the taxpayers' pockets to provide relief. But I say "potentially" because there’s an empirical question here: what percentage of retirees would actually end up in the safety net? It's possible -- and I think likely -- that the cost of providing for those cases via a straightforward safety net would be much smaller than the costs imposed by forcing everyone into one compulsory retirement plan. That kind of paternalism imposes a large burden.
Posted by Lawrence H. White at 02:29 AM
February 11, 2005
Economics of Rebates
I hate rebates. I have been cheated enough that I will pay more for an item to avoid a rebate. However, there may be good reasons for a rebate that have nothing to do with cheating customers.
Rebates turn customers into creditors. If it is cheaper to borrow from customers than from financial markets, then it is efficient for the company to offer rebates. Once we view rebate customers as creditors then we can also view part of the rebate as interest income. The interest income is embodied in the discounted price. This "income" escapes taxation. Accordingly, the tax benefit can be shared by the debtor and the creditor. In effect, tax avoidance on interest income provides an additional incentive for engaging in rebates.
Mastur-Rebation at CompUSA
Rebates are an amazing innovation. It seems to me pretty simple, though crooked: a form of third degree price discrimination. You can't tell what a consumer's demand elasticity is at the store, so you
People with low elasticities drop out first, moderately elastic demanders try and then give up, while the highly elastic consumers scream bloody murder. You pay off the screamers. It is not as efficient as pure third degree price discrimination, of course (lots of deadweight loss from paperwork, on both ends), but it is profitable, even net of processing costs. And, of course, the bigger the rebate, the bigger the potential gains from hold-up. Check this description; pretty infuriating.
On the other hand, and in the interests of full disclosure: I just bought some phones at Nextel, and there was a $100 rebate. I stupidly threw away one of the boxes, with its UPC label. I wrote a letter, explaining I had done that. Sent it off, but assumed I would get reamed (as, in fact, I deserved to, for not following the terms of the rebate. they do need proof of purchase, and the receipt alone may not guarantee I didn't return it in the box).
Anyway, got the full rebate back from Nextel, and very quickly. So, at least some companies are playing this relatively straight. It may because I also pay monthly bills to Nextel for service on four phones, of course, but still....
I just took another gamble in the rebate parlor. Bought a cheap LCD projector, from JR.com. Supposed to be a $100 rebate. I'll let you know what happens. I'm married to an angry attorney, I'm an economist, and I'm on a mission from God. Bring it on, you bunch of mastur-rebaters! You're goin' down!
Economic Freedom Is Good for Women
It's often thought that big government is good for women. For example, John Lott and Larry Kenny have a JPE paper documenting the expansion of government following women's suffrage. Similarly, it is also commonly remarked that women (especially single ones) like the security that big government supposedly provides. And, I strongly suspect that most feminists are in favor of larger government (Hillary-care anyone?).
In contrast, there's an increasing body of literature documenting the beneficial effects of economic freedom for women. Here's part of the abstract of a neat new paper documenting women's gain from liberty:
An alleged achievement of socialism was gender equality in the labour market. Has its collapse shattered this accomplishment? The theoretical literature and attendant empirical evidence are inconclusive. Using data for 2.9 million wage earners in Hungary, we find that the male–female difference in log wages declined from 0.31 to 0.19 between 1986 and 1998 and that this is largely explained by a matching decline in "Oaxaca's discrimination," suggesting extraordinary improvement of women's relative situation.
Similarly, in a 2003 Journal of Private Enterprise paper (sorry no link), my colleagues Gary Rosemane and Wilson Mixon find that greater economic freedom is associated with greater female life expectancy relative to male life expectancy.
Posted by E. Frank Stephenson at 04:09 PM
Comparing apples to oranges
Science shows that it can be done after all!
Hat tip to: Will Wilkinson .
Posted by Lawrence H. White at 11:26 AM
Kentucky Politicians v. the Elasticity of Demand
A bill that would gradually raise Kentucky's minimum wage by $2/hour has been approved by a House Committee. The bill would increase the minimum wage of $5.15 an hour by $.50 every six months until it reaches $7.15. [link]
[Thanks to Ann for the pointer.]
Posted by Robert Lawson at 11:09 AM
Copyright v. Theft
I don't think it's necessarily an apples to apples comparison but there is apparently a big difference between physically stealing a DVD and illegally downloading it.
[Thanks to Dave for the pointer.]
Posted by Robert Lawson at 09:44 AM
February 10, 2005
But Mom, I Don't Want to Roll the Joints Today
A Smyrna woman was arrested after she hit her 14-year-old son and threw beer on him when he refused to roll marijuana cigarettes for her, police said.
Full AJC story here.
Posted by E. Frank Stephenson at 10:58 PM
Seems Like An Idea for a Sitcom
Out of the seven Sutter brothers, only the oldest didn't make it to the NHL. (Found while reading this story on the death of Louis Sutter).
Or as Fred Willard said in A Mighty Wind (I'm paraphrasing here), "I was thinking that there are nine New Main Street Singers and Nine Supreme Court Justices. How about a sitcom where the New Mainstreet Singers become Supreme Court Justices?"
Posted by Joshua Hall at 09:08 PM
Gringo American Studies
When considering how to handle the Weird Churchill matter, it might be instructive to see how the Colorado public university system dealt with a similar matter in 1997. Luis Chavez, an Hispanic faculty member at Pikes Peak Community College, wrote a satirical proposal for an academic program “Gringo American Studies.” Citing court papers, the Rocky Mountain News reported that the proposal "parodied academic minority studies programs and addressed racial/ethnic issues by applying the minority studies format to a study of 'Gringo American' culture."
Apparently the administrators at PP CC didn’t think it was too funny and penalized Mr. Chavez for his attempt at humor (or was it for attacking ethnic studies?) by suspending him without pay for 15 days. I guess freedom of expression doesn’t count for much in Colorado if you are on the wrong side of the issue.
Astonishingly, the chair of the history department, Katherine Sturdevant, came to his defense. She called it legitimate political satire. For this and apparently some other matters she had been outspoken on, Ms. Sturdevant was removed as chair. Ms. Studevant sued the college for violating her rights to free expression. The case was settled out of court with her reinstatement as chair.
See: Karen Abbott, "Springs College Settles Lawsuit," Rocky Mountain News, September 4, 2002 .
I guess the ACT and SAT must not have included any questions about Type I vs. Type II error
The St. Louis Post-Dispatch has a front-page story today about a local high school senior who made perfect scores on both the ACT (twice) and the SAT. Scrolling way down, here’s the money quote:
Zalocusky has been accepted at Truman State University in Kirksville, Mo.; Hendrix College in Conway, Ark.; Emory University in Atlanta; and Southern Illinois University Carbondale. She said her decision would depend on how much scholarship money each school offered her.
Emory is a top-40 university, but she didn’t apply to any other schools comparable or better!?
Posted by Lawrence H. White at 02:18 PM
Today's For Better or Worse comic strip shows "That the Division of Labour is Limited by the Extent of the Market."
Posted by Robert Lawson at 10:21 AM
Various academics are now questioning Weird Churchill’s “academic writings.” (See Denver Post). I suggest they take a close look at the entire ethnic studies department, not only at Colorado but at all schools. These departments began as and continue as no more than propaganda outlets for correct thought. What ever true scholarship exists in these departments should be folded back into traditional departments of humanities and social sciences.
Churchill likes analogies to Nazi Germany. I suggest there is another analogy we consider, that of Aryan Studies.
From the Simon Wiesenthal Center
“In place of non-Aryan scholarship, Nazi scholars attempted to create "Aryan studies." In some instances, this meant establishing new areas such as racial biology and military science. Often, trends in scholarship that had existed prior to 1933 rose to prominence under the Nazis.”
New departments with new ideas to bolster the new political agenda, how reminiscent this is of the last two decades on American campuses. If you are looking for Eichmanns, who call for death to the Jews, don’t look for them hiding in the US government or in Wall Street’s Twin Towers. You are much more likely to find them in the pseudo science department of ethnic studies.
Posted by at 09:55 AM
Money is the Root
Nearly 2,500 years ago, Aristotle made some important observations about the origins of money, and of markets.
Of everything which we possess there are two uses: both belong to the thing as such, but not in the same manner, for one is the proper, and the other the improper or secondary use of it. For example, a shoe is used for wear, and is used for exchange; both are uses of the shoe. He who gives a shoe in exchange for money or food to him who wants one, does indeed use the shoe as a shoe, but this is not its proper or primary purpose, for a shoe is not made to be an object of barter. The same may be said of all possessions, for the art of exchange extends to all of them, and it arises at first from what is natural, from the circumstance that some have too little, others too much. Hence we may infer that retail trade is not a natural part of the art of getting wealth; had it been so, men would have ceased to exchange when they had enough. In the first community, indeed, which is the family, this art is obviously of no use, but it begins to be useful when the society increases. For the members of the family originally had all things in common; later, when the family divided into parts, the parts shared in many things, and different parts in different things, which they had to give in exchange for what they wanted, a kind of barter which is still practiced among barbarous nations who exchange with one another the necessaries of life and nothing more; giving and receiving wine, for example, in exchange for coin, and the like.
This sort of barter is not part of the wealth-getting art and is not contrary to nature, but is needed for the satisfaction of men's natural wants. The other or more complex form of exchange grew, as might have been inferred, out of the simpler. When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use. For the various necessaries of life are not easily carried about, and hence men agreed to employ in their dealings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver, and the like. Of this the value was at first measured simply by size and weight, but in process of time they put a stamp upon it, to save the trouble of weighing and to mark the value…
When the use of coin had once been discovered, out of the barter of necessary articles arose the other art of wealth getting, namely, retail trade; which was at first probably a simple matter, but became more complicated as soon as men learned by experience whence and by what exchanges the greatest profit might be made. Originating in the use of coin, the art of getting wealth is generally thought to be chiefly concerned with it, and to be the art which produces riches and wealth; having to consider how they may be accumulated. Indeed, riches is assumed by many to be only a quantity of coin, because the arts of getting wealth and retail trade are concerned with coin. Others maintain that coined money is a mere sham, a thing not natural, but conventional only, because, if the users substitute another commodity for it, it is worthless, and because it is not useful as a means to any of the necessities of life, and, indeed, he who is rich in coin may often be in want of necessary food. But how can that be wealth of which a man may have a great abundance and yet perish with hunger, like Midas in the fable, whose insatiable prayer turned everything that was set before him into gold? (Aristotle’s Politics, Book I, Section 9).
The paradox that Aristotle points out is interesting. Money is clearly not wealth, because a person with nothing but money would starve. The answer, of course, is that money represents all other commodities. The medium of exchange is a measure of value, or the unit of account, of the barters people would negotiate if money were not available. Instead of me trading you two bottles of wine for a sheep, we can exchange money. I give you $10 for a sheep. You give me $5 each for bottles of wine, and end up buying two bottles. The $10 went back and forth, to no net effect; for this reason, some economists say that money is a “veil,” disguising but not really affecting the contours of trade. In the example, money was an artifice: the real exchange was the trade of wine for mutton.
Having a currency, however, reduces the frictions or “transactions costs” of the exchange, making it easier for both of us. Furthermore, if we have money the exchange need not be directly a barter between two people. If my only option is trading wine for sheep, but you don’t like wine, I can’t get any sheep, even if each sheep is “worth” two bottles of wine! Money breaks the dyadic relations of barter into separate exchanges, allowing me to obtain abstract command over goods and services (i.e., units of money) instead of having to take physical possession of a commodity I don’t value or can’t use. Money allows us to focus on an important aspect of scarcity, the “opportunity cost” of a commodity.
The problem is that money means one can store wealth. The Lockean ideas about property and fairness of wealth distribution are based on 2 factors: (1) others have "as much and as good" in terms of resources, and (2) there is no waste, in the sense that people do not accumulate more than they need (if I have more apples than I can use, they rot. Locke didn't say "Pareto optimality", but that is what he meant.
This has always bothered me. (And some other people). If I have more apples than I "need", we can all agree that there is waste. But suppose I have more money than I "need." Is that wasteful? Much of our political discussion appears to rest on the premise that it is.
The thing I think is interesting about the Aristotle quotes above is that they pervade lots of discussions today. Even at a more basic level than envy of wealth. Somehow, trade or exchange based on arbitrage is wrong, or at least not as morally good as "homemade." Think about how much nicer it seems if someone bakes you a loaf of bread instead of giving you a storebought pie as a housewarming gift.
Why don't people like markets?
Why do so many people think "trade is not a natural part of the art of getting wealth?"
Why is it that we teach sex ed, but not market ed, in schools? Market intercourse takes place a lot more often than the other kind, though teenagers might wish it were otherwise.
Money is the lubricant for market intercourse, but few people understand it.
We are stuck in Aristotle's world, when it comes to understanding money.
February 09, 2005
They can't be serious
Assuming the HIV test is like other tests, there are a certain number of false positive results. This study for example estimates the ten-year risk of a false positive mammogram to be 23.8%. False positive test results, like false negative test results, can be deadly. People who incorrectly test for something typically undergo various therapies or surgeries that carry risks themselves. Basically women under 40 are discouraged from getting routine mammograms for this (and other) reasons.
The reality is that AIDS is confined mostly to a few at risk populations (homosexuals and IV drug users mainly). Given that the risk of a false positive HIV test is a big concern, recommending that all people get tested regularly is really quite absurd.
Posted by Robert Lawson at 10:37 PM
Why the ten year plan?
The Soviets always had a new five year plan. The plan would be accelerated or slowed, depending on how good things were going, or whether Stalin had an itch. In the United States we don't have such glorious Five Year Plans, although we seem stuck on ten year predictions. I am sure that there is a paragraph somewhere in the CBO/GAO/OMB handbook that makes this standard operating procedure, but can we please just stop?
Enter Exhibit A: Medicare Drug Benefit to Cost $720 Billion which is the supposed cost over a ten year period. The story indicates that the cost might be closer to $1.13 trillion, but who really knows? The Dems are screaming that Bush lied to Congress by low-balling the cost estimate to, get this, "win votes from conservatives when Congress narrowly approved the program, and created a program with benefits that are too stingy."
Benefits are too stingy? Bush was able to bamboozle the conservatives with fancy numbers that they couldn't see through? The Dems seem to be talking out of both sides of their collective mouth (remember, however, there is no collective stomach).
The story does quote the otherwise unidentified "Karr":
"Of course the costs go up when you add in more years at the end and more people are on Medicare," Karr said.
At least we have that part straightened out.
Ten year plans seem to be the norm today, but what good are they really? After the prescription drug program is in place for ten years is it realistic to believe that it will go away? Perhaps it will because there won't be anymore prescription drugs to purchase. However, it is a farce to discuss figures in these ten year blocks. Collective wool-pulling on the part of our "leaders" is the short-run result. The long-run effects? Who knows? (although we can hazard some guesses)
The unintended consequences and opportunity costs of the drug plan (or any other "plan") are not included in any discussion of the plan's cost. So be it. The average person probably doesn't want to hear about it anyway. But why not put the "cost" of the drug program in terms of $/day? That might get the average person's attention.
My calculations would indicate 10x365 days = 3,650; ignoring the leap years. Divide that into the $720B fantasy figure to obtain $198.63 million per day. Divided into the likewise fantasy figure of $1.13T and we get $356m per day (roughly half of Walmart's daily corporate-wide, worldwide revenue of approximately $768 million per day).
Wait a second. That's probably not a good idea from the government's perspective. The average person can actually visualize $198 million, they do it all the time dreaming about the lottery. So, maybe the ten year plan has some focus-group tested rationale behind it. Don't cast the plan in too long a time frame because the costs become so big as to seem insane. But don't measure costs on too short a time frame because then the costs are revealed to be insane.
Posted by Craig Depken at 07:49 PM
Hook, line, and sinker?
Evidently Thomas Sowell bought into the German woman being forced off of state support after turning down a job in a brothel.
While his points are fairly good, perhaps a little restraint is in order before too much is made of such things. Blogging on the fly is one thing, but a regular column probably should do a little digging first. It seems that the right/libertarians are as susceptible to stories that "fit" their agenda as the left.
Posted by Craig Depken at 07:09 PM
Lake Woebegone investors
In a USA Today poll, only 30 percent of respondents agreed that “most Americans” investing their own funds could earn “higher” returns than the Social Security system pays, but 40 percent agreed that they themselves could beat the SS rate of return. (Hat tip: Jeff Taylor at the Locker Room blog.) The discrepancy between the two answers suggests that the Americans who think themselves better than average investors outnumber those who think themselves worse than average.
Actually, the poll respondents are not optimistic enough on either question. For most workers today the implicit real rate of return paid by SS is less than 2%, a rate that anybody can beat over the relevant long haul (based on 6.5% historical real returns) simply by investing in a stock market index fund.
Posted by Lawrence H. White at 02:59 PM
What Medicaid Cut?
In an exchange with Russ Roberts over federal spending on health care, John Irons writes:
Specifically, it looks like Medicaid will be cut by $60 billion over 10 years, meaning fewer payments to states to cover benefits.
Later Irons refers to the dire consequences of “cutting $60 billion in health insurance for low-income families”.
How, you might wonder, is such talk of a large cut in Medicaid consistent with the Congressional Budget Office’s projection of uninterrupted growth in Medicaid spending for the next few decades, as shown in the diagram posted by co-blogger Craig below?
Turns out it’s the oldest trick in the budget book: the proposed “cut” under discussion is not a real cut, but only a moderation in the projected growth path. As the San Francisco Chronicle reports:
Also Thursday, the nation's top health official fleshed out proposals to cut $60 billion from the projected growth of Medicaid in the next decade.
And by the way, $60 billion over ten years, or $6 billion a year, is a drop in the Medicaid bucket. According to the Washington Post, Medicaid “is projected to cost $324 billion this year”.
Posted by Lawrence H. White at 11:44 AM
Costa Rican Libertarian Presidential Candidate to Speak in Columbus
The Transforming Impact of Libertarian Ideas in Costa Rica and Latin America
Date: February 24th, 2005
Time: 7:00 p.m.
Speaker: Otto Guevara-Guth Former Libertarian Congressman and current Presidential Candidate in Costa Rica
Location: Hagerty Hall Auditorium (Room180), Ohio State University
On Thursday, February 24th, the Libertarian Studies Organization at Ohio State
The experience of the libertarian movement in Costa Rica has become an
The president of the Libertarian Studies Organization at Ohio State, Francisco
Posted by Robert Lawson at 09:44 AM
February 08, 2005
from the 'U' section of the glossary of the aforementioned Budget and Economic Outlook: Fiscal Years 2006 to 2015? Well, here it is word for word...see if you miss what I miss:
underlying rate of inflation: The rate of inflation of a modified consumer price index for all urban consumers that excludes from its market basket the components with the most volatile prices: food and energy. See consumer price index and inflation.
The term I don't see is "Unfunded Liability." Is this an indication of a lack of concern?
Posted by Craig Depken at 07:54 PM
Bollywood facts of the day
Bollywood (the Hindi language film industry; the label combines the first letter of the studio center Bombay with Hollywood) is sometimes touted as “the world’s largest film industry”. That may be true by number of tickets sold per year (or by the largely irrelevant number of titles released per year, if you include non-Hindi films made elsewhere in India), but it’s certainly not true by revenues. Bollywood films earn a surprisingly small fraction of what Hollywood films earn in box-office grosses.
The top-grossing Bollywood film released in 2004, the love story Veer Zaara (the title combines the names of the two lead characters), has grossed Rs. 674 million worldwide, equivalent to less than US$15.5 million at the current exchange rate. (The top grosser of 2003, Koi Mil Gaya, unkindly described as "Forrest Gump meets ET", earned even less.) Meanwhile the top-grossing Hollywood film of 2004, Shrek 2, earned more than 25 times as much. Even the 10th-ranked Hollywood release (Polar Express) earned more than 10 times as much. The current exchange rate may undervalue the rupee relative to purchasing power parity, but not by enough to explain more than a few percentage points of the difference here.
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Sidebar: Amazingly, Veer Zaara earned almost as much overseas (US $2.9m; UK £2.0m; together equivalent to Rs. 289.6 m) as in India (Rs. 384.7m). Amazing, because there are only around 2 million South Asians living in the US, and a similar number in Britain, versus India’s population of 1 billion.
Business Week guesstimated in 2002, evidently counting dvd sales as well as theater tickets:
Bollywood's global annual revenues, estimated at $1.3 billion this year, are small change compared with Hollywood's $51 billion. But theaters worldwide sold some 3.6 billion tickets to Bollywood films last year, compared with Hollywood's 2.6 billion.
As the ticket-sale numbers make obvious, the reason for the box-office revenue discrepancy is that ticket prices are much higher in the US. Today first-run movies command $6-10 for a ticket at a US cinema, only Rs. 30-120 (US$0.70-2.80) at an Indian cinema.
Question for economics students: given these revenue figures, how much do you think top Bollywood stars are paid per film, relative to top Hollywood stars?
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Posted by Lawrence H. White at 07:18 PM
I guess the Pentagon and Medicare must not be part of the federal government anymore
Fox News reports that President Bush is in Detroit today, “laying out his vision for a slimmed-down federal government.”
The LA Times helpfully breaks the budget down by category (but these figures are not adjusted for inflation):
Domestic discretionary programs: down 1%.
Posted by Lawrence H. White at 03:18 PM
Problem? What Problem?
Stare at this picture for a while
If you don't see a potential problem lurking in the projections, then maybe this one is a little more clear:
These pics come from The Budget and Economic Outlook: Fiscal Years 2006 to 2015 from the Congressional Budget Office.
Posted by Craig Depken at 12:30 PM
Broken Windows and Tsunamis
I thought we might just have avoided having anyone make the odious assertion that the tsunami disaster could be economically beneficial. Apparently not, but at least it wasn't Paul Krugman.
Posted by E. Frank Stephenson at 10:50 AM
"A lean budget"?
WARNING: This budget business has me a bit grumpy this morning.
President Bush's budget proposal calls for some $2.57 trillion (2,570,000,000,000--get the picture?) in federal spending. This budget is about as lean as one of those morbidly obese people who can only be removed from his home by demolishing a wall and using a forklift.
Predictably, the Commiecrat response to and the media coverage of the budget are even worse. Consider:
"The president's budget is a hoax on the American people," said House Minority Leader Nancy Pelosi (D-Calif.). "The two issues that dominated the president's State of the Union address -- Iraq and Social Security -- are nowhere to be found in this budget." The spending blueprint, she added, "is fiscally irresponsible, morally irresponsible and a failure of leadership."
Maybe, just maybe, there are no Social Security reform costs in the budget because reform wouldn't go into effect until 2009 or so. Is it too much for even a mush-brained Dummycrat to understand that a budget covers a period of time--in this case Oct. 1, 2005 to Sept. 30, 2006--and that expenses outside of that period would not be included in the budget?
Then there's all the teeth-gnashing over Amtrak:
An influential Democrat warned that if enacted, the Bush administration's budget would set the nation's only city-to-city passenger service "on a course to bankruptcy."
(A talking head on NPR this morning also repeated the bankruptcy talking point.) Excuse me, but the reason Amtrak needs a subsidy is because it is already bankrupt. Amtrak has had some 30 years and $29 billion in subsidies to get on its feet; if now isn't time to cut the subsidy then when? (And don't give me a bunch of positive externaties bunk about eliminating traffic congestion; Amtrak carries a trivially small share of passengers.)
Finally, a personal story about Amtrak. I took Amtrak to the AEA meetings in Boston about 10 years ago. On the return trip the car was freezing cold so I asked the conductor if he could turn up the heat. His response--it's not my job. After shivering myself to sleep, I was awakened about 3 am by the same (white) conductor exchanging racial slurs and punches with a black passenger on the platform in New York. I've not been on Amtrak since.
Posted by E. Frank Stephenson at 09:23 AM
February 07, 2005
AKPress has just published Weird Churchill’s On the Justice of Roosting Chickens: Reflections on the Consequences of U.S. Imperial Arrogance and Criminality. At the AK Press website they claim that
“AK Press is a worker run book publisher and distributor organized around anarchist principles. All decision-making, including which titles we distribute and what we publish, is made collectively.”
Anarchic collectivists, is this oxymoronic? Could these people be a little confused?
The carpenters union hires stand-ins in Atlanta for its shakedown--oops, picket-- marches. Story here.
Posted by E. Frank Stephenson at 11:14 PM
Next Time Steal the Dime Truck
Genius criminals foiled in plot to steal 3.8 million nickels (weighing some 45,000 pounds). Story here.
Posted by E. Frank Stephenson at 11:06 PM
John "Two Americas" Edwards will be directing the newly created Center on Poverty, Work and Opportunity at UNC-CH. From the announcement:
"Edwards spent six years in the U.S. Senate. In that time, he championed policy initiatives such as raising the minimum wage, expanding the earned income tax credit, creating matching savings accounts for low-income families ...."
If he thinks such tripe as minimum wage hikes and socialized savings (the bit about matching savings accounts is nothing more than conscripting the high income to save for low income people*) will cure poverty, Edwards will likely do more harm than good.
On the hand, tort reform-types might just think that Edwards's salary is a small price to pay to keep his attention focused away from the court room. On this issue, you can judge for yourselves ...
Hat tip: Jon Sanders who has several Edwards posts at the Lockerroom.
*The matching savings bit is Clinton-era scheme that, alas, the Bushies picked up as part of being "compassionate" conservatives.
Posted by E. Frank Stephenson at 10:49 PM
Greenspan: two cheers for Adam Smith
In a nice speech paying tribute to Adam Smith, Federal Reserve chairman Alan Greenspan (or whoever wrote the speech) comments:
Most of Smith's free-market paradigm remains applicable to this day.
Only “most”? One wonders what parts of the paradigm do not remain applicable. Perhaps Smith’s support for free banking over a government-sponsored central bank?
Posted by Lawrence H. White at 03:13 PM
Ward Churchill believes in Nozick’s concept of Utopia?
Churchill’s vision, expressed in an April 2004 interview, is to replace the United States with
500 indigenous nations imbued with an inalienable right to self-determination, definable territoralities which are jurisdictionally separate. […] Basically, you’ve got a dismantlement and devolution of the U.S. territorial and jurisdictional corpus into something that would be more akin to diasporic self-governing entities and a multiplicity of geographical locations.
Unlike Nozick, however, Churchill doesn’t believe in respecting private property. Asked about violent protest in the fashion of animal-rights activists who break into labs to liberate animals, or burn down property, he replies:
Well, that’s an absurd framing in my view. Defining violence in terms of property—that basically nullifies the whole notion that life is sacred. People who want to elevate property to the same level of importance as life are so absurd as to be self-nullifying.
Also, don’t miss the photo of Churchill posing in a Che Guevara beret, wearing combat duds, and holding what looks like an assault weapon.
Posted by Lawrence H. White at 11:33 AM
The Weird Churchill
We should all defend Weird Churchill’s right to free speech, but let us not confuse a defense of his free speech with a defense of his scholarship. There may be some very good reasons to get rid of the pseudo sciences that spawn purveyors of hate. These have become little fiefdoms that host numerous conferences where the liberal ideologists can present papers that extend their academic resumes. They never test their ideas in debate in the public arena. They only speak to the indoctrinated.
To understand where the real attack on free speech is coming from, you can watch Brainwashing 101.
Posted by at 09:28 AM
February 06, 2005
Best line in tonight's Simpsons episode?
Something to the effect of:
"This new stadium cost 300 million dollars and was completed just last week. It is slated for demolition early next month."
Posted by Craig Depken at 11:52 PM
Super Bowl halftime thought
The unkindest phrase for rock-n-rollers who continue to perform beyond the age of 50:
Gramps with amps.
BTW, I heard that on VH-1, which is somewhat ironic considering that channel's viewer demographic.
Posted by Lawrence H. White at 08:35 PM
State Park Fees
I really have missed Steve Stephens' Monday columns in the Columbus Dispatch. Steve is one of the few journalists I've ever met who really understood economics. About a year ago, they "promoted" him to travel editor and he's done a good job in that position, but it doesn't allow him to talk economics and politics much. But today, he had a nice column on why charging fees at state parks is a good idea.
Posted by Robert Lawson at 05:23 PM
Another academic freedom case
As if to provide a bizarre bookend to the academic-freedom case of Ward Churchill (venomous Marxist), the economist Hans Hoppe (acerbic Rothbardian) is under fire by administrators at UNLV for classroom comments that a student found offensive. Hoppe reportedly offered homosexuals as an example of a group with high time-preference. Hat tip: Jim Lindgren at The Volokh Conspiracy.
These cases raise the question: what is the argument for academic freedom? It’s easy to show that academic freedom (faculty not being fired or disciplined for offending someone) is in the interest of tenured faculty. The challenge, though, is to show that academic freedom is in the interest of those who foot the bill for the university (donors, taxpayers, tuition-payers). Why should they tolerate statements from an academic that would get a business executive fired? Basically, because the academy has a mission – pursuing the truth – different from commodity production, a mission that best thrives with a frank exchange of potentially offensive ideas. The best attempts to spell out such a case in recent days are at The Volokh Conspiracy blog.
To Volokh's case, I'd add: a university that tries to hire faculty without offering them academic freedom -- i.e. where the policy is that faculty can be fired at will should their speech or publications offend someone -- will have to pay higher salaries or settle for inferior scholars. So, at least for those who want the university they support to promote valuable research, academic freedom is a sensible policy. Whether taxpayers ought to be supporting universities in the first place is another question.
Posted by Lawrence H. White at 05:22 PM
What's your opinion of the first amendment?
A story last week indicated that high school kids didn't think the first amendment was all that important. You can take the same survey the kids did. I didn't include my name and address in my submission.
Posted by Craig Depken at 04:18 PM
Privacy v. Efficiency
The other day I called Delta Airlines to book a flight for my wife after checking things out on their website. The conversation with the agent went something like this: "Hello Dr. Lawson, I see you're looking at the Friday 10:15 flight to Dallas from Columbus, and the 2:45 flight on Sunday back from Dallas. That will be no problem. Do you want to pay for this or use miles." Very cool.
So far I think the efficiency gains of all this information sharing exceeds the privacy fears. So far that is...
Posted by Robert Lawson at 03:29 PM
This Couldn't Have Been Comfortable
A 19-year-old Lawrenceville resident came very close to smuggling a loaded pistol into the Gwinnett County Jail this week. He also may have come very close to seriously injuring himself.
A search of the suspect revealed that he had hidden the loaded .25-caliber pistol between his buttocks, authorities said.
"My understanding is that it was fully loaded with a bullet in the chamber," said sheriff's spokeswoman Stacey Kelley. "I don't now how he was able to conceal the weapon in that area. It is very unusual."
The incident occurred Tuesday after the suspect, identified as Clifton Alexander Carter, was seen on the campus of Central Gwinnett High School, Kelley said. "A school resource officer recognized him and knew he was wanted for a charge in Barrow County," she said.
Posted by E. Frank Stephenson at 01:56 PM
German women are not forced to work in brothels
My original post was titled "You really can't make this stuff up," but evidently you can. Alas, such a story about the excess of government was too good to be true.
Posted by Craig Depken at 11:58 AM
To the Barricades! M. Antoinette Lives...
The French are rioting against the idea of scarcity.
It seems they want to maintain the 35 hour work week. It was implemented, remarkably, to reduce unemployment. Comes from the old Marxist idea (actually, Ricardian, but Marx believed it) that there is a certain fixed amount of stuff to be done. If you reduce the maximum hours someone can work, then voila! More jobs.
Of course, things don't work that way. Workers in the U.S. are seeing their work weeks go up in hours, or at least there are pressures in that direction. Why?
Because in the U.S. (and even moreso in France) "jobs" are the unit of redistribution, through the back door means of mandating certain social goods must go along with jobs. Insurance, record-keeping on taxes, a variety of pension and other benefits, are essentially lump-sum payments: you pay one for each job. If you can get workers to work more, you are spreading these fixed costs over more hours.
Consequently, U.S. government policies are to blame for all sorts of contracting out, and laying off some workers so you can give the remaining workers more hours. You can pay for the additional hours, even with mandatory overtime, and still be ahead.
Incredibly, French workers blame capitalism, rather than their own foolish insistence on having their cake and eating it, too.
February 05, 2005
They were only one of the thousands of casualties when the dot com bubble burst. Here is a list of some 900 dead sites with accompanying screen shots.
Oh, the dashed hopes and dreams...
Posted by Craig Depken at 11:29 PM
The 1933 San Francisco Earthquake
in pictures from Swapatorium.
Posted by Craig Depken at 10:40 PM
Dean Wormer, RIP
John Vernon, the actor who introduced the world to "double-secret probation" while playing Dean Wormer of Faber College in the greatest comedy of all time, Animal House, has died. Alas, the toilets will no longer explode every spring.
Posted by Lawrence H. White at 09:56 PM
For future reference...
Posted by Craig Depken at 07:23 PM
Students at Marquette University tried to raise money for the "Adopt a Sniper" program, but backed down after university officials expressed "strong objections."
Too bad. Maybe the anarcho-capitalists are right after all, and we can fund national defense with voluntary contributions!
Posted by Robert Lawson at 05:02 PM
Would you vote to freeze your taxes?
Arlington's special election on wine sales and a property tax freeze for those 65 years old isn't going to make CNN or Fox News, but earlier today we went down and did our civic duty. We voted around 11:15 am (four hours after the polls opened) and were voters #132 and #133 in our precinct. Our neighborhood is full of old folks, so I was surprised at the low turnout in my precinct (approximately 4,000 votes were cast in our precinct in the Stadium/General election in November). Perhaps the old folks aren't that interested in a tax freeze after all?
Alas, there was no bowl of purple ink.
Our ballots are fairly self-explanatory, you just have to fill in the arrow next to your desired outcome. I don't know how many other states use this type of ballot, but it seems pretty bulletproof.
Posted by Craig Depken at 03:55 PM
Want a free house?
The 11,000 square foot Thisle Hill in Fort Worth is available for free.
Posted by Craig Depken at 03:00 PM
Posted by E. Frank Stephenson at 12:26 AM
February 04, 2005
Who’s the fibber here?
In his latest column on Social Security, Paul Krugman makes the following statements:
For years, privatizers - including Mr. Bush - have claimed that people would do better with private accounts than with traditional Social Security even if they played it safe and invested in U.S. government bonds (which yield 3 percent after inflation).
Krugman is here pulling a fast one, comparing apples and oranges.
Apples: If we imagine that Social Security deductions from your paycheck are “savings”, and Social Security payments you get in retirement are “returns” on those savings, the average implicit rate of return varies widely across individuals (depending on the individual’s year of birth, income, and life expectancy) but the averages for younger workers lie in the neighborhood of 1-2%. (Source) Compared to getting a 1-2% “return” on each $100 deducted from their paychecks, people would do better investing that $100 in government bonds at 3%.
Oranges: The official at the briefing was talking about something else: a proposal under which each $100 redirected to your private account reduces your Social Security retirement payments by $100 plus 3% annual interest (compounded). In that case, true, investing your private account in government bonds leaves you no better off.
Why set the price of opting out at 3% when the average implicit return is lower than that? The offset rate was chosen on the grounds that the government needs to borrow at 3% to replace the redirected funds for the purpose of meeting its scheduled payments to current retirees. Why is the average “return” on Social Security payroll deductions lower than the prevailing Treasury bond rate? Because the Social Security Administration pays out the lion’s share of its revenue to current retirees. They don’t invest it in anything.
By the way, the fact that the average implicit return on Social Security is 2% or less, while the Treasury's borrowing rate (the opt-out price) is 3%, helps explain why the Bush plan doesn't allow a worker to opt-out all of his payroll deduction. It can't afford to. If your future payout is going to be $102 for a $100 deduction, allowing you to opt out at a 3% price means that the Social Security Administration can only let you have $99, not the entire $100. The dollar gap becomes even bigger when we factor in multi-year compounding.
Posted by Lawrence H. White at 06:27 PM
Social Security Taxable Earnings Cap
In previous posts (here, here, and here) I discussed AARP's advocacy of raising the limit on earnings subject to payroll tax. The Joint Economic Committee has a superb chart showing both the nominal and the inflation adjusted earnings limits. there are also a number of other good charts.
Speaking of the AARP, click here to view its new membership card.
Hat tip: SocialSecurityChoice.org
Posted by E. Frank Stephenson at 04:45 PM
You've got hate mail!
In today's snail mail I received an anonymous handwritten note using official stationery of the Public Employees Retirement System (PERS).
Dear Prof. Lawson-
"Runaway spending by a string of governors and legislators is to blame."
What an embarrassment! Why did you have to identify yourself as a professor? Since you provide no analysis or evidence for your conclusion, it makes you look like some kind of right wing loony. Capital Univ. deserves better.
I personally believe that Ohio spends far too little on education, social services and the like-
Public Employees Retirement System of Ohio
Oh, darn it, they found me out, there's no analysis here at all.
Posted by Robert Lawson at 04:23 PM
Sanity in the Court
A court has rejected the federal government's attempt to "recover" (extort would be a better word) $280 billion in health costs ostensibly caused by cigarette smokers. Tobacco smoking is, on net, a positive for the government; any increase in Medicare costs is more than offset by reduced Social Security payments and tobacco taxes. Plus, if cigarette smoking is such an awful burden on the federal government it should just eliminate Medicare or alter its coverage for smoking related illnesses.
In case you're wondering--other than a half dozen cigars or so per year, I'm a non-smoker.
Posted by E. Frank Stephenson at 04:15 PM
The paternalism of the anti-privatizers
In his latest column on Social Security privatization, Paul Krugman gets one thing right:
Experts usually tell people to plan for their retirement by investing in a mix of stocks and bonds.
Yet Krugman, like other anti-privatizers, doesn’t want to let us have the option of mixed investment with the funds that are currently taken from us by the Social Security payroll tax. For our own well-being, we are supposed to leave all the funds in the ordinary Social Security plan. Why? Because we should not be allowed to engage in “speculation” with our funds by investing any part of them in even a diversified portfolio of stocks.
Like the “opting out” proposal I described earlier, the Bush plan calls for reducing future Social Security benefit payments by $103 for each $100 a worker elects to invest (say, in stock mutual funds) rather than contribute to Social Security (again, for simplicity I abstract from compounding). Krugman calls electing to invest on these terms “speculation on margin: borrowing to buy stocks”. But of course it isn’t borrowing in that sense, the sense that one has to pay it back out of one’s future income. It is simply the choice of one investment option (say, a stock mutual fund) over another (bond-like) option, with the second (bond-like) option having a marginal opportunity-cost yield of 3%.
When the University of Georgia offered me the choice between TIAA-CREF and a state defined-benefit retirement plan, was I engaging in "speculation on margin" or "borrowing to buy stocks" when I took the first option? Hint: no.
Krugman claims that taking the first option is “speculation that no financial adviser would recommend,” but here he contradicts the one thing he got right. An expert who advises a mix of stocks and bonds clearly would not recommend puting all your funds in the bond-like option.
The larger issue is: whose expertise gets to prevail here? Are we as individuals to have our options limited to the one Paul Krugman imagines that an expert would recommend? Or will each of us be allowed to consult our own experts and make our own decisions? Possibly some people, even offered the choice, will decide that they can’t beat the 3% benchmark, and so will leave all their funds in ordinary Social Security. Fine. But why can’t we at least make that choice for ourselves?
This is not to say that the President’s plan is flawless. First, it limits the the share of payroll taxes that you can choose to invest. Second, it differs from simple opting-out by restricting the options you have for investing your $100 to a menu of government-chosen and government-administered mutual funds. Third, it restricts your options for spending what you earn by forcing you to buy an annuity with the proceeds. I would prefer to eliminate all of these restrictions.
Posted by Lawrence H. White at 03:37 PM
Was that a pig that just flew by my window?
New York (New Jersey?) Football Giants propose to build their own stadium to replace Giants Stadium at the Meadowlands...From Amusement Business:
The NFL's New York Giants have agreed to pay more than $6 million a year to New Jersey for the right to build a stadium at the Meadowlands Sports Complex, meeting a key demand from officials and clearing the way for a deal, according to the Newark Star-Ledger.
And the story goes on to say,
Sources told the Star-Ledger that the Giants would pay all construction costs and meet the state's demand for $5 million a year in rent and $1.3 million in taxes for the 75 acres at the Meadowlands Sports Complex on which the stadium will be built.
So, either the Giants ownership is extremely stupid or the state of New Jersey made it very clear that it would not build a new stadium. Either way, put one in the win column for the anti-stadium subsidy folks!!
Posted by Craig Depken at 03:21 PM
Who's buying whom?
Posted by Craig Depken at 02:45 PM
The latest twist in the Ward Churchill story
The website that hosts Churchill’s now-infamous screed on 9/11, “Some People Push Back: On the Justice of Roosting Chickens”, bylines him thusly:
Ward Churchill (Keetoowah Band Cherokee) is one of the most outspoken of Native American activists.
Other references to his being Native American abound.
But Native American spokesmen are now saying that he isn’t one of them. The editors of Indian Country Today report:
there is no evidence that Churchill is Indian.
One of the periodical’s columnists says that:
aside from the in-laws of his late Indian wife, he has not been able to produce any relatives from any Indian tribe.
The American Indian Movement Grand Governing Council is even more blunt:
Ward Churchill has fraudulently represented himself as an Indian, and a member of the American Indian Movement, a situation that has lifted him into the position of a lecturer on Indian activism.
Talk about your chickens coming home to roost!
Hat tip to Eugene Volokh, who suggests that, if Churchill lied about being an American Indian to get his job as Professor of American Indian Studies at Colorado University, the University would have legal grounds to fire him.
POSTSCRIPT: I should add that I fully agree with Professor Bainbridge and others who have argued that Churchill's writing his screed is not legitimate grounds for his dismissal. The principle of academic freedom at tax-supported universities is threatened by Colorado officials, like the governor, who have reportedly called for CU to fire Churchill because of his offensive political views.
Posted by Lawrence H. White at 12:10 PM
Is your dining ritual in a rut? Maybe you can't stand to have chicken again tonight. Well here's the solution to add variety to your diet--the Eat a Bug Cookbook.
If the bug book sounds difficult to, ahem, digest, I assure you it's better than this offering from my dear ole dad. (Note: This might answer the question "Why is that Stephenson fellow so warped?" It's obviously hereditary.)
Posted by E. Frank Stephenson at 09:19 AM
February 03, 2005
Parsing previous Bush speeches
Here are the results searching for "Social Security." You mean Abe Lincoln didn't have anything to say about Social Security.
Posted by Craig Depken at 09:11 PM
Hey pal, do you have the time?
Check out this really neat digital clock .
[Thanks to Dave for the pointer.]
Posted by Robert Lawson at 05:03 PM
There's lake front property
and then there is lake front property. Dateline Iriving, a suburb of Dallas (where the Cowboys now play) comes this story from the Dallas Morning News.
Castro's back yard, along with four other homes nearby, had collapsed seven to eight feet, leaving the houses just a few feet from the new edge. A satellite dish dropped, fences fell and shrubs sagged.
Is this a case where the homeowners would have rather had their houses slide into the lake, at least for insurance purposes? I doubt any of the six Texas home insurance companies sell a policy that protects against the physical loss of actual property, that is ground. You can buy flood insurance in Texas but I wonder if this would be covered by such a policy?
Posted by Craig Depken at 04:21 PM
well, kind of. Some of the world's smallest video games. I have tried pac-man and asteroids. I got Lasik surgery four years ago and even my eyes started to blur after a while.
Evidently there is a lot of free time out there...
Posted by Craig Depken at 03:10 PM
A Crappy Way to Die
Maybe she should have used port instead ...
Posted by E. Frank Stephenson at 02:29 PM
Roger Pilon of the Cato Institute, whose views I respect most highly, wrote me to suggest I rethink the drug reimportation issue. The guts of the exchange are pasted below. I have to admit he's got me on first principles. But I'm not sure I can live up to my first principles in this instance.
Mainly, I wanted to argue that drug companies are right to want to stop drug reimportation because it prevents them from practicing the price discrimination they want to practice. Allowing for enforceable no-resale clauses would be my first best solution. At least this is what I wanted to say.
Posted by Robert Lawson at 02:08 PM
Super Bowl Economics
I think I heard a snippet on the radio about Philadelphia tour operators charging more than New England tour operators for Super Bowl trips. (Unfortunately, searches of Google and NPR didn't find the story.) Assuming tickets aren't transferable between cities and that the underlying cost of producing a tour is about the same for both cities, this pricing pattern would be consistent with Eagles fans having less elastic demand over the relevant price ranges.
Although I'm not a big NFL fan (baseball and college hoops are my favorites) and I'm not a fan of either team, I'll be rooting for the Pats. Why? Because their coach was an economics major. (Hat tip: Newmark's Door)
Posted by E. Frank Stephenson at 12:24 PM
Tour de Georgia
Cool news--the Tour de Georgia is coming back to Rome again this year. One state will finish here and there will be a time trial circuit that navigates a local mountain. I was near the finish line last year when Lance Armstrong won the stage coming into town; he later won the time trial as well. The bad news--there's suspicion that Armstrong will be cycling in Europe rather than Georgia this year.
Posted by E. Frank Stephenson at 12:14 PM
That Bob Lawson--He's Everywhere
Co-blogger Bob seems to be popping up frequently today. He got a plug in the NCPA email for this piece on drug importation and an attaboy from Cafe Hayek's Don Boudreaux for this Cato Journal article.
Posted by E. Frank Stephenson at 12:00 PM
Devils in the Details
I just got today's WSJ; the front page has a box listing some details of the Bush proposal. Two caught my attention:
1. Private accounts would be annuitized upon workers' retirement. To me, this undermines one of the strongest rationales for private accounts--the possibility to accumulate wealth and pass it to heirs. Now I suppose that someone could just redeposit his/her annuity proceeds into another account and then pass that account on to heirs. This possibility, however, only partly alleviates the problem because many annuities only run for the life of the beneficiary and leave no remainder for heirs. Of course, poorer people with shorter life expectancies would be the most likely to be in this situation.
2. Traditional benefits would be reduced by "an amount commensurate with their account's size." If this means a dollar-for-dollar reduction, what's the point of private accounts? After all, one of the biggest sellling points for private accounts is the possibility for a higher rate of return than the traditional Social Security Ponzi scheme.
Posted by E. Frank Stephenson at 11:04 AM
George Bush -- "taxpayer dollars must be spent wisely, or not at all"
What form private Social Security accounts may take is still unclear. There are, however, several warning signs that this may be just another program that further empowers the government to direct private lives and private decisions. Supposedly, we will be able to invest OUR dollars in a select group of mutual funds or government administered funds. How does a brokerage house get on this government approved list? Will political contributions matter? If the government directly invests these funds in companies, how will it determine which companies? Will political contributions matter? The ability to direct private investments would extend the government's control over the private economy beyond anything that could be attained through regulatory measures that create countervailing interests.
We already have individual retirement accounts with few restrictions on how funds may be invested. There is no need to place additional restrictions on accounts used to replace Social Security benefits.
Will this list of investments be restricted to companies and funds that are politically correct, whether that be pro-life or pro-choice? Anti-democratic groups have succeeded in imposing their minority agenda on the American people through a few judges. They may soon be able to do the same through a few select investment advisors.
Incentives Matter: Filipino Doctors and Nurses Edition
Excerpts from an IHT story on Filipino nurses taking jobs abroad:
Every year, as many as 8,000 nurses leave for the United States, Continental Europe, Britain and Saudi Arabia and other Middle East countries. The United States and Saudi Arabia are the most common destinations, according to Philippine labor officials.
An additional worry is that, of these nurses, about 2,000 are trained as physicians but are paid so poorly that they decided to study nursing so they could find work abroad, thus seriously depleting the ranks of Philippine doctors.
The average salary of a nurse in the provinces is about $120 a month. In contrast, a Filipino nurse in the United States could earn $3,000 to $4,000 a month. The average salary of a government doctor in the Philippines is $300 to $800 a month.
NPR also had a piece on Filipino doctors retraining to be nurses this morning with the following teaser posted on its website:
Feb. 3 · A report on reverse outsourcing in the Philippines: For Filipinos, the pay abroad is so good that some doctors are going back to school to become nurses -- so they can move away.
Posted by E. Frank Stephenson at 09:31 AM
February 02, 2005
Paul Krugman gives Cato mad props on Social Security reform
Krugman in an interview with Rolling Stone magazine:
The only reason they talk about how wonderful an ownership society would be is because we managed to win the battle over the word privatization. The Cato Institute -- which is the intellectual headquarters for all this stuff -- founded something in 1995 called the Project on Social Security Privatization. But focus groups don't like that word, so in 2002 they changed the name to the Project on Social Security Choice. They didn't announce a name change -- they just went back and scrubbed their Web site, so there's no indication that it was ever called “privatization.”
I hope it’s true that Cato is the intellectual headquarters for all this stuff. It is true that the name of the project has changed, and I don’t know whether an announcement was made. But Krugman’s last sentence is pure fantasy. The word “privatization” appears all over the Cato site, www.socialsecurity.org. Entering “privatization” into the site’s search engine, I got 1427 results, many of them clearly indicating the project’s old name. Some job of “scrubbing”!
Posted by Lawrence H. White at 06:40 PM
The 85 foot shot...twice?
Story making the rounds is here:
The Guilford College player who made a cross-court shot, does it again on WFMY News 2.
Posted by Craig Depken at 06:06 PM
Is it moral hazard if the actions aren't hidden?
Here is one of our Arlington city councilmen admitting on local Fox news that he wants to make Jerry Jones "the richest man on this earth" and if the stadium helps him do that, then so be it. The hidden message is that the rest of Arlington will get rich along with Jerry Jones, but I don't think it's gonna happen. I know that Bank of America won't give me a loan using my expected benefits as collateral.
Us sports economists have always thought that there was something fishy about the way local politicians are always lobbying hard for publicly funded stadiums, but we never had anyone bold enough to come right on out and say it. Well, now we have it.
It seems that this type of admittance takes us beyond the moral hazard (hidden action) portion of the principal-agent problem. I think this brings us to the vote-the-bums-out-of-office portion of the principal-agent problem. Unfortunately, the damage has been done - sales taxes are going up on April 1, property taxes will increase soon after that.
Note: Cross posted at Heavy Lifting for the Arlington locals.
Posted by Craig Depken at 05:46 PM
Supreme Court DUI
Ohio Supreme Court Justice Alice Robie Resnick, the most left-wing member of the Ohio court, was arrested for DUI. You can check out the police video here. She was pretty drunk if you ask me.
Posted by Robert Lawson at 04:10 PM
"Trade and Production are positive-sum games."
"Rent-seeking is a negative-sum game." That's how economists talk. The screenwriter Arjun Dev Rashk was fortunately more poetic. In the classic 1960 Bollywood film I watched this past weekend, Jis Desh Mein Ganga Behti Hai [literally, Land in Which the Ganges Flows], the film's lead character, played by Raj Kapoor, puts it this way:
Plows can help produce corn. But guns can only produce widows.
Posted by Lawrence H. White at 03:52 PM
Democracy or Liberty?
Someone once defined democracy as a two wolves and a lamb voting on what's for dinner.
This puckish comment is on my mind because I've gotten a bit curmudgeonly about all the heavy breathing about Sunday's vote leading to democracy in Iraq. (This is an admittedly crude measure, but a Google search on Iraq democracy returned over 7 million hits.) Like most people, I'm pleased that the election went well and that the worst fears of terrorist attacks went unrealized. I also admire the courage of the Iraqis who turned out to vote. But what I really wish for the Iraqi people is liberty not democracy. While free countries are generally democratic to a greater or lesser extent, it's quite possible to be democratic but unfree (India and most of western Europe come to mind as examples). It is my hope, however unrealistic, that Iraqis (and everyone else for that matter) will be able to conduct their lives as they see fit not as some democratically elected busybodies decide for them.
Posted by E. Frank Stephenson at 12:40 PM
Pareto-improving Social Security privatization
I'd like to propose a straightforward form of Social Security privatization that avoids the need for the federal government to get involved in the stock market. Call it “opting out”. Here's how it works: we give Ms. Smith, a worker, the right to opt out of paying $100 in social security payroll taxes provided she also opts out of (say) $103 in future Social Security benefits. She can now save her $100 privately. She will consider herself better off opting out if she thinks she can earn a return of better than $103 for each $100 saved. Voila, who could object?
Wait, the anti-privatizers object: if she no longer coughs up the payroll tax, Social Security has less cash flowing in. That cash flow pays current retirees. To make up the shortfall, the Social Security Administration would have to borrow.
Fine, I say. Let it borrow. Let the Treasury issue a $100 bond to replace Smith’s taxes. Suppose the Treasury’s borrowing rate is 3%. Then the funds needed to retire the bond plus interest in the future ($103) have already been provided for by the fact that Smith has opted out of $103 in future benefits. Already scheduled future tax payments, no longer needed to pay Smith $103 in benefits, will be available to retire the bond. No tax rate increases or benefit cuts to current retirees are needed.
I’ve chosen these numbers (and ignored multi-period compounding) for illustrative purposes, but the idea generalizes. If the Treasury’s borrowing rate is actually higher, say 4%, set Smith’s buy-out price higher (she has to give up $104 in future benefits to shed $100 in taxes today).
Here’s the key point: so long as we set the price of Smith’s opting-out at the Treasury borrowing rate, and Smith can earn a rate of return in the stock market higher than the Treasury rate, then Smith gains from opting out, and nobody loses. QED: There exists a Pareto-improving form of Social Security privatization. The only way to deny the result is is to deny that expected stock returns exceed the Treasury rate.
Paul Krugman today (registration required) claims that “privatization” plans “invariably [my emphasis] assume that investing in stocks will yield a high annual rate of return, 6.5 percent or 7 percent after inflation, for at least the next 75 years. Without that assumption, these schemes can’t deliver on their promises.” Krugman is wrong. The Treasury rate isn’t as high as 6.5 or 7 percent after inflation, and for the opting-out plan it’s only the Treasury rate that the stock market needs to beat.
If Paul Krugman doesn’t think that the stock market usually beats the Treasury rate over retirement-savings horizons (20 or more years), then I suppose he must have none of his own TIAA-CREF funds in the stock market. All of his retirement savings must be in Treasury bond funds. Somehow I doubt that. If it were so, he should hire a new investment advisor.
POSTSCRIPT: According to the US Treasury, the current real (after inflation) 20-year Treasury rate, based on "closing real bid yields on existing TIPS" [Treasury Inflation Protected Securities], is 1.94%.
Posted by Lawrence H. White at 11:55 AM
Rand at 100
Much ado going on about today being the 100th birthday of novelist cum philosopher Ayn Rand.
I spent my senior year in college completely enthralled with Rand, and then like so many others I mostly got over it. Still, I reread her books every few years which is more than I can say for any other writer. Because of Rand, I refuse to cede the moral highground to leftists who peddle an ideology of self-sacrificial service to others.
My best advice to students: If you haven't read any Rand, please do so. Anthem is a great little novel to start with; you can finish this in one short sitting. This inspired the Rush song by the same name.
Posted by Robert Lawson at 10:43 AM
Academic Bill of Rights
An Academic Bill of Rights has been introduced into the Ohio legislature. Where does a good conservative stand on government intrusion into a corrupted academic process?
A few excerpts
(B) Students shall be graded solely on the basis of their reasoned answers and appropriate knowledge of the subjects and disciplines they study and shall not be discriminated against on the basis of their political, ideological, or religious beliefs. Faculty and instructors shall not use their courses or their positions for the purpose of political, ideological, religious, or antireligious indoctrination.
(C) Faculty and instructors shall not infringe the academic freedom and quality of education of their students by persistently introducing controversial matter into the classroom or coursework that has no relation to their subject of study and that serves no legitimate pedagogical purpose.
February 01, 2005
The federal government forced oil companies to add MTBE to gasoline. The additive was supposed to reduce air pollution. Somebody didn’t do their due diligence (guess who). It was subsequently discovered that MTBE may be a carcinogen and that significant quantities were leaked into the groundwater during production and distribution. Law.Com reports that local governments have successfully sued the oil companies for millions in damages. The people get dirty water and high gasoline prices. The government and the lawyers get the money.
When one level of government sets up companies for forced payments to another level of government, isn’t that called a shakedown?
Some folks at my shop are pushing a "cultural competency" agenda and want to add it to the university's short list of Learning Goals.
Here's an e-mail that I sent to someone on the Faculty Senate:
Read More »
(1) Here is a sample of what cultural competency means to some people at least: http://www.aecf.org/initiatives/jobsinitiative/cultural_comp.htm
Some quotes (in bold) with my commentary (in italics):
For most Americans, race continues to be the defining factor in getting--and keeping--good jobs.
So it’s race that is the “defining” factor? The poor quality of urban public schools, drug use and violence, fatherless families, sub-standard English skills are not important?
Cultural competence means understanding the impact of structural racism.
So American society is racist “structurally.” It’s not just that some people are racist, the very system itself is. We need to what reform the whole system?
"Unlike diversity awareness, cultural competence requires that you change your awareness along the way,"
Apparently we want not only our students’ minds but their very souls. You vil change zur avareness, or else.
Sutton firmly supported the need for coalitions. In the broader scheme of things, they can create material improvements in customers’ lives--even, perhaps, lasting change in both private and public policy.
"This is a political agenda," said Sutton. "This is about organizing, the big, dirty O-word that we don’t want to talk about."
"This issue of strategic alliances, and organizing, and advocacy, it’s really a new concept, as far as this work is concerned," said conference organizer Sharon Walter. "In the past, we’ve talked about soft skills in terms of people that we’re serving, and now we’re talking about it in terms of employers. But what we’ve not really talked about is that in-between piece, where the workforce development takes place. How do you build those alliances with employers that result in good practice and good public policy?"
Political Agenda? Organizing? Advocacy? Public policy?
This is tailored for a health care professional and would have to altered a bit in our context. But check them out (again my comments are in italics):
___ I treat all of my clients with respect for their culture, even though it may be different from my own.
What if, I say what if, I don’t respect all cultures equally? (I think your example of the treatment of women in India is a great one. I’ve been to India, and it is horrific. And I told my Indian friends as much.) I guess I’m culturally incompetent.
___ I do not impose my beliefs and value systems onto my clients, their family members or friends.
What if, I say what if, I do impose my beliefs and value systems on others at least in some contexts? (Like when I argue that Western-style free-market capitalism is morally and practically superior to other forms of economic organization?) I guess I’m culturally incompetent.
___ I believe that it is acceptable to speak a language other than English.
What if, I say what if, I think immigrants should learn English and that English should be the dominant language in the U.S. I guess I’m culturally incompetent.
What if, I say what if, I think immigrants and society would be both better off if they assimilated more rather than less. I guess I’m culturally incompetent.
___ I have no problems accepting and providing services to clients who are GBLT (Gay, Lesbian, Bisexual, or Transgendered).
What if, I say what if, I happen to have a deeply held religious conviction that GBLT behavior is sinful? I guess I’m culturally incompetent.
___ I am driven to respond to others’ insensitive comments or behaviors.
What if, I say what if, I am inclined to let insensitive idiots be insensitive idiots? I guess I’m culturally incompetent.
___ I do not participate in insensitive comments or behaviors.
What if, I say what if, I happen to think an insensitive comment is called for on occasion? Like when some one else says something dumb even if they’re from another culture? I guess I’m culturally incompetent.
___ I respect non-traditional family structures (e.g. divorced parents, same gender parents, grandparents as caretakers, etc).
What if, I say what if, I happen to think divorce and single parenthood have been devastating to social life in the U.S. and that same gender parenting or interracial adoption are equally risky for society? I guess I’m culturally incompetent.
My question: How can anyone argue that this is not driven by a particular political ideology?
For the record, I don’t necessarily believe any of the above, but there are reasonable, deep thinking people who do. The purpose of a university is to think, discuss, and research these things. If we elevate this one view to the level of a University Learning Goal, we have in effect closed down debate on these issues and labeled those who disagrees with us as “cultural incompetents.”
« Close It
Posted by Robert Lawson at 07:23 PM
"Fair Trade" coffee
“Fair Trade” coffee is promoted by well-meaning souls as a charitable option for globally responsible coffee drinkers: you pay a bit more for your cup of coffee or bag of beans, and a nonprofit group certifies that family growers get a better price for their beans. Starbucks now sells “Fair Trade” coffee, seemingly in a bid to win patronage (rather than rocks through the window) from the anti-globalization crowd.
You might wonder why the ordinary market price for coffee isn’t good enough. If it’s too low for some family growers to stay in business, you might wonder why those growers shouldn’t exit the industry and produce something that consumers value more highly instead. You might also wonder whether coffee farmers are the most deserving recipients of your charity: you might instead help needier people by buying less expensive coffee and donating the resulting savings to a charity that directs the funds to the urban poor in the third world.
But these are quibbles. If tying a donation to each coffee purchase elicits more charity, fine.
Unfortunately, the “Fair Trade” people aren’t satisfied with relying on the charitable impulses of coffee drinkers. They want agricultural price supports and more:
A windfall tax on the profits of the coffee industry could help finance a stabilization plan, including the setting of a minimum price per pound for farmers and the removal of excess coffee stocks from the market. In addition, the debt of poor countries must be canceled immediately so that they can put scarce resources into health care and education. And the coffee industry as a whole must fully endorse Fair Trade as a solution for small farmers.
In other words, protectionism for small coffee growers. Presumably, the price-support payments would only go to existing growers, not to all the additional growers who would like to get in on growing coffee at an artificially high price.
Posted by Lawrence H. White at 04:54 PM
Those poor rich folks?
Poverty is someone not having "enough stuff." To be sure, there is great debate about what constitutes "enough." In the U.S. the poverty threshold for a family of four is an astounding $18,000! Most of the people in the world would love to be so poor. But leaving aside the issue of whether our poverty line is too high (or too low), once defined poverty is an absolute concept.
In contrast, income inequality is an inherently relative concept. No matter how rich we are there will always be some who are less rich (i.e., poorer) than others. There will always be a botton 10%.
To illustrate this point, I've gathered the data for the Forbes 400--the list of the 400 wealthiest people in the U.S. I think it's fair to assume that no one thinks anyone on the Forbes 400 list is poor. (The last person on the list has a net worth of $750 million.) Still, there is a tremendous amount of wealth (and one assumes income) inequality among the Forbes 400.
This is the Lorenz Curve for the Forbes 400.
The pink line represents the cumulative distribution if everyone had the same amount, and the blue line is the actual cumulative distribution. There sure is a lot of inequality amidst all those rich folks!
Based on these data, I compute a Gini Coefficient of 0.49. For reference, the Gini Coefficient (based on income) for the U.S. is about 0.41. (A Gini Coefficient of 0 indicates perfect equality and a Gini Coefficient of 1 indicates perfect inequality.)
Posted by Robert Lawson at 02:18 PM
Are we looking at the same thing?
From today's Fort Worth Star-Telegram:
The deal drew mixed reactions.Interesting how there can be such different takes on the same issue.
Posted by Craig Depken at 12:21 PM
Another Drug War Intrusion on Liberty
My county (Floyd) has enacted restrictions on the sale of cold meds that can be used to make meth. Georgia is now considering a statewide law.
Posted by E. Frank Stephenson at 11:13 AM
Markets for Everything: Richard Hamilton's Hair Edition
"This is definitely the Motor City. In a promotion for Goodyear, Piston guard Richard Hamilton had his hair shaved into the exact tire tracks of the company's new triple-tread tire."
Posted by E. Frank Stephenson at 09:06 AM
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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