Division of Labour: April 2005 Archives
April 30, 2005
Berry Commencement

Today is Berry's Spring graduation. Yes, I'm going this time--mainly because of an outstanding group of economics graduates. Congrats to Andrew Chupp, Ted Crouse, Jeremy Smalley, Justin Slaughter, Jeff Hoffman, Wilson Meads, and Steven Simms--it's been a pleasure to have you in classes over the past 4 years.

Our speaker is Atlanta Mayor Shirley Franklin. I'm not a big fan, but she's more competent than the last mayor. Apparently she's more honest too--the last mayor is under indictment for corruption.

Posted by E. Frank Stephenson at 01:39 PM in Misc.  ·  TrackBack (65)

April 29, 2005
Gizoogle

Warning: Politically Incorrect Material to Follow

Translate your webpage with this website. Here's DoL's current Adam Smith quote translated:

"The dawg of system...seems ta imagine that he can arrange tha different memba of a bootylicious society wit as miznuch eaze as tha hand arranges tha different pieces upon a chess-board...but that, in tha bootylicious chess-board of human society, every single piece has a principle of motion of its own..."

Adam S-M-to-tha-izzith

[Hat tip: Keith]

Posted by Robert Lawson at 04:33 PM in Funny Stuff  ·  TrackBack (86)

Obesity and Dementia

Middle-Age Obesity Linked to Dementia in Later Life [Story.]

Ok, how obese to you have to be and how much more likely are you to get dementia? Surprisingly, the article cited above actually gives us most of the needed facts:

Investigators analyzed data for 10,276 members of Kaiser Permanente medical care program in California who underwent detailed health checks from 1964 to 1973 when they were aged 40-45 and who were still members of the health plan in 1994.

In 1994, dementia was diagnosed in 713 (7 percent) participants. [RL: Hurray! They give us something like a baseline risk here.] Obese people (body mass index 30 or above) were 74 percent more likely to have dementia, while overweight people (body mass index 25-29.9) were 35 percent more likely to have dementia compared with those of normal weight (body mass index 18.6-24.9). [RL: Roughly speaking this seems to mean that someone with normal weight is about 5% likely to get dementia and an obese person is about 9% likely to get it. (UPDATE: My calculations are wrong here but you get the idea.) Is this increase big or small? I dunno.]

Body mass index predicted dementia more strongly among women. For example, obese women were 200 percent more likely to have dementia than women of normal weight, while obese men had a non-significant 30 percent increase in risk. [RL: At least they didn't disregard the 30 percent figure just because it was "non-significant" in a statistical sense.]

Both men and women with the highest skin-fold measurements had a 60-70 percent greater risk of dementia compared to those with the lowest measurements.

Posted by Robert Lawson at 11:19 AM in Science  ·  TrackBack (90)

Movies about left-wing conspiracies?

In the new cinematic explosion-fest “XXX: State of the Union,” according to this morning’s St. Louis Post-Dispatch:

It's not long before Stone [the protagonist, played by Ice Cube] runs afoul of George Deckert (Willem Dafoe), the secretary of defense, who may be involved in a right-wing conspiracy to overthrow the moderate President Sanford (Peter Strauss).

Ho-hum. Right-wing conspiracies to overthrow the US government are a familiar plot device, e.g. "The Manchurian Candidate". Are there any movies with a left-wing conspiracy to overthrow the US government? (In last year’s second-funniest movie, “Team America”, there is a left-wing conspiracy, but not to overthrow the US government.) I can't think of any. Can anyone help me out with titles of movies on each side, so we can get a sense of which list is longer? I’ve enabled comments.

Posted by Lawrence H. White at 10:57 AM in Culture  ·  Comments (2)  ·  TrackBack (65)

April 28, 2005
South Park Libertarians

A few days ago (April 25) the author of the book South Park Conservatives: The Revolt Against Liberal Media Bias visited the MSNBC show “Scarborough Country”. (You can view video of the discussion: go here, then enter “South Park” into the search bar. Hat tip: Ivan.)

Much as I admire the marketing chutzpah of the book’s title, the tv show South Park is not – culturally or politically -- conservative. It is the opposite of culturally conservative: it goes out of its way to be outrageous. Cultural conservatives are oblivious to popular culture, but South Park is entirely clued in. (Scarborough shows a clip of Barbra Streisand as MechaGodzilla, defeated by Robert Smith of the Cure as Ultraman. Genius.) Would cultural conservatives create a talking piece of feces (“Mr. Hankey”) to represent the spirit of Christmas? Give a fourth-grade teacher (Mr. Garrison) a leatherbound gay lover (Mr. Slave)? Lampoon church doctrine that the mentally handicapped can’t get into heaven? If you’ve watched the show, you know the list goes on and on.

More than anything else, South Park’s politics is libertarian. In my favorite episode, “Underpants Gnomes” (unauthorized script here) from Season 2, the owner of a local coffee shop (Mr. Tweak) wants to keep a giant coffee chain (“Harbucks”) from opening a shop in South Park to compete with him, so he writes an anti-globalization screed for our gradeschooler heroes to pass off as their own term paper. The lesson, as Kyle and Stan spell it out when they come clean:

Kyle: Big corporations are good! […] Because without big corporations we wouldn't have things like cars and computers and canned soup. Stan: Even Harbucks Coffee started off as a small, little business. But because it made such great coffee, and because they ran their business so well, they managed to grow and grow until it became the corporate powerhouse it is today. And that is why we should all let Harbucks stay!
There’s also a subplot, involving gnomes who steal underpants, the lesson of which is: you can’t make a profit without a coherent business plan.

The key comedic insights of Trey Parker and Matt Stone, creators of South Park and Team America, are that (1) nothing is funnier than deflating the sanctimonious, and (2) the most sanctimonious people these days are mostly liberals.

Posted by Lawrence H. White at 10:09 PM in Culture  ·  TrackBack (3)

House rich and cash poor?

Most likely not. Forbes list of the most expensive zip codes

From zip code 93108 (SANTA BARBARA, CA, median house value: $2,176,251) the cheapest property listed at realtor.com is this little mobile home gem at:

2155 ORTEGA HILL # 15 RD
SUMMERLAND, CA 93108

$439,000
2 Bed, 1 Bath
850 Sq. Ft.

Estimated payment:
$1,997 Per Month*

$516 per square foot? Ouch. Here in Arlington we are getting approximately $70 per square foot.

This is the next cheapest property listed:

265 DAWLISH PL
SANTA BARBARA, CA 93108

$1,349,000
4 Bed, 2 Bath
0.38 Acres

Estimated payment:
$6,137 Per Month*

Absolute insanity. (hat tip: J-walkblog)

Posted by Craig Depken at 10:04 PM in Economics  ·  TrackBack (4)

Pirate radio remixes from the 1980s

For those who like old school hip-hop.

Posted by Craig Depken at 09:30 PM in Culture  ·  TrackBack (1)

Prediction: Major scandal at the IOC

Okay, given the past behavior of the IOC, perhaps the prediction is not that much of a stretch. However, immediately after announcing who will suffer the winner's curse of hosting the 2012 Olympics, the IOC will hold 28 sequential votes (evidently on the same day) on each of the different sports in the summer program. Failure to win majority support and the sport will be dumped. Twenty eight votes in a row? Sounds like a marathon on C-SPAN.

From this article:

The last sport to be removed from the Olympic Games was polo in 1936.

In 2002 the IOC decided to cap the numbers of sports at an Olympic Games at 28, the number of events at 301 and the number of athletes at 10,500.

At that same session in Mexico City Rogge proposed that baseball, softball and modern pentathlon be dropped, and golf and rugby added.

However IOC members resisted and no vote was taken.

Three years ago the sports earmarked to be dropped were able to rally support and launch campaigns that ultimately saved their status.

With every one of the Olympic sports up for the vote in Singapore there is no obvious target and IOC insiders believe this will make it much harder for vulnerable sports to rally support.

Certainly Rogge remains unsentimental. "It is clear that no sport has an eternal right to be on the Olympic program," he said last week.


Whew. I am glad to see that olympic events do not have rights. For a minute there I was expecting the opposite - after all it is the Olympics.

Yet to claim that there is no obvious target would seem to be a stretch. Swimming, gymnastics, track (most events at least), and basketball are likely safe. The various sports federations want to keep their respective sports in the summer olympics because to do so elevates their sport relative to non-olympic sports, providing psychic or monetary rents. Thus, with no obvious target the uncertainty should increase the overall amount of rent-seeking efforts (lobbying, bribes, etc.).

As one person in the article stated:

There are going to be 28 separate votes, one after the other," one high-ranking official told Reuters. "Will the IOC members really be able to, or be prepared to, concentrate fully on each vote? I'm not so sure. A lot of people are worried and concerned about this vote.

Well, if you line their pockets with a lotta-dolla-bills, I am sure the good folks at the IOC would be able to, indeed would be prepared to, "concentrate fully on each vote." I would be surprised if the vote in July isn't followed by another major scandal within the IOC.

Posted by Craig Depken at 04:07 PM in Sports  ·  TrackBack (25)

April 27, 2005
Steve Levitt on the Daily Show Thursday

Jon Stewart just announced that "rogue" economist Steve Levitt, author of the much-discussed Freakonomics, will be his guest tomorrow (Thursday) night on Comedy Central's The Daily Show . Levitt's blog is here.

Posted by Lawrence H. White at 11:42 PM in Economics  ·  TrackBack (0)

The Perfect Rainbow

Yesterday evening I saw the most perfect rainbow -- ever. It was lightly raining where we were but the sky was clearing in the west as the sun was setting making the conditions just right. There were literally a dozen adults standing in a parking lot where we were -- all of us staring at the sky. We all agreed that a lifetime could go by without seeing another as perfect as this one. Not only were the colors (rembember ROY G BIV) very clear the entire thing was visible from horizon to horizon. I didn't have a camera myself but one of my students (thanks Meghan!) sent me this pic. Alas it doesn't come close to doing it justice.

rainbow3.jpg

Posted by Robert Lawson at 07:07 PM in Misc.  ·  TrackBack (2)

Bernanke a libertarian?

Today’s Wall St. Journal (hat tip: Mahalanobis), in a head-to-head comparison among the three purported leading candidates to succeed Alan Greenspan as Fed chairman (Martin Feldstein, Glenn Hubbard, and Ben Bernanke), says the following about Bernanke:

He may need to pay more political dues before getting a shot at the chairmanship. Though a libertarian Republican, he displays few partisan leanings.

“Displays few partisan leanings” is certainly true – so true that I’m not aware of any expression by Bernanke of libertarian (or even Republican) views. Can anyone direct me to one? I have enabled comments.

Posted by Lawrence H. White at 06:34 PM in Economics  ·  Comments (3)  ·  TrackBack (6)

Welcome, Tim

Somewhat belatedly, I'd like to welcome Tim Shaughnessy to the DoL fold. Tim is an econ prof at LSU-Shreveport. He went to a great graduate school for his doctorate. Go 'Noles!

Posted by Robert Lawson at 02:43 PM in Admin  ·  TrackBack (2)

The pension reform road we didn't take

What if the US had adopted personal retirement accounts as Chile did, rather than adjusting taxes upward and benefits downward, back when both countries' social security systems faced financial problems back in the early '80s? NY Times columnist John Tierney compares his prospective checks from the Social Security Administration to a childhood friend's Chilean pension. Guess who's way ahead?

Hat tip: Aeon J. Skoble at Liberty and Power.

Posted by Lawrence H. White at 11:00 AM  ·  TrackBack (3)

April 26, 2005
Social Security reform theater, day one

Senate hearings on Social Security reform began today. The distortions and exaggerations by both sides will no doubt pile up faster than anyone can correct them. But let’s at least pick off a couple. Reuters reports:

Sen. Max Baucus of Montana, the top Democrat on the committee, said that while lawmakers should deal with Social Security's finances sooner rather than later, private accounts were not the answer. "We do not need to privatize Social Security to save it," he said. "The president's plan would dig Social Security into a deeper hole."

Private accounts are the answer if you are asking the right question, namely, “How can we give young workers better retirement saving returns without burdening other taxpayers?” They’re not the answer if you’re only asking, “How can we preserve Social Security in its present form?” Baucus is right that we don’t need to privatize Social Security to save it. We only need to privatize to improve it.

The president’s plan for personal accounts would not, in fact, “dig Social Security into a deeper hole.” Personal accounts are fiscally neutral with the right “clawback” rate, namely with future benefits reduced, per dollar redirected into a PRA, by that dollar plus compound interest at the Treasury’s borrowing rate. Bush’s proposal actually sets the rate higher than necessary for fiscal neutrality (the Treasury pays less to borrow than the 3% real rate he proposes).

Posted by Lawrence H. White at 08:17 PM in Economics  ·  TrackBack (3)

Recommended reading

The latest issue of the Cato Journal (Winter 2005), entirely available online, contains a number of interesting papers about international monetary reform. See especially the papers by George Selgin on currency privatization, Kurt Schuler on dollarization, Anna Schwarz on China, and Leland Yeager on capital freedom.

The latest issue of Constitutional Political Economy has an article by Selgin and your truly on "Credible Currency", together with another by Tyler Cowen and Chris Coyne on "Postwar Reconstruction".

Posted by Lawrence H. White at 04:52 PM in Economics  ·  TrackBack (1)

Who is the AARP protecting?

The AARP managed to get a federal judge to block EEOC rules that allowed employers to reduce health care benefits to retirees when they turned 65 and could qualify for Medicare.

The AARP claimed that the rule was discriminatory because it provided more substantial benefits for those under 65.

“The EEOC argued that without the exemption, employers will reduce or eliminate health benefits for all retirees, no matter what their age, because retiree health benefits are becoming so expensive that employers cannot afford to give the same level of health benefits to all.”

The law does not require that firms provide retired workers health care. In most cases it is voluntarily provided and not contractually obligated under employment contracts. Firms must now face the difficult choice of providing expensive but perhaps unneeded benefits to those 65 and over, or terminate benefits to those under 65 who do need the protection.

Why would AARP operate against the interest of their members? What’s missing in this story? Comments welcome.

Posted by at 02:47 PM in Economics  ·  Comments (0)  ·  TrackBack (3)

My "Time Toilet" for Today

About a month ago, I posted on the dubious finding that half of bankruptcies are medically related. I just can't seem to let this baby go.

Both this good article in Forbes and this article in the Atlanta birdcage liner cite the study that came up the 50% statistic. So, a la Don Boudreaux, I've been firing off letters to the editor.

The author of the Forbes piece sent back an interesting question: Since Medicare expenditure per enrollee varies widely across states (lowest state Hawaii=4165 per enrollee, highest New Jersey=7994), couldn't medically related bankruptcies also vary widely? This is a reasonable question--Medicare expenditure per enrollee might reflect interstate differences in healthiness and it might capture any systematic treatment differences across states. If such differences in healthiness or treatment intensity differs then there could be big differences in medical expense related bankruptcies.

So I found some data on bankruptcies and Medicare expenditure per enrollee (scroll down to the download for 2001 Medicare expenditure by state). And the result? There is essentially no correlation (0.028) in Medicare expenditure per enrollee and the number of households per bankruptcy filing. Though not statistically significant from zero, the point estimate actually has the wrong sign.

Posted by E. Frank Stephenson at 01:39 PM in Economics  ·  TrackBack (2)

Sports Economics = No Respect

So the John Bates Clark Award goes to Daron Acemoglu. Congratulations. There are only two more awards offered before I will turn 40, so I expect a phone call one day.

Okay, seriously. Mucking around in sports economics and the other areas of guerilla research I engage in will not merit a JBC award. It is interesting to see who wins and what they do with their skills afterwards. From today's Chronicle of Higher Education (reg req'd):


In a written statement, the association praised Mr. Acemoglu, 37, as a "broad and productive economist" who has made "valuable contributions" in the fields of labor economics, macroeconomics, institutional economics, and political economy. "Especially innovative," the statement says, is his recent work on the role of institutions in development and in political economy.

Mr. Acemoglu was one of the authors of a paper, "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," that appeared in the Quarterly Journal of Economics in 2002. The authors argue that among countries colonized by European powers, those that were relatively rich in 1500 are now relatively poor because of colonial policies -- an argument against the notion that geography is destiny.

In a working paper published in March by the National Bureau of Economic Research, Mr. Acemoglu and other authors argue that there is no evidence that countries that increase their levels of education are likely to become more democratic.

Mr. Acemoglu is the editor of the Review of Economics and Statistics and is a member of the editorial board of the Journal of Economic Growth. He was a lecturer at the London School of Economics and Political Science before he became a professor at MIT.

Eleven of the previous 29 winners of the medal have gone on to win the Nobel Memorial Prize in Economic Science. Previous winners include Paul Krugman, a Princeton University professor and columnist for The New York Times; Jerry A. Hausman, another professor at MIT; James J. Heckman, a professor at the University of Chicago and co-winner of the Nobel in 2000; and Lawrence H. Summers, president of Harvard University.

Posted by Craig Depken at 01:10 PM in Economics  ·  TrackBack (26)

Buzzword of the Day

From Buzzwhack:

time toilet: Any project, assignment,
meeting, etc., that takes more time than
expected -- effectively flushing away
whole your day.

Sounds like a good name for most college faculty meetings - our's is this Friday.

Posted by Craig Depken at 12:22 PM in Funny Stuff  ·  TrackBack (25)

April 25, 2005
Tiny Nations Hold Much Wealth

"Although they have only 1 percent of the world's inhabitants, they hold a quarter of United States stocks and nearly a third of all the globe's assets. They're tax havens: 70 mostly tiny nations that offer no-tax or low-tax status to the wealthy so they can stash their money."
So reports David Francis in the Christian Science Monitor. Apparently the non-wealthy aren't allowed to put money in these countries. No word on the wealthy-nonwealthy cutoff. The article includes the obligatory "nations are losing X millions of dollars in lost tax revenue." Lost? I lost a ten dollar bill that was mine and fell out of my wallet. The government lost nothing when I decided to send that $10 to a place where it wouldn't get pilfered.
Next, the article discusses the bandwagon of religious groups wanting "tax justice." I was at a small conference for religious students a few years ago where Pete Boettke gave a talk on basic economics. Some of the students laughed a bit when Pete made some religious references. I turned to one and asked "It's funny when the economist tries to sound like a theologian? Well, it's funny to us too when you all try to sound like economists."
The worst part about the article? It doesn't even tell you how to send money to these tax havens! Gimme something I can use!

Posted by Tim Shaughnessy at 05:26 PM in Economics  ·  TrackBack (2)

Corruption in Louisiana (and elsewhere)

Last week, Timothy blogged on corruption in Louisiana. Colleague Courtney LaFountain and I have a forthcoming paper in Public Choice investigating the pecuniary externalities imposed on states through corruption (a version is available here). We look at the impact of corruption on state bond ratings.

We use the number of public officials convicted of corruption at the Federal level per 100,000 people as our measure of corruption. Here's the corruption index of Louisiana relative to the national average:

Here are some simple regressions.

.reg corrupt sfindex, robust
corrupt | Coef. Std. Err. t P>|t|
sfindex | .0004932 .0206273 0.02 0.981
_cons | .3044246 .1479997 2.06 0.040

Our measure of corruption is NOT strongly correlated with Fraser Institute (originally wrongly associated with Simon-Fraser University - thanks Robert Lawson for the reminder) index of economic freedom (oops: earlier I mistakenly claimed this was the Fraser Index of corruption).
. reg startups corrupt, robust
startups | Coef. Std. Err. t P>|t|
corrupt | -179.423 59.81447 -3.00 0.003
_cons | 3264.49 419.431 7.78 0.000

States with higher corruption tend to have fewer business startups.
. reg statetax corrupt, robust
statetax | Coef. Std. Err. t P>|t|
corrupt | .2666923 .0374503 7.12 0.000
_cons | 9.791858 .0477708 204.98 0.000

States with higher corruption tend to have higher state tax burdens.

Posted by Craig Depken at 03:05 PM in Economics  ·  TrackBack (1)

Dayton Wireless

The city of Dayton is now offering free wireless networking to anyone on the streets of the city. The network connections are largely limited to the central business district. Other cities, including Philadelphia, are planning similar projects. Cleveland already has free access in parts of the downtown area.

How do we justify this public provision of wireless networking? Wireless networking does not fit the economist’s classic description of a public good. Consumers who do not pay for the service can be easily excluded from the market by encryption, and additional consumers impose congestion costs on the network. In addition, any external benefits from the private consumption of Internet services are probably minimal or non-existent. Moreover, the best proof that it is not a public good is that wireless services are already being sold in private markets.

Municipal governments like Dayton justify this public provision of a private good by claiming it will close the Digital Divide and it will attract tourism and industry. The Digital Divide is the latest term for the gap between those who do not have access to the new technologies (the poor) and the rest of us (all who are not poor). This program, however, is more likely to widen the divide, rather than close it. In order not to compete with private networks, you are not able to pick up Dayton’s wireless system indoors. To use the system you typically have to be outdoors with a laptop. Now, how many poor people do you know roaming the city streets with a notebook computer? I suppose if you are homeless, but not computerless, it might help. The Dayton Daily News reports, “Most users are likely to be business people checking their email or doing Internet-related work outside the office, said Travis Tangeman, said HarborLink’s chief technology officer.”

Clearly, any public resources devoted to this enterprise will allocate government revenues away from the poor and toward the middle class. Like public support for a college education, this could be another public benefit for the middle class.

It is also difficult to give much credence to the tourism or industry argument. When is the last time you jumped on an airplane because you wanted to sample the wireless signal in Seattle or Philadelphia. However, you might want to come to Dayton to see the Five Rivers Fountain of Lights another expensive boondoggle that never lived up to the promises that were made. With cell phones commonplace and businesses and hotels having broadband connections, does it really matter whether or not you can get a wireless connection while riding in your car? Is this our answer to international outsourcing?

For more on municipal wireless networks see ‘Not In The Public Interest –The Myth of Municipal Wi-Fi Networks’ Why Municipal Schemes to Provide Wi-Fi Broadband Service With Public Funds Are Ill-Advised"

Cross Posted at Buckeye Institute Blog

Posted by at 02:25 PM in Economics  ·  Comments (0)

Government Planning Hall of Fame

There are government boondoggles and then there are government boondoggles. One of the biggest oinkers is a scheme for a manufacturing zone located around an airfield not too far from where I grew up in eastern NC. The plan, known as the Global TransPark (shouldn't that be TransPork?), has been a dismal failure:

"Original predictions of the GTP’s economic impact were ambitious. Studies said that it would create 55,000 jobs by 1998 and pump $2.8 billion dollars a year into the region’s economy. Since 1991 more than $140 million in federal, state and county funds have been spent on the GTP, but the project has failed to land a major corporate tenant, has no manufacturing facilities as tenants and has not created a single manufacturing job."

Full story here; hat tip to the Locker Room.

Note that this lemon started under a Republican governor; yet another reason to call myself a libertarian. Note also the irony that the original brainstorm came from some bloke who is the Director of the Kenan Institute of Private Enterprise at UNC-Chapel Hill--Orwell must have come up with his job title. Shamelessly, his biography proclaims that "he is considered the leading developer of the aerotropolis concept defining the roles of aviation and airports in shaping 21st century urban growth and form."

Posted by E. Frank Stephenson at 01:55 PM in Economics  ·  TrackBack (2)

Some notes on the minimum wage?

[Sidenote: looks like Frank and I were simultaneously blogging on the same topic]

Recent data released by the BLS suggests that:

About 2 percent of workers age 25 and over earned the minimum wage or less. Among those age 65 and over, the proportion was 4 percent.

The press release goes on to mix sub-samples of the population, so you have to keep track of what the "denominator" is, however "[a]bout half of all hourly-paid workers earning $5.15 or less were under age 25."

Here's a picture of the percentage of workers paid hourly for which the minimum wage is binding (they are paid at or below the federal minimum wage):

What causes the spikes? Looks like every time the minimum wage is increased, more people are paid the minimum wage. How about the number of people who are priced out of the labor market?


D.pctminwage | Coef. Std. Err. t P>|t|
minwageinc | 1.966667 .3973271 4.95 0.000
_cons | -.9 .1421392 -6.33 0.000

The dependent variable is the one-year change in the percentage of workers paid hourly that are paid at or below the minimum wage. These results suggest that in years when the minimum wage is increased, approximately 2% more of the hourly work force is paid at or below the minimum wage.

How about the number of people hired who are paid hourly? Contemporaneously there doesn't seem to be a statistically significant relationship between the number of hourly workers hired and an increase in the minmum wage. However, if you regress the yearly change in workers paid hourly against the one-period lagged value of a dummy variable that takes a value of one when the minimum wage is raised you get:


D.totalhrly | Coef. Std. Err. t P>|t|
lag minwageinc | -887.5079 395.8992 -2.24 0.035
_cons | 1137.222 236.9102 4.80 0.000


where the dependent variable is measured in thousands. What this simple regression suggests is that increasing the minimum wage causes a reduction in those paid hourly by 887,000 people. This doesn't capture those who are moved to salaried positions, so this number would seem to be an upper bound. I don't know this literature, perhaps one of my co-bloggers or a reader can indicate if this is consistent with the other evidence.

It seems that the largest proportion of minimum wage workers are in the service sector (duh) and it seems that most minimum wage workers are young (again, duh). Does this mean that raising the minimum wage will have no effect in the labor market? Nope, it just means that, excluding union contracts that tie union wages to the minimum wage, the minimum wage binds on a subset of the labor force that typically doesn't vote.

Posted by Craig Depken at 01:40 PM in Economics  ·  TrackBack (1)

Minimum Wage Data

This page has lots of facts and figures about employment and minimum wage. Most interesting to me was Table 10 which shows that the percentage of workers earning at or below $5.15 per hour has fallen to 2.7%. Two thoughts:

1. This small percentage probably explains why Dems get so little traction advocating minimum wage hikes--so few people (even if one includes those earning a dollar to two above minimum) would benefit.

2. Some folks (example here) like to trot out the nugget about minimum wages being needed to offset monopsony power. Conceptually, it's difficult to take such arguments seriously in an age where people are willing to spend 30 minutes or more each way on their commutes. Empirically, the decline in minimum wage employment from some 15% of all workers in the early 1980s down to less than 3% of all workers is inconsistent with monopsony. Obviously much of the decline is associated with the declining real value of the minimum wage, but if monopsony was a significant feature of labor markets then the monopsony firm would gladly maintain wages at $5.15 per hour rather than paying rates above the minimum wage.

Posted by E. Frank Stephenson at 01:32 PM in Economics  ·  TrackBack (0)

Pythagorean Wins and Manager Skill Revisited

In this post last August, I expressed skepticism that the difference between actual wins and Pythagorean wins (the number of wins predicted by runs scored and runs allowed) is a meaningful measure of a manager's skill. This observation was motivated by an article in the Weekend section of the WSJ which argued that actual wins-Pythag. wins is a good indicator of managerial skill.

While putting off writing my final exams this morning, I decided to catch up on SABR's "By the Numbers." Thomas Thress has articles in the May and August 2004 issues that support my skepticism. In the May issue (scroll down to p.19), he modifies the Pythag win formula for home and road wins. (The modification reflects the fact that home teams that win use fewer innings to do than do visiting teams.) In the August 2004 issue (scroll down to p. 3) he then examines the relationship between home and road deviations from predicted home and road wins. (For example, did the Braves win more games on the home and on the road than would have been predicted based on the number of runs they scored and allowed both home and away?) If the difference between actual wins and Pythag. wins is indicative of managerial skill, Thress argues, then there should be a correlation between the home and road residuals. He finds no statistically significant evidence of such a correlation.

Posted by E. Frank Stephenson at 12:33 PM in Sports  ·  TrackBack (24)

Libertarianism 101

Got 5 minutes to spare? Check out this seriously cool Flash animation introduction to the libertarian philosophy courtesy of ISIL.

Posted by Robert Lawson at 09:51 AM in Politics  ·  TrackBack (5)

April 24, 2005
What use do sari-makers have for condoms?

You may have seen the “news of the weird”–type story in yesterday’s online Boston Globe, headlined “Most condoms in India used to make saris”. The article explains:

The condoms are valuable to manufacturers because of the lubricant on them. Sari weavers place the condoms on their thread spools and the lubricant on the prophylactics is rubbed off on the thread, making it move faster through their sewing machines.

If you think like an economist, you immediately wondered: how on earth can it be cheaper for the sari-makers to get the lubricant by taking it from condoms, than by buying the lube without the condoms (presumably they could buy it from the same firms that supply the condom-makers)? If you instinctively guessed “they must be getting condoms at a subsidized price,” it turns out that your instincts are exactly right. The Globe story echoes a widely reported Daily Telegraph story from last year. But yesterday's Globe version omits the key fact: the Indian government gives away about 900 million free condoms each year. Industrial users apparently buy them very cheaply from corrupt officials at the agencies that handle distribution:

Sari maker Yusuf Bhai said they purchased the condoms from agents, who reportedly acquired them from agencies involved in family planning and AIDS prevention schemes.

Some other novel uses: pavers mix condoms into asphalt (the latex increases crack-resistance); rural villagers use condoms as disposable water containers; soldiers use them to keep dust out of gun barrels.

Economic moral (also noted here): demand is very elastic at a near-zero price.

Posted by Lawrence H. White at 05:28 PM in Economics  ·  TrackBack (14)

Ecuadorian president falls; currency doesn’t

Ecuador ousted its President, Lucio Gutierrez, on Wednesday. Prices of Ecuadorian government bonds have fallen (yields have risen 100 basis points) in speculation against the trustworthiness of the new leftist President, the former Vice-President Alfredo Palacio. But the exchange value of Ecuador’s currency hasn’t dropped one penny against the dollar – because there is no national Ecuadorian currency. Ecuador officially adopted the US dollar in 2000, when the sucre hyperinflated. From Bloomberg.com:

With oil prices still high and Ecuador's currency linked to the dollar, a change in government is unlikely to hurt the economy, said Jose Cerritelli, an Andean region economic analyst for Bear Stearns Co. in New York. ``The president could fall, but the economy will most likely not be affected, because dollarization as well as high oil prices shield the economy from politics,'' Cerritelli said.

Score another point for dollarization.

To say that “Ecuador’s currency [is] linked to the dollar,” by the way, is as misleading as saying that Wisconsin’s currency is linked to the dollar. It simply is the dollar.

The new president has been an outspoken opponent of dollarization. It would be extremely foolish and economically damaging for him to try to reinstitute the failed regime of an independent national currency. But that's no guarantee he won't do it. It was likewise extremely foolish and economically damaging for Argentina's Duhalde government in 2002 to break its currency's link with the dollar (in that case there was only a linkage and not dollarization, nor an orthodox currency board), and yet (egged on by ill-informed American economists) they did it anyway. (I’m reminded of the famous Ren and Stimpy episode, “Space Madness”, in which Stimpy, egged on by the voice-over announcer, can’t resist pushing the history eraser button.)

Posted by Lawrence H. White at 02:04 PM in Economics  ·  TrackBack (1)

April 23, 2005
The next big thing?

Nanotechnology? Medicine? Hibernation upon demand?

Posted by Craig Depken at 10:34 PM in Misc.  ·  TrackBack (4)

Who owns the family name?

Looking at vehicles on the web, I wanted to check out the Nissan Murano. www.nissan.com is not the home of Nissan motor company.

Posted by Craig Depken at 07:25 PM in Law  ·  TrackBack (3)

April 22, 2005
Death drives a Blue Bird

bus that is. From Regret the Error, a hilarious archive of newspaper mistakes, comes this mistake in the Washington Post:

A graphic with an April 19 Metro article incorrectly reported the number of passenger miles traveled by U.S. school buses. The correct figure is 4.3 billion miles each year, not each day.

A graphic with an April 19 article incorrectly reported that the number of school bus fatalities per passenger miles was 0.01. The correct figure is 0.01 school bus fatalities per 100,000 passenger miles.

Yep, those bus drivers aren't nearly paid enough. Plus what's an order of magnitude or two, or five!? Nice editing.

This was the first hit from googling school bus deaths.

Posted by Craig Depken at 08:50 PM in Misc.  ·  TrackBack (1)

Interesting "game"

Guess the Google presents montage of pictures and you guess the google keyword that generated it. They start to repeat, but the first time I played I scored 119 and the second time 260 (with three repeats - two I got right and one I didn't).

Interesting what comes to mind when you see things.

Posted by Craig Depken at 08:30 PM in Funny Stuff  ·  TrackBack (32)

Kudos to The Economist

Every semester I offer a bet with my students - half a letter grade on their final grade if they can find a published definition of "price gouging" in an economics textbook. I haven't found one, and I suppose the students don't try too hard looking. I did have someone show me "price gouging" in a dictionary of management terms, but that didn't count. If anyone knows of a definition in a textbook, let me know.

I am glad to report that in it's dictionary of economic terms the The Economist does not attempt to define "price gouging." Here are the pertinent 'P' terms in alphabetical order :

... Predatory pricing, Preference, Present value, Price, Price discrimination, Price elasticity, Price mechanism,Price regulation, Price/earnings ratio, Principal-agent theory, Prisoners' dilemma...

It isn't in the "G"s either. Good on 'ya laddies.

Posted by Craig Depken at 08:14 PM in Economics  ·  TrackBack (1)

Clarida to replace Bernanke at the Fed?

According to the Financial Times, Richard H. Clarida of Columbia University is the leading candidate to fill Ben Bernanke’s seat on the Federal Reserve’s Board of Governors when Bernanke moves over to the Council of Economic Advisors. (Hat tip: Brad DeLong, who gives Clarida a thumbs-up.)

What kind of monetary policy would Clarida support? From the FT article:

Mark Gertler, a professor at New York University who has co-authored papers with Mr Clarida, said: "Basically, he's an inflation targeter. He believes in following a monetary policy rule that is consistent with inflation targeting."

Many of Clarida’s papers are helpfully available as pdf's on his Columbia website. A quick look at one of his papers with Jordi Gali and Mark Gertler, "The Science of Monetary Policy - A New Keynesian Perspective" (Journal of Economic Literature, December 1999), confirms Gertler’s statement. Like Bernanke, Clarida et al. promote inflation targeting. I’d say about their version of inflation targeting, though, what Johnny Depp says about the Pirate’s Code in Pirates of the Caribbean: it’s more of guideline than a rule.

Oh, and don't let the self-applied "New Keyensian" tag scare you. Here it means much the same as "Old Monetarist": it posits a non-frictionless world in which monetary policy has real effects in the short run.

Posted by Lawrence H. White at 05:50 PM in Economics  ·  TrackBack (0)

We're always close to last

Another day, another story of Louisiana political corruption. It got me thinking of the U.S. Economic Freedom Index published by the Pacific Research Institute. I know other groups produce similar reports.
So why is Louisiana always last? Maybe it's because we're 40th on the list; geographically the closest states with similarly bad business environments is New Mexico and Kentucky. Sigh.

Posted by Tim Shaughnessy at 02:02 PM in Economics  ·  TrackBack (3)

Sirico on Pope Benedict XVI

Fr. Robert A. Sirico writes,

We have already heard a thousand times or more that the new Pope is a conservative. As counterintuitive as this may sound, I believe that insofar as the new papacy has implications for economics and politics, it is in the direction of a humane and unifying liberalism. I speak not of liberalism as we know it now, which is bound up with state management and democratic relativism, but liberalism of an older variety that placed it hopes in society, faith, and freedom.

ATSRTWT

Posted by Robert Lawson at 01:55 PM in Culture  ·  TrackBack (3)

Where's the Oomph?

A large multiethnic study unveils that a diet containing lots of processed meats, like hot dogs and sausages, raises the risk of pancreatic cancer. [Story 1 and Story 2.]

Ok, what I need to know is how much do you have to eat and how much does it raise your risk?

From the news articles, it turns out that the risk of getting pancreatic cancer was 67% higher among people eating 40 grams or more of processed meats daily. 40 grams is not a lot of meat--only about 1.4 ounces. So a quarter pounder hot dog (113 grams) per day should increase your odds of getting pancreatic cancer by nearly 200% (assuming linearity).

Wow, this doesn't sound like a lot of meat and the increased risk (200%) sounds pretty big. But the real question is how big is a 200% increase? If the baseline odds of getting pancreatic cancer are just 1 out of a million (0.000001), then eating a big daily hot dog will increase your odds to about 3 out of a million (0.000003). [Note, I do NOT know the baseline risk of getting pancreatic cancer; this is just an example.]

It is entirely reasonable for someone to say, "I really love eating hot dogs, and a lifetime of enjoyment is worth the additional 2 out of a million chance of contracting pancreatic cancer." Of course a reasonable person could say, "Wow, although I like hot dogs, that too much risk for me to take."

Medical science can give us the relevant parameters but it cannot decide if the risk is worth it. Only people can decide this for themselves.

But my big beef (pardon the pun) is that medical journalists ALMOST NEVER give us the baseline risk information without which you cannot make such a judgment. I need to know the baseline risk in order to judge if a 67% (or 200%) increase is big or not.

[UPDATE: I'm not sure if this is the baseline or not, but this press release indicates that 482 people out of 200,000 contracted pancreatic cancer over the seven-year period. This implies a 0.0024 risk.]

Posted by Robert Lawson at 10:32 AM in Economics  ·  TrackBack (2)

April 21, 2005
Mini gets longer

The Mini gets longer

Posted by Craig Depken at 04:55 PM in Misc.  ·  TrackBack (4)

Prank Paper Accepted for Conference

Story here.

Create your own here.

Hat tip: Andrew Cline at The Locker Room.

Posted by E. Frank Stephenson at 03:00 PM in Misc.  ·  TrackBack (0)

Religion, Conscience, and the Workplace

"In December, a four-year-long court battle came to an end when a U.S. Court of Appeals dismissed a $2 million religious discrimination lawsuit brought against Costco, the nation’s largest wholesale retailer, which logged some $47 billion in sales last year.

The case, brought by West Springfield, Massachusetts, employee Kimberly Cloutier, was certainly not your average religious discrimination matter. Provoked by a change in the wholesaler’s dress code policy, it pitted facial piercings against professional appearance, and involved, among other things, an eyebrow ring and a small church [The Church of Body Modification] that few people have ever heard of."

Full story here.

Sorry but religious freedom shouldn't guarantee one a job because it infringes on employers' freedom of association. Likewise, even though I think abortion is murder, I don't support state laws guaranteeing pro-life pharmacists jobs. Instead they should find (or start!) pro-life pharmacies that will employ them without requiring that they distribute medications that offend their consciences. (Many states, including my own, have passed laws making it illegal to fire pharmacists who refuse to fill scripts on conscience. At least one state, IL, has passed a law mandating that pharmacists fill abortion pill scripts. Some background is here and here.)

Posted by E. Frank Stephenson at 02:57 PM in Law  ·  TrackBack (27)

Intel Discovers Market Works

See Cnet

    A day after Intel said it would offer $10,000 for a copy of a magazine in which Moore's Law was first announced, a University of Illinois engineering library noticed that one of its two copies had disappeared

    Librarians at Stanford University, the University of Washington and other universities say they are angry at Santa Clara, Calif.-based Intel for posting on eBay a $10,000 bounty for a copy of the magazine. The bounty went up on April 11. Since then, others have posted bounties too.

Posted by at 01:22 PM in Misc.  ·  TrackBack (21)

Faculty Salaries

The Annual Report on the Economic Status of the Profession, 2004-2005 has just been posted by the AAUP. The report indicates that the salary ratio of university presidents to full professors at doctoral institutions has increased over the last decade. Thus, the divergence between compensation at the upper level and the mid level at universities seems to have mirrored what has occurred in private industry.


    Between 1993-94 and 2003-04, however, increases in average presidential salaries accelerated, and the gap between chief administrator and faculty broadened. Unfortunately, the CUPA reports for the years between 1993-94 and 2003-04 do not distinguish between the public and the private sector within these institutional categories. The failure to do so obscures significant variation. Economist James Monks, a member of the AAUP's Committee on the Economic Status of the Profession, found that presidents at public research universities earned approximately half as much as their private university counterparts in 2001-02 and 2002-03, even taking into account differences in institutional characteristics.

    Still, it is clear that presidential salaries in both sectors began to move significantly ahead of faculty salaries during the latter half of the 1990s, and that the trend apparently continues. This development is one further indication that a more corporate organizational hierarchy is emerging in colleges and universities, in potential conflict with the mission of institutions of higher education to operate for the benefit of society as a whole.

>

Posted by at 12:48 PM in Economics  ·  Comments (0)  ·  TrackBack (25)

Of newspapers and candlestick makers

From AdAge comes this story about how the internet (let's drop the capital 'I') is going to cost the newspaper industry approximately $4 billion between now and 2007:

The newspaper industry's traditional lock on classified ads as its key revenue source is being seriously eroded by non-newspaper online classified ad sites.

Luis Ubinas and Jochen Heck warned that newspapers could lose $4 billion of "highly profitable" classified revenue by 2007 -- or around 20% of newspapers' 2004 classifieds revenue and just under 9% of the $46.6 billion in total newspaper ad revenue last year -- if trends that afflict help-wanted classifieds spread to automotive and real-estate classifieds.


Let's see, from the reader's side: the (physical) newspaper's classified ads are not searchable, are not always located in the place I, as the reader, might expect, and are not easily archived. From the advertiser's side: the classified ad is only good for a week or so, it is highly uncertain that your ad will be seen, it is likely more expensive to run a classified ad in a newspaper than on-line.

Yep, the days of the classified newspaper ad might be on the wane. From a newspaper executive:

The chilling part, Mr. Ubinas said, is that the key problem is not the competitors but rather what their pricing is doing to the entire classifieds model, calling it "price destruction."

Price destruction? Who comes up with these terms? I think the underlying complaint is similar to the complaints of the candlestick makers, liverymen, and typewriter repairmen: New product replaces old product and someone's ox gets gored.

Side note: The woes in the newspaper industry, real and perceived, are evidently not the fault of the newspapers, their content, or their business model. Not only are other industries stealing their advertising revenue, the readers are to blame:

"Our customers these days are a slippery bunch," said Gregg K. Jones, the NAA's chairman and also co-publisher of the Greeneville Sun in Tennessee. "Harder to find and harder to hold onto."

"Do they still love us? Do they still need us?" he wondered. "Consumer [sic] today aren't following patterns in media, or anything else." He described American consumers as having gone "from the 'we' generation to the 'me' generation to the 'it's all about me' generation."


Makes me want to discontinue my TWO newspaper subscriptions.

Posted by Craig Depken at 11:40 AM in Economics  ·  TrackBack (19)

I need a shower

This morning was spent dealing with vehicles. Kid-mobile had to go to the shop. Downside? Our other vehicle is a holdover from the pre-kid years, a MB 560SL. Beautiful car, fun to drive, completely impractical.

Eventually catch a ride from a nice person and get back home. Take the bucket o' bolts for its annual state inspection. There are few other rackets the government is involved in that are as insane as car inspections. Yearly expenditure to make sure that my headlights, blinkers, horn, and windshield wipers work? I need the government to help me out with this?

Of course, the real reason we have to have inspections in the big cities is for pollution control. Right. The city of Arlington's (and the whole Dallas-Ft. Worth metroplex) traffic system is so efficient it's the badly maintained car that causes the pollution. I think it is the amount of time we sit around at stupidly timed red lights - an idling engine is the least efficient.

Nevertheless, I watch my friendly technician give the BoB an auto colonoscopy and she's "running like a top" (so says our techie). Here's the run down on a fairly well maintained 1988 MB560SL with 141000 miles (oil changes regularly, four years ago I had to replace the rear valve springs but nothing else done to the engne):

High Speed Emission Results (25mph)
Hydrocarbons (ppm): Maximum allowed - 137    BoB's Score- 11
Nitrous Oxide (ppm): Maximum allowed - 956    BoB's Score - 434

Low Speed Emission Results (15mph)
Hydrocarbons (ppm): Maximum allowed - 140     BoB's Score- 21
Nitrous Oxide (ppm): Maximum allowed - 1046    BoB's Score - 467

Overall result? The BoB passed with flying colors.

$39.95 cash, check, or charge. Why we have to do this every year is beyond me. There is little reason to suspect that the BoB will score appreciably worse next year. The government just took my money for no reason, but the penalty for driving without being inspected is a lot more than $39.95.

I often chalk the inspection up to a bit of useful information about the BoB's innards. But this is just a rationalizatoin. I really get steamed after I leave the inspection joint because I feel like something happened that I won't want to talk about in the morning.

Side note: Two or three years ago the state changed the requirements placed on the equipment to perform inspections. New equipment cost? Approximately $40,000 at the time. My mechanic said "uncle" and got out of the inspection business. As one would expect, the prices of inspections increased. However, Taylors, the place I go to (which is actually reputable and quick), used to take only cash or check and if it was cold or hot out, well then suffer outside. A new inspection joint (which also offers oil changes) has opened immediately next door. Now Taylors accepts credit cards (at least I got 39.95 frequent flyer miles) and they are building an air conditioned and heated waiting room.

Hooray for competition!! I suppose we take our victories where we find them.

Posted by Craig Depken at 11:22 AM in Economics  ·  TrackBack (2)

Thoughts for your penny

Like Bob, I would like to see the US government get out of the business of issuing pennies. But then, I'd like to see government get out the business of issuing currency of all denominations, and let private firms do it. That's the only real way to discover whether the benefits of the penny (or dollar coin, etc.) outweigh its costs. Pipe dream? No, there's good historical precedent. My frequent co-author George Selgin is now working on a book about how private penny issuers saved the Industrial Revolution.

Posted by Lawrence H. White at 10:50 AM in Economics  ·  TrackBack (28)

Statistical Mumbo-Jumbo

While driving in this morning, I heard some sort of radio promo proclaiming that one out of two men is at risk for cancer. (I think that's an exact quote, but since I was driving and couldn't jot down the ad word-for-word, I've left off the quote marks.)

Geez, I thought all men were AT RISK for cancer, though not all would actually contract some form of it. Stated differently, is it now possible for 50% of men to smoke like chimneys or engage in other cancer related behavior (too much sun exposure and melanoma) and still not come down with cancer? (Of course we may not know which 50%.)

Of course, what I think the ad was trying to say is that 50% of men will contract some form of cancer at some point in their lifetimes. Maybe I'm just grumpy from lack of sleep (note the time on my previous post), but it sure would be nice for the cancer folks to make a clear statement about lifetime probability rather than a mouthful of statistical mush.

Posted by E. Frank Stephenson at 09:53 AM in Misc.  ·  TrackBack (28)

Relative Prices v. Inflation (cont.)

I would like to see the penny abolished in the United States. I think it is a pretty easy case that the costs of the $0.01 denomenation coin outweigh the benefits. My main evidence for this is the number of pennies one finds on the ground that people don't bother to pick up and the ubiquitous "leave a penny/take a penny" cups found on many store counters. (This evaluation is debatable of course, just as my evaluation of the costs and benefits of the dollar coin was debatable.)

But when I suggest the idea of getting rid of the penny, the typical reaction I get is this, "If you abolish the penny all businesses will increase their prices to the nearest nickel and this will be inflationary." Of course, this is nonsense. Suppose it was true that all businesses rounded up to the nearest nickel. If all prices go up a little bit, then we won't have enough money to pay for everything we normally buy. Some businesses will find themselves with surpluses and will end up lowering prices to restore equilibrium. In the end, prices will adjust to clear markets, but abolishing the penny will not be inflationary.

The only way this could be inflationary would be if the money supply increased which brings us back to Uncle Miltie's famous dictum.

Posted by Robert Lawson at 09:29 AM in Economics  ·  TrackBack (21)

Relative Price Changes vs. Inflation

Like Larry, I also try to explain the difference between relative price changes and inflation to my students. My approach is straightforward (especially since I don't burden principles students with a couple of technical caveats)--we can only have inflation (a general increase in prices) if the money supply is increasing. If the money supply is constant, then a price increase for one good will leave less income available to spend on other goods thereby reducing the demand for and prices of those goods. To illustrate the point, in the last 6 months or so, there have been lots of articles about rising gas prices hurting retail sales. Here's one of the 200,000+ results to the Google query "gas prices hurt retailers."

Maybe Krugman can repeat after Uncle Miltie: Inflation is always and everywhere a monetary phenomenon.

Posted by E. Frank Stephenson at 03:40 AM in Economics  ·  TrackBack (41)

April 20, 2005
Let's make it even easier.

Timothy Shaughnessy and Ralph R. Frasca have some salient points about the new Pope. Here was my take after seeing/hearing about five minutes of the "experts."

Theorem: Benedict XVI will be a good Pope.

Proof: The secularists are insisting he will be a bad Pope.

Q.E.D.

Posted by Craig Depken at 11:04 PM in Culture  ·  TrackBack (26)

How not to explain inflation

When I teach undergraduates about inflation, one of the first points I make is to distinguish between relative prices and nominal (dollar) prices. It follows from the distinction that identifying the subset of consumer prices that has risen fastest (had the greatest relative price increases), as journalists like to do, provides no explanation for why the index of all nominal consumer prices is rising. Thanks to Paul Krugman’s latest column, I now have a fresh example for my students of how not to reason about inflation:

What's driving inflation? Not wages: Labor costs have been falling, because wages are growing less than productivity. Oil prices are a big part of the story, but not all of it. Other commodity prices are also rising; health care costs are once again on the march. And a combination of capacity shortages, rising Asian demand and a weakening dollar has given industries such as cement and steel new "pricing power."

Does Krugman recognize that to explain how nominal demand for goods can outgrow the real supply of goods we need to refer to the supply and demand for money? There's no evidence that he does. He refers to Fed policy regarding interest rates, but offers not a word about money or velocity growth. Krugman reassures us that “we’re not back to the economic misery of the 1970s”. But in Krugman’s column, we seem to be back to the macroeconomics of the 1970s, before the profession took to heart the lesson that money growth is the most important determinant of the inflation rate.

Posted by Lawrence H. White at 10:12 PM in Economics  ·  TrackBack (33)

Tour de GA Rolls into Rome

Pee Wee and I are just back from watching Lance Armstrong finish third in the second stage of the Tour de Georgia. We were about 150 meters from the finish line and Lance was among a group of cyclists sprinting for first but, alas, he came up short. If last year is any guide, he'll smoke the field on tomorrow's time trial over Mt. Alto.

Posted by E. Frank Stephenson at 08:16 PM in Sports  ·  TrackBack (31)

A verdict on the new formula of Pepsi One (in the black cans) compared to the old formula (silver cans)

Less-bitter aftertaste (now sweetened with Splenda rather than aspartame), but not nearly fizzy enough.

Posted by Lawrence H. White at 04:33 PM in Misc.  ·  TrackBack (23)

Viva il Papa!

As soon as Cardinal Ratzinger appeared on the balcony at St. Peter’s, the media began a trashing of the new pope. An excellent article on the new pope that cuts through the liberal smoke screen has been posted on NRO by Michael Novak. Pope Benedict XVI is no reactionary cretin. As seen from the Left, his major fault is that he opposes totalitarian leftist movements that attempt to eliminate debate.


    In today’s liberal democracies, Ratzinger has observed, the move to atheism is not, as it was in the 19th century, a move toward the objective world of the scientific rationalist. That was the “modern” way, and it is now being rejected, in favor of a new “post-modern” way. The new way is not toward objectivity, but toward subjectivism; not toward truth as its criterion, but toward power. This, Ratzinger fears, is a move back toward the justification of murder in the name of “tolerance” and subjective choice.

The new pope’s first battles may be closer to home than most people expect. We need only observe what is going on at Catholic universities to see that moral relativism is a significant challenge to those who favor democracy

Posted by at 04:30 PM in Politics  ·  TrackBack (78)

Transitive Property Abolished

So let me get this straight: the media and leftists simultaneously claim that
A) the late John Paul II was a great Pope (like when they said the newly-dead Reagan was great).
B) Benedict 16 nee Joseph Ratzinger is very similar to John Paul II.
C) Benedict 16 will be a bad Pope.
Why the belief in C? Well, because Ratzinger is committed to the doctrines of the Catholic Church (hmm, perhaps because he was part of the Congregation for the Doctrine of the Faith). Apparently, it would be better if the Church were a democracy and priests handed out condoms with communion; my rejoinder to a blind faith in the will of the majority is that Barrabas was democratically elected.
Here's hoping that Benedict continues the classical liberal economic views espoused by his predecessor in Centesimus Annus. Heck, JP2 makes more economic sense here than what I've heard of JK Galbraith on NPR.
My old stomping ground, the Acton Institute, has created a site dedicated to JP2, and Father Sirico defends JP2's stance on the free market.

Posted by Tim Shaughnessy at 12:43 PM in Culture  ·  TrackBack (22)

Well, it's about time.

Introducing the International Journal of Motorcycle Studies:

The International Journal of Motorcycle Studies (IJMS) is dedicated to the study and discussion of motorcycling culture in all its forms?from the experience of riding and racing to the history of the machine, the riders and design to the images of motorcycling and motorcyclists in film, advertising and literature. We welcome submissions on all areas related to the cultural phenomenon of motorcycling. We invite contributions from all members of the motorcycling community.

Posted by Craig Depken at 11:42 AM in Culture  ·  TrackBack (24)

Link Wray in St. Louis

It was a treat to see the father of the power chord, guitarist Link Wray (age 75, but he still rocks), tonight at a small club in St. Louis. Even if he did play his biggest hit “Rumble” three times. And even if it was like a rehearsal for him and the bass player and drummer with whom his promoter has hooked him up. They were earnest but not yet familiar with the Link Wray songbook, this being only the second stop on their tour. But hey -- if they played a song poorly or dischordantly the first time, they got it right the second time (e.g. Batman, Ace of Spades, Jack the Ripper).

Link's tour dates here.

Posted by Lawrence H. White at 03:15 AM in Culture  ·  TrackBack (29)

Everything in life is an option?

So say the finance folks.

Enter Rogers Cadenhead who bought the domain name BenedictXVI.Com a few weeks ago.

What to do with it now...

Posted by Craig Depken at 12:42 AM in Culture  ·  TrackBack (40)

April 19, 2005
FDA to Levitral - No more PDA

The FDA wants Bayer, Schering-Plough and GlaxoSmithKline to pull an advertisement for Levitra claiming the:

"TV ad fails to disclose the drug's indication, fails to include information relating to the major side effects and contraindications, and fails to make adequate provision for dissemination of the FDA-approved labeling. ... Moreover, the TV ad is misleading because it contains representations or suggestions that Levitra is superior to other erectile dysfunction treatments when this has not been demonstrated by substantial evidence or substantial clinical experience."

I am sure parents around the country are happy that the ads will be pulled, not because of fears of patient safety and the lack of counterindicators but because the ads just shouldn't be on television for decency's sake.

Posted by Craig Depken at 12:06 PM in Culture  ·  TrackBack (14)

Macro Movies?

I enjoyed the APEE conference, especially the sessions on using movie clips to highlight topics in class. Unfortunately, there didn't seem to be many clips suitable for the principles macro class (Gwartney's text). Any suggestions would be appreciated.
In preparing my MBA class tonight on Oligopoly and Game Theory, I was reminded of a clip at the beginning of The Royal Tenenbaums that demonstrates how easily collusion falls apart: son Chas and dad Royal are waiting in ambush with BB guns for two other kids:
Royal--Hold it Chassie, hold it right there (pointing gun at Chas instead).
Chas--What are you doing? You're on my team!
Royal--Haha, There ARE no teams! (shoots at Chas)
Narrator--The BB was still lodged between two knuckles in Chas' left hand.

Posted by Tim Shaughnessy at 11:25 AM in Economics  ·  TrackBack (21)

Think Tank's Ideas Shifted As Malaysia Ties Grew

The WaPo reports,

For years, the Heritage Foundation sharply criticized the autocratic rule of former Malaysian prime minister Mahathir Mohamad, denouncing his anti-Semitism, his jailing of political opponents and his "anti-free market currency controls." Then, late in the summer of 2001, the conservative nonprofit Washington think tank began to change its assessment...

ATSRTWT

Posted by Robert Lawson at 08:59 AM in Politics  ·  TrackBack (24)

April 18, 2005
Concentration in the gaming industry

GameStop (started by a couple of guys from Arlington/Grapevine, TX) is buying out Electonic Boutique (which has been around for quite a while). The target's stock is now up $14.89 (36.21%) while the acquirer's stock is up $ 3.58 (16.57%). The merger, if approved, will result in a firm with more gaming sales than Walmart - and the market seems to think the merger will lead to greater profits.

Some will likely oppose the merger over concentration concerns. However, the FTC should "approve" the merger - although it sounds eerily familiar to the Office Depot-Staples merger, which was denied during the Clinton administration, because the combined firms would have 100% of their previously separate market shares. The current administration is less likely to choose such a narrow definition of the relevant market.

It would seem that the gaming market is highly competitive - there are a lot of places to buy new and used games - and therefore there should be little reason to deny the merger on pricing concerns. This looks like an efficiency-based merger.

Posted by Craig Depken at 01:39 PM in Economics  ·  TrackBack (28)

A couple of interesting commencement speakers

From today's Chronicle of Higher Education:

Cabrini College: Helen Thomas, a syndicated columnist and former White House correspondent for United Press International

Lehigh University: Maya Angelou, the author and poet

Posted by Craig Depken at 12:32 PM in Culture  ·  TrackBack (29)

Rationality of NFL Draft

While taking a break from some yardwork over the weekend, I kicked back with the latest issue of ESPN The Magazine. It contained a short article on this paper which purports to find market inefficiency in the NFL draft. I haven't yet read the paper (it runs some 60 pages) but the magazine version suggests that two pieces of evidence are an overvaluation of the top pick and an undervaluation of later picks. (Pick 43 has had a good run over the last 10 years--9 of the 10 picks are still in the league and they include Julius Jones, Corey Dillon, and Muhsin Muhammad.)

The first part strikes me as plausible--I doubt Eli Manning is going to be so much better than Philip Rivers that the Giants should have forked over an extra first, third, and fifth round pick to get Manning. (Of course, one should measure marginal revenue product rather than the mere effect on wins--Eli might have a bigger effect on ticket sales than Rivers.)

The second part--at least as reported in the mag--is less convincing to me. Suppose that draft choices are binomial events--success or failure--and the the probability of success is close to 1 for high picks and declines as the draft progresses. It would be entirely possible that some spot in the draft (maybe pick number 43!) would seem to be a sweet spot because over some relatively short (maybe 10 years) period of time there had been a run of successful picks. Stated differently, the finding that 9 of the last 10 picks at spot 43 are still in the league is no reason to conclude that the probability of success does not decline as the draft progresses. (Note also that still in the league depends on flukey things like injuries, not just the efficiency of the draft.)

Again, I have not yet read the full paper so I might not (or more accurately, ESPN The Mag might not) be doing justice to the paper. After reading it, I might add more.

Posted by E. Frank Stephenson at 10:38 AM in Sports  ·  TrackBack (45)

April 17, 2005
Neanderthal man (Homo non-economicus)

See this story in the Economist for the latest on why Neanderthal man lost out to Homo sapiens. The reason wasn’t his sub-sized brain or his lack of language skills. It was his failure to engage in trade. We now can thank Adam Smith for saving both the economy and the species. Maybe there is something to social darwinism.

Hat tip to Fark.com and Adam Smith

Posted by at 10:26 PM in Economics  ·  TrackBack (30)

Free speech or fund raising?

Speakers with highly politicized and biased points of view currently bounce from campus to campus receiving large publicly subsidized lecture fees. These rote speeches remain the same throughout the entire lecture circuit. Moreover, the speeches are widely reported in the press so that there is little new information to be gained at any of these gatherings. The purpose of these lectures is to politicize; it is not to inform. The effect is to channel public money into causes that the majority of voters may find reprehensible.

Were these lecture fees set in a private market I would have no problem with them. However, these fees are mainly set by agents who are not accountable to the public. I find it difficult to justify a lecture fee of $20,000, or even $5,000, for a persuasive speech, when similar expression can be found on C-span at minimal cost. One way of getting a more diverse platform of speakers is to limit publicly supported fees to travel plus $1,000. Is there a problem with this proposal?

Posted by at 04:14 PM in Politics  ·  Comments (0)  ·  TrackBack (33)

My Saturday night...

was not spent engaged in the high-arts, but instead rooting around in the low-arts in the form of the Texas Rangers (who, by the way, are "exploiting" their fans early in the season). I was offered a "free" seat in the Tris Speaker box at the Ballpark, er Ameriquest Field, in Arlingotn tonight and watched the Rangers lay an egg - 8 to 0 against the Bluejays. Twice the Rangers walked the bases loaded and then hit the next batter - both times the result was the same.

The luxury box was nice - fourteen regular seats outside and a couple of tables inside with a fridge and a sink, and a private bathroom. Unfortunately, the box is not "stocked" with anything and the crowd I was with didn't bring much.

It was my first big league game in quite a while without a beer. Shock and awe from some who know me, is Depken sick, has he gone over?

None of the above. Interestingly enough - you can't buy a beer from the regular vendors and carry it up to the suite. You can carry hotdogs, and such, but not the booze. The nice lady who came to the suite was willing to sell beer, but only six at a time and for a bit more than you would pay with the pedestrians. I wasn't in the mood for six expensive beers and so went without.

The Rangers lost out on some revenue from me, but then I am small pickings. The suites around us were packed with the typical corporate guest types - mostly employees, I would assume - who were all sufficiently eating and drinking on the company's tab that my little boycott went unnoticed.

The beer limitations might be the decision of the Rangers, but then it might have something to do with Texas state law - which wouldn't be surprising. Today's fishwrap had an article about the lack of beer sales at Texas Motor Speedway, where tomorrow's NASCAR race will be held.

What!? They don't sell beer at the TMS? They must sell beer at TMS, after all it's NASCAR.

Nope.

Evidently state law does not allow the selling of beer where people can bring their own. Anyone who has been to a NASCAR race, or been anywhere near a NASCAR race, knows that BYOB is standard operating procedure. Hence plenty of beer being drunk, just not sold by TMS.

It has taken nine years for the TMS folks to get some action started in Austin, but it looks like they will get the special exemption rent-seeking theory would predict.

Posted by Craig Depken at 12:04 AM in Sports  ·  TrackBack (25)

April 16, 2005
Those poor exploited violinists!

We went to see the BalletMet Columbus production of Cinderella on Friday. It was well done we thought. [Full disclosure: The better half works for BalletMet though she has nothing to do with the professional company side of the operation.]

There is a bit of a to do over the fact that the company went with taped music instead of forking over the $56,000 it would have cost to employ the Columbus Symphony to do the job live. The musicians union is crying foul.

Forgive me but I'm having trouble feeling sorry for the unionized musicians making $50-60k when the ballet dancers themselves are lucky to make $25k.

Posted by Robert Lawson at 10:41 PM in Economics  ·  TrackBack (29)

140 years ago today

President Lincoln has been shot and killed two days earlier on April 14. The assassin, one John Wilkes Booth is fleeing south. 140 years ago today he has left the home of Dr. Mudd, having had his broken leg set, and heads to Mr. Cox's abode. Booth will eventually be shot and killed on April 26, 1865.

From this website the $100,000 reward would be approximately $2,251,200 today. That sounds high because the BLS claims that the CPI in 1865 was 46 (1967=100) and the CPI in 2003 was 552 (1967=100). A little manipulation indicates that the $100,000 in 1865 would be worth approximately $1.2m.

What's the reward for Osama bin Laden? $25 million!!


Here's Booth's escape route
.

A whole bunch more on the Lincoln assasination...

Posted by Craig Depken at 05:52 PM  ·  TrackBack (27)

April 15, 2005
The opportunity cost of government?

We all know it is jaw-dropping at times. This figure is stunning:

130 million returns filed in 2003 (see Table 473) required approximatley 6 billion hours? 40 hours per return? I spent probably ten hours - with the help of some software - and I too receive a refund. In the past I have had to pay, but with the nipper and the financial advisor quitting her job we ended up overpaying the federal government - plus this year we get to deduct our state sales tax (Texas doesn't have a state income tax)!

Posted by Craig Depken at 12:31 PM in Economics  ·  TrackBack (28)

More things found in food

This time in Fort Worth. A teacher found a dead (thankfully?) frog in the grean beans she had bought from a local Grandy's.

Posted by Craig Depken at 12:10 PM in Funny Stuff  ·  TrackBack (22)

Bernanke on the "global savings glut"

I'm having a busy week for attending talks by visiting speakers. On Wednesday, John Blundell of the IEA spoke at UM-St. Louis (under my sponsorship) and at the Discussion Club of St. Louis. Yesterday, Fed Governor Ben Bernanke gave the annual Homer Jones lecture at the St. Louis Fed. Today Deirdre McCloskey speaks at Washington U. in St. Louis.

Bernanke's talk is available on the Board of Governors' website. The most noteworthy observation he made is about who's been financing the $666b US trade deficit: Japan, of course, but also developing countries.

As table 1 shows, the bulk of the increase in the U.S. current account deficit was balanced by changes in the current account positions of developing countries, which moved from a collective deficit of $90 billion to a surplus of $326 billion--a net change of $416 billion-- between 1996 and 2004.

You'd think that countries like Korea and Brazil would be borrowing from the rest of the world. In 1996 they were. But in 2004 they did the reverse: for the time being capital has stopped flowing into them and has starting flowing out on net. But capital outflows from developing countries are anomalous and can't be expected to continue indefinitely. When investors get over their post-1997-crash jitters about those countries, the US Treasury is going to find it harder to sell its debt at reasonable interest rates. US taxpayers will be socked with even greater debt service if low-interest debt rolls over into higher-interest debt. So the US had better get its fiscal house in order.

I had been worried that it was premature to invite Bernanke to give the lecture, because any current Fed official is presumably constrained in what he can say. With Bernanke's nomination to the Council of Economic Advisors (his confirmation hearings begin soon), the constraints are even more severe. It was gracious of him even to give the lecture, given that unconfirmed nominees traditionally cancel all public speaking engagements. But he unfortunately could not take questions after the lecture.

Posted by Lawrence H. White at 12:00 PM in Economics  ·  TrackBack (39)

Tax notes

1. Thank goodness for TurboTax. What a breeze, at least compared to the old days of doing my taxes on Lotus 123, and before that, on a handheld calculator.
2. Should I be happy that I have federal and state refunds coming, or annoyed that by overdeducting I've been giving the feds and state an interest-free loan?

Posted by Lawrence H. White at 11:31 AM in Misc.  ·  TrackBack (34)

Drink more water! Drink less water! What's a runner to do?

Runners should think twice before reaching for that water bottle: A study confirms that drinking too much can be dangerous, even deadly, for endurance athletes. [Story.]

Posted by Robert Lawson at 11:15 AM in Sports  ·  TrackBack (26)

April 14, 2005
Blind Justice

Tennessee passed a law prohibiting retail optical companies from leasing space to optometrists to perform eye exams in their retail eyewear stores. Lenscrafters challenged the law as being unconstitutional. The law clearly had a discriminatory purpose aimed at protecting local optometrists. Of course, nothing in the act prohibits optometrist from selling eyewear to their patients.

This case was just decided by the 6th Circuit Court of Appeals. The majority found Lenscrafters arguments unpersuasive. The law may be constitutional, but there is certainly nothing wrong with Lenscrafters’ economic reasoning. This is an unhealthy combination of vested interests, politicians looking for political contributions and local optometrists looking for protection. No doubt Lenscrafters will be hurt by this law, but the real losers are the people from Tennessee. Tennessee definitely needs consumer protection, but it is not from the likes of Lenscrafters. They need protection from their own politicians and their parasitic local businesses.

Posted by at 08:12 PM in Economics ~ in Law  ·  Comments (1)  ·  TrackBack (18)

"Napoleon Dynamite" Resolution

Idaho is considering a resolution honoring "Napoleon Dynamite." An excerpt:

WHEREAS, tater tots figure prominently in this film thus promoting Idaho's
15 most famous export; and
16 WHEREAS, the friendship between Napoleon and Pedro has furthered
17 multiethnic relationships; and
18 WHEREAS, Uncle Rico's football skills are a testament to Idaho athletics;
19 and
20 WHEREAS, Napoleon's bicycle and Kip's skateboard promote better air qual-
21 ity and carpooling as alternatives to fuel-dependent methods of transporta-
22 tion; and
23 WHEREAS, Grandma's trip to the St. Anthony Sand Dunes highlights a long-
24 honored Idaho vacation destination; and
25 WHEREAS, Rico and Kip's Tupperware sales and Deb's keychains and glamour
26 shots promote entrepreneurism and self-sufficiency in Idaho's small towns;

Of course, Idaho taxpayers are better off having their representatives wasting time on pointless resolutions instead of hiking taxes or coming up with new spending programs.

(This sounds so silly that it might be a hoax--caveat emptor.)

Hat tip: Jeff Hoffman.

Posted by E. Frank Stephenson at 12:38 PM in Misc.  ·  TrackBack (28)

MSM and swamps

Here goes for my first DOL post (thanks, Bob, for the offer). A "top story" on CNN.com describes a man who held out on selling some of his property in the Everglades, but agreed to do so for $4.95 million. At least they didn't eminent domain him. But, lower on the CNN page is their QuickVote that asks "Was Florida right to pay $4.95 million for 160 acres of land needed for restoration of the Everglades?" I was amazed that 77% of respondents said Yes, because the wording of the question obviously intends to elicit the opposite response. Who cares about property rights when there are swamps to save?

Posted by Tim Shaughnessy at 12:03 PM in Culture  ·  TrackBack (22)

Those in glass houses?

Here is a partial(?) list of congress-people with relatives on the payroll. Tom DeLay is the latest Republican to be on the hot seat, but seems to have done little more than what others have done (not a great excuse, but hey it's Washington) - what DeLay has really done is get the statists to hate him. I don't have much love for the Republicans, but you would think they would get tired of being "forced" out because the statists used the political/media machine to grind them up.

Posted by Craig Depken at 11:51 AM in Politics  ·  TrackBack (62)

Little House Review

My better half is a life-long fan of the Laura Ingalls Wilder's Little House books. ABC/Disney has recently begun airing a new mini-series version. Her review follows:

Generations of children have read and loved the Little House books by Laura Ingalls Wilder. My second grade teacher, Mrs. Anita Johnson, read us a daily chapter of Little House in the Big Woods, and then Little House on the Prairie. I was so enamored with the story of the Ingalls family that I devoured the rest of the series on my own.

Read More »

Posted by Robert Lawson at 10:00 AM in Culture  ·  TrackBack (27)

Congratulations

Are due to Dave Tufte of Voluntary Exchange, who received tenure this week.

Posted by Joshua Hall at 09:51 AM  ·  TrackBack (25)

Burning Down The (Out)House

At Franklin (Ind.) College they burn down an outhouse before the homecoming football game every year. Here is a picture.

From Sports Illustrated: On Campus:

The privy-burning started in 1908: Female students had strict curfews, so the men had to resort to trickery to get the women out of their dorm rooms to party. They stole a privy ... and burned it outside Bryan Hall, the women's dorm. The girls ran out and off with the guys, and a tradition was born.


Posted by Joshua Hall at 08:46 AM  ·  TrackBack (27)

Tax Freedom Day

Get ready to celebrate. April 17th is Tax Freedom Day this year. It is two days later than last year. That would have put it at April 15th. Hmmm, I know there is something special about that date.

Posted by at 12:26 AM in Economics  ·  TrackBack (28)

April 13, 2005
Crazy Patents

Those of you who believe in real business cycle theory might like to visit Free Patents Online. It provides a free searchable database of patents. The Crazy Patents page makes you wonder who is working late at the patent office. At the top of the list is a method for exercising cats. It involves using a laser pointer. Gosh, I have been doing that for years, but I never viewed it as exercising the cat. It was more like, look at the stupid cat.


cat.jpg


Posted by at 11:27 PM in Funny Stuff  ·  TrackBack (23)

Political Correctness in Occupational Titles?

We all remember adding a little flair to our personal resume when we were younger. Worked at a gas station? You have experience as a "petroleum transfer expert." Worked at a pet store? You have experience as a "interspecies facilitator".

The fine citizen who claims to have found a finger in a bowl of Wendy's chili, which sounded suspect from the beginning, is described as "an unemployed janitorial service operator."

Posted by Craig Depken at 03:50 PM in Culture  ·  TrackBack (25)

The solution to GM's problems?

I would have thought a suggestion like "make better cars" might have had a chance, but then I would have been wrong.

Evidently the solution, at least from GM's point of view:

General Motors Corp. is going to stamp its corporate logo on every car and truck it sells in North America in an effort to better link its eight brands with the parent company.

Wait a second. The entire point of disassociating GM from the different nameplates was to engage in price discrimination - Caddy, then Olds, then Buick, then Pontiac, then Chevy. All nameplates had basically the same cars - except Caddy - but had different prices.

Evidently it is possible to completely depreciate the reputational value of the nameplates. But does it sound reasonable that the two letters GM would make that much of a difference? I could see people not knowing that GM owns SAAB, but we are supposed to believe that people have somehow forgotten that GM owns Chevy?

There's more:

"Our own studies show that consumers place a tangible value on the General Motors name," said Mark LaNeve, GM's top sales executive" [AND] "The GM corporate name has a stronger public image than some of the brands that make up the company," said Joe Barker, with CSM Worldwide in Farmington Hills. "It tells consumers GM is backing this vehicle."

So, keep making crappy vehicles and depreciate whatever value the letters 'GM' have?

Posted by Craig Depken at 03:41 PM in Economics  ·  TrackBack (29)

Buzzword of the day

From Buzzwack:

deja moo:

The distinct feeling that you've heard this bull before.

Posted by Craig Depken at 11:39 AM in Culture  ·  TrackBack (2)

Where's Coase When You Need Him?

A property rights tiff in Atlanta.

Posted by E. Frank Stephenson at 10:39 AM in Law  ·  TrackBack (26)

Honey, Why is There Snoring Coming from the Closet?

Bizarre crime; story here.

Posted by E. Frank Stephenson at 10:31 AM in Misc.  ·  TrackBack (27)

Andrea Dworkin, RIP

The vitriolic lesbian feminist author and censorship advocate Andrea Dworkin has died at age 58. Her views were mind-boggling, including what was very nearly the view that all sex is rape. In one book she described sex as “the pure, sterile, formal expression of men’s contempt for women.” Perhaps the most remarkable quote from Dworkin reported in her obituaries is this one, from the Times Online, quoting her book Pornography: Men Possessing Women.

The book maintained that “Pornography exists because men despise women, and men despise women in part because pornography exists.”

Sure. And Sports Illustrated exists because men despise sports.

Posted by Lawrence H. White at 01:55 AM in Politics  ·  TrackBack (41)

April 12, 2005
A look inside the sausage factory

Today's Columbus Dispatch has an article about one of the 400 BLS agents who collect the price data used to calculate our price indexes.

Posted by Robert Lawson at 09:43 PM in Economics  ·  TrackBack (26)

"The Incentive Effects of Higher Education Subsidies on Student Effort"

Abstract:

This paper uses a game-theoretic model to analyze the disincentive effects of low-tuition policies on student effort. The model of parent and student responses to tuition subsidies is then calibrated using information from the National Longitudinal Survey of Youth 1979 and the High School and Beyond Sophomore Cohort: 1980-92. I find that although subsidizing tuition increases enrollment rates, it reduces student effort. This follows from the fact that a high-subsidy, low-tuition policy causes an increase in the percentage of less able and less highly motivated college graduates. Additionally—and potentially more important—all students, even the more highly motivated ones, respond to lower tuition levels by decreasing their effort levels. This study adds to the literature on the enrollment effects of low-tuition policies by demonstrating how high-subsidy, low-tuition policies have both disincentive effects on students’ study time and adverse effects on human capital accumulation.

Paper here.

Hat tip--Wilson Mixon.

Posted by E. Frank Stephenson at 09:10 PM in Economics  ·  TrackBack (20)

"Economic Death Spiral"

Now that Robert Samuelson of the WaPo--one can't get more mainstream--has weighed in on the need for entitlement reform, perhaps the Democrats ostriches will get serious about restructuring the programs.

Posted by E. Frank Stephenson at 09:07 PM in Politics  ·  TrackBack (28)

Rebates Redux

I am not sure how to take Michael Munger’s post on rebates. He tells us that on average rebates are a net loser, yet he looks forward to receiving his rebate check. Maybe he is a risk taker and likes living on the wild side.

Cnet has posted some insights on how rebates work and also provides some common sense tips on playing the rebate game that Michael might want to read

    The manufacturer works with a company that specializes in administering rebates. The manufacturer figures out how many more products it could sell by advertising a good rebate, then pays the rebate company a set amount of money to handle the rebates. It's in the rebate company's best interests to give away less money than it's getting paid. That's why they make rebates so hard to apply for.

    Figures vary depending on the amount, but a small percentage of rebates ever get redeemed, as low as 2 percent for values of less than $5. And those that do get turned in don't always get paid in a timely fashion. In fact, the FTC recently ordered CompUSA to pay a backlog of consumers who never got their rebate checks.

If this is how a typical rebate program functions, my comment on consumer provided financing may be wrong. According to Cnet, the company pays for the rebate before it experiences the increased sales.

Posted by at 04:49 PM in Economics  ·  Comments (0)  ·  TrackBack (31)

How many Red Bulls does it take

to buy a soccer team? From Amusement Business:

The billionaire creator of Red Bull energy drink has decided that competing in Formula One racing and sponsoring a variety of extreme sports teams isn't quite enough exposure in the jock market.

Dietrich Mateschitz, who swooped in to buy Jaguar's Formula One team in November, now has purchased struggling Austrian soccer club SV Salzburg -- and set some lofty goals.

Posted by Craig Depken at 04:38 PM in Sports  ·  TrackBack (7)

As I predicted...

Here (or over at Heavy Lifting) I predicted that the NYT and the rest of the chin-in-chest crowd would complain that the trade deficit had hit an all time high the next time the figures were announced. The prediction of all-time-high was not a stretch given the price of crude oil is up substantially.

Sure enough, today's announcement of the trade deficit was received with predictable sky-is-falling anxiety:

The U.S. trade deficit, aggravated by surging imports of oil and textiles, soared to an all-time high of $61.04 billion in February.

The Commerce Department said Tuesday that the February imbalance was up 4.3 percent from a $58.5 billion trade gap in January as a small $50 million rise in U.S. exports of goods and services was swamped by a $2.58 billion increase in imports.


The current surge is blamed on textiles and petroleum - I would put more weight on the latter (here's a picture)

But is this really something to worry about in the short run? We give little slips of paper to folks who give us oil, BMWs and plasma televisions. Sounds like a rotten deal alright.

Moreover, our economy (unlike most of the rest of the developed world) is still cranking along. As our economy grows relative to the rest of the world, it is natural that we will buy more from them than they will from us. From the Bureau of Economic Analysis, "Real GDP increased at an annual rate of 3.8 percent in Q4 2004, according to final estimates."

If Q4 of 2004 had 3.8 growth, perhaps Q1 2005 was a little better? Could that explain why the trade deficit continues to grow?

Why the trade deficit is always portrayed as a negative is beyond me. The alternative is that we have a trade surplus - in other words we build cool things here in the states and ship them off to some other country for them to enjoy instead of us. I gain utility out of consuming things, not making things and selling them to someone else. I am sure that the good folks in China would love to be able to keep some of the things they are making, but their system doesn't allow for consumption and accumulation.

If the U.S. trade deficit stays a (near) constant proportion of GDP in the near term, then every time GDP increases, the trade deficit will also increase (not withstanding whether the dollar is strong, oil prices have spiked in the short run, etc). The best of all worlds for those who need to sell papers: a ready made story every time an announcement is made. Just push print.

Posted by Craig Depken at 04:19 PM in Economics  ·  TrackBack (199)

FEC Commissioner Brad Smith to Speak at Capital University

George H. Moor Chair Lecture

Unfree Speech: The Folly of Campaign Finance Reform

Bradley A. Smith
Commissioner, Federal Election Commission
Professor of Law (on leave), Capital University

Monday, April 18
5:30 p.m.
Bridge of Learning

Bradley A. Smith was nominated to the Federal Election Commission by President William Clinton on Feb. 9, 2000, and confirmed by the U.S. Senate on May 24, 2000. He served as chairman of the Commission in 2004. Smith is on leave from Capital’s Law School, where he has taught Election Law, Comparative Election Law, Jurisprudence, Law & Economics, and Civil Procedure. Smith’s writings on campaign finance and other election issues have appeared in the Yale Law Journal, the University of Pennsylvania Law Review, the Georgetown Law Journal, the Harvard Journal of Legislation, the Cornell Journal of Law & Public Policy, and other academic journals. As a law professor, Smith was a much sought-after witness in Congress on matters of campaign finance reform, and also a frequent guest on radio and television and a contributor to popular publications such as the Wall Street Journal and USA Today. He is the author of Unfree Speech: The Folly of Campaign Finance Reform (Princeton University Press, 2001).


The lecture is free and open to the public.

Sponsored by the George H. Moor Chair and the Capital University School of Management. For more information, contact Robert A. Lawson, at 236-6138 or at rlawson@capital.edu

Posted by Robert Lawson at 11:19 AM in Politics  ·  TrackBack (26)

Tiger's shot at the 16th

Video here - 60 second version is the better of the two. See the shot that will go down in history (it would only be slightly less memorable if Tiger hadn't won the tournament) before the PGA/Nike/CBS makes them take it down.

Yeah, I suppose Tiger is pretty good.

Posted by Craig Depken at 12:14 AM in Sports  ·  TrackBack (2)

April 11, 2005
It takes advertising to smash advertising

I recently received a large glossy postcard announcing “two important new videos from the Media Education Foundation”. (The Foundation’s website is here.) The first video is “The Overspent American: Why We Want What We Don’t Need”; the second is “No Logo: Brands, Globalization, and Resistance”. The irony is that the postcard prominently features a well-designed logo for the video “No Logo”, and on the back another logo for the Media Education Foundation. A lot of design talent went into making the postcard attractive and attention-getting – just like the evil corporate advertising that the videos criticize. Remember the strictly utilitarian labels on supermarket generics -- a plain white can labelled only "Beer"? That's what the logo for "No Logo" should look like.

Posted by Lawrence H. White at 04:54 PM in Economics  ·  TrackBack (26)

The 65% Solution

From George Will:

"PHOENIX -- Patrick Byrne, a 42-year-old bear of a man who bristles with ideas that have made him rich and restless, has an idea that can provide a new desktop computer for every student in America without costing taxpayers a new nickel. Or it could provide 300,000 new $40,000-a-year teachers without any increase in taxes. His idea -- call it The 65 Percent Solution -- is politically delicious because it unites parents, taxpayers and teachers while, he hopes, sowing dissension in the ranks of the teachers unions, which he considers the principal institutional impediment to improving primary and secondary education.

The idea, which will face its first referendum in Arizona, is to require that 65 percent of every school district's education operational budget be spent on classroom instruction. On, that is, teachers and pupils, not bureaucracy.

Nationally, 61.5 percent of education operational budgets reach the classrooms. Why make a fuss about 3.5 percent? Because it amounts to $13 billion. Only four states (Utah, Tennessee, New York, Maine) spend at least 65 percent of their budgets in classrooms. Fifteen states spend less than 60 percent. The worst jurisdiction -- Washington, D.C., of course -- spends less than 50 percent."

Will later notes that in a "recent five-year period only 62 of California's 220,000 tenured teachers were dismissed." Here's an idea for improving teacher quality--adopt something like Jack Welch's policy of firing the worst performing 10% annually. Call it the 10% solution!

Of course, neither the 10% solution nor the 65% solution would be ideal because they ignore local knowledge and circumstances.

Posted by E. Frank Stephenson at 02:21 PM in Politics  ·  TrackBack (19)

Voting with One's Feet--College Choice Edition

This WaPo article reports that prospective students are increasingly taking campus wackiness into account in making their college choices.

Hat tip: George Leef

Posted by E. Frank Stephenson at 02:10 PM in Misc.  ·  TrackBack (37)

Another Item from Paul Rubin

Paul Rubin's been busy--today's AJC contains his op-ed on the recent theft of information from ChoicePoint.

Posted by E. Frank Stephenson at 02:04 PM in Misc.  ·  TrackBack (30)

Brothels ask to pay taxes?

Although county governments collect license fees, Nevada has never taxed brothels. If an industry lobbying group and a lawmaker have their way, that could change this year. [Story.]

There must be a public choice explanation in this somewhere...

[Update: Notice this piece of economic illiteracy regarding the incidence of taxation. The funds would come from the brothel, not the prostitutes themselves, who work as independent contractors...]

Posted by Robert Lawson at 11:29 AM in Economics  ·  TrackBack (26)

More Housing Blogging

In the March 30, 2005 edition of the Wall Street Journal there was an article titled "Dark Side of the Boom." The article was about how elderly homeowners are hurt by being in areas where housing values are going up.

I, for one, have always been puzzled by this. Why be concerned with the elderly whose primary asset is increasing in value. To the extent rising taxes are a problem, a home equity loan or reverse mortgage could easily cover it, or they could just move to low tax areas mor in line with their preferences. Why should we be concerned that the elderly are unwilling to avail themselves of these options?

The real concern should not lie with the elderly who have an unwillingness to move, it should like with the elderly who where the schools have gone bad and housing values have declined. Yet no stories are written about them (as far as I could tell from Lexis-Nexis).

Personally, I think the writers of these stories understand they've been assigned a dog of a story. Why else would you include anecdotes like this:

Barbara O'Toole, a 69-year-old retiree who owns a mobile home on one-third of an acre in Basalt, Colo., not far from Aspen ... says her property-tax bill was about $600 in 2003, the year the state's relief measure was in effect. Last year it doubled to $1,200.

Ms. O'Toole says here property's assessed value was $300,000 in 2003 compared with $74,000 in 1999. She doesn't like to think about the next assessment, coming this year: A nearby property recently sold for $850,000.

Who in their right mind doesn't like the idea of their home appreciating at that rate? This woman stands to make hundreds of thousands when she sells her home and policymakers should be concerned that her tax bill rose by $600 in a year? Hogwash.

Posted by Joshua Hall at 11:21 AM

Housing Advice

Last Thursday's Wall Street Journal had an article titled "Unsold Homes Pile Up in Some Areas." For those of you not in housing markets propped up by the growth of Leviathan, here is a bit of advice from me to those of you who might be thinking of purchasing your home.

Many of my friends in Columbus purchased were seduced by the lure of owning a new, relatively inexpensive home on the outskirts of town. For those who stayed, this wasn't a bad decision because they got more house than they could have received for a comparable price in an older section of town. For those who had to move (for a job change or family reasons), this turned out to be a terrible decision, as many had to take losses of five to seven percent on their homes in order to sell them - and that is not even factoring in the costs of selling the home.

Why? The main reason is because there was so much new construction in these areas that someone who wanted to move into that community could always buy a home from a builder. Why would they want to buy a three-year old home from my friend when they could have a brand-new home for the same price?

Conversely, my wife and I purchased a home in a mature Columbus suburb with good schools and little space to build new homes. When we had to sell our home after only three years in it, we were able to recoup our costs associated with owning it, but make a couple of percent on it.

The bottom line is that you don't want a lot of good substitutes for your home when you have to put it on the market (assuming there is demand for what you are selling). If someone wanted to live close to downtown Columbus, in a good school district, and in a house in my price range, there were only two other houses for sale in the area that were comparable to mine. Keep that in mind when you go to buy a house. You not only want the right house for you, you want the right house that other people will want too.

Posted by Joshua Hall at 11:00 AM  ·  TrackBack (176)

Costs of FDA Delay

Paul Rubin has a nifty article in Regulation on costs of the FDA obstacles to approving new antibiotics.

Posted by E. Frank Stephenson at 09:38 AM in Economics  ·  TrackBack (23)

The Unbalanced Academy

Of the 341 professors registered to vote in Hanover, NH, Lebanon, NH, and Norwich, VT, 225 (66 percent) are Democrats and eighteen (5 percent) are Republicans. Ninety-eight (29 percent) did not register a party. Put another way, there are 12.5 registered Democrats for every registered Republican. [Story.]

Posted by Robert Lawson at 09:34 AM in Politics  ·  TrackBack (22)

Future of TSA

This WaPo article from Friday reports the TSA's mission is shrinking its focus to airport screeners. A good start but why not ditch government screeners as well? While returning from the APEE meetings last week, I found myself in a lengthy line in the Orlando airport. From my line, I could view a screener in the adjacent line. I doubt looked at 50% of the items going by her xray machine. She'd occasionally look up at the screen and she'd sometimes pause the belt as though she was carefully examining a piece of luggage, but most of the time she simply stared down without paying attention to xrays of bags passing by. Yes, it's a tedious job so the screeners probably rotate positions every so often. And yes, there might also be a deterrence effect to having the possibility that a screener will be paying attention when a would-be terrorist is passing his bags through the xray machine. Nonetheless, the bumbling TSA (for more adjectives and a link to Penn Jillette's funny take on security screening, see Dan Alban's post here) seems to be exactly the sort of half-assed government bureaucracy that its opponents feared.

ADDENDUM: This is an excerpt from the WaPo article:

"TSA, at the end of the day, is going to look more like the Postal Service," said Paul C. Light, a public service professor at New York University and a Brookings Institution scholar who has tracked the agency since its birth in February 2002. Light calls the TSA "one of the federal government's greatest successes of the past half-century" and likens it to the creation in the late 1950s of the National Aeronautics and Space Administration, which was also born during great public excitement to serve an urgent national need.

Hmmm ... look more like the Postal Service ... success story like NASA? Yikes!

Hat tips: Dan Alban and Mini-Me.

Posted by E. Frank Stephenson at 09:14 AM in Politics  ·  TrackBack (33)

April 10, 2005
Harmony with Nature

Don Boudreaux over at Café Hayek objects to the idea that pre-contact Native Americans lived in greater “harmony with nature” than we do today, pointing out that our greater scientific knowledge allows us better to avoid being victimized by nature.

Of course, there’s another sense in which pre-contact Native Americans have been said to have “lived in harmony with nature” – and that other sense is also false. I recommend The Ecological Indian: Myth and History by Shepard Krech III for debunking the myth that Native Americans were especially gentle toward the ecosystem. For one example, the earliest Americans hunted many species of megafauna (e.g. mastodons) to extinction. My favorite evidence of non-selective native hunting techniques: there’s a Canadian national park in Alberta called Head-Smashed-In Buffalo Jump, so called because native hunters drove herds of bison over a cliff there in order to slaughter them. For another, early Americans deliberately burned entire forests to increase their future yield. For a third, the extensive Native American irrigation systems in Arizona ended up salinizing huge areas of land. The basic message of Krech’s book is that Native Americans responded to incentives, and generated the tragedy of the commons, just as much as those who came later.

ADDENDUM: An author at Muck and Mystery thoughtfully comments on Boudreaux's post, pointing out that the leading pre-Columbian American civilizations (the Aztecs and Incas) were coping quite well with nature, thank you. Which complements my point that even the Amerindians north of Mexico (to whom I took Boudreaux to have been referring) did much more than let nature batter them.

Posted by Lawrence H. White at 09:53 PM in Economics  ·  TrackBack (31)

Chicago's World Fair 1933

Panoramic image - shows what things south of the Field Museum and Soldiers Field used to look like.

More pictures here.

Here's some from the 1939 NY World Fair

Posted by Craig Depken at 07:32 PM in Culture  ·  TrackBack (72)

Team owners are altruists?

So says Kirk Wakefield, chairman of the Marketing department at Baylor University. In yet another example of the differences between economists and the rest of the world, Wakefield commented in this story that :

his only concern is the Rangers' debt ratio. Forty-four percent of the team's value is tied up in debt, according to the magazine.

But owners generally don't stress over the bottom line the way corporations on Wall Street might, he said.

"The owners probably don't get into it for making money," Wakefield said. "I think a lot of it is, in an altruistic sense, it's a service to the community."


Hmmm...tell that to George Steinbrenner. We are supposed to believe that team owners get into the business of baseball (or any other sport) to give us all warm fuzzies?

Economists have long recognized that team owners gain some utility from owning a team, and they might trade off some profitability for increased utility. But behaving altruistically implies that team owners are concerned with the utility of their consumers, which they are not (except to make sure that consumers gain enough utility to keep coming to the games). Tom Hicks, owner of the Rangers, has never come by my seat in right field to ask about my utility.

Team owners are typically depicted as evil capitalist pig-dogs busy shaking down cities for stadiums, trying to collude to keep wages down, trying to break the unions, and turning a blind eye to doping and other bad behavior. Evidently, that is all wrong. Team owners are really altruists.

Posted by Craig Depken at 01:59 PM in Sports  ·  TrackBack (24)

April 08, 2005
Subway coupon

Buy one, get one free (expires June 5) [Don't know if it is legit or not]

Posted by Craig Depken at 10:30 PM in Misc.  ·  TrackBack (25)

Friedman on Drug Prohibition

At the APEE meeting earlier this week, we enjoyed a chat with Milton Friedman via satellite. I took this short video clip of Friedman talking about drug prohibition (click on the image for the .mov video).

DSC00187.JPG

Posted by Robert Lawson at 04:24 PM in Economics  ·  TrackBack (24)

The "surprising" truth about the Social Security "Trust Fund"

On Tuesday, President Bush staged a media event in which he visited the file cabinet in Parkersburg, West Virginia that stores Treasury IOUs held by Social Security Administration. According to press accounts, Bush afterward remarked: "There is no 'trust fund,' just IOUs that I saw firsthand."

On Wednesday, a leading opponent of Social Security reform, economist Dean Baker of the Center for Economic and Policy Research, released a press statement professing to be shocked by Bush’s remark.

Quoth Baker:

That is an amazing, and probably unprecedented, statement. It is unlikely that any prior U.S. president ever called the integrity of government bonds into question. … President Bush could not honestly have expected to find vast stores of gold or silver hoarded in the trust fund.

An expanded version of Baker's press release ran in the St. Louis Post-Dispatch yesterday as an op-ed piece. In the extended version, Baker ridicules “Bush’s discovery that the bonds in the trust fund are sheets of paper.”

Baker’s talking points – that Bush was doubting the integrity of government bonds, and of course the trust fund is in paper bonds and not gold – were both echoed Wednesday by Washington Post reporter Dan Froomkin:

And indeed, the trust fund is a pile of paper, not a pile of gold. But those papers -- just like other government securities -- represent promises backed by the "full faith and credit" of the United States. So was Bush really suggesting that those promises might not be kept?

Of course, Bush was suggesting no such thing as the Treasury failing to make future transfers to Social Security. (Since we're only talking about a transfer from the federal government's left pocket to its right pocket, there would never be any point in failing to make it.) Baker and Froomkin cannot honestly think that Bush was suggesting any such thing.

Here is Bush’s full statement:

There is no 'trust fund,' just IOUs that I saw firsthand, that future generations will pay -- will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs.

The office here in Parkersburg stores those IOUs. They're stacked in a filing cabinet. Imagine -- the retirement security for future generations is sitting in a filing cabinet. It's time to strengthen and modernize Social Security for future generations with growing assets that you can control, that you call your own -- assets that the government cannot take away.

Bush’s point can be restated as follows: when we honestly consolidate the federal government’s Treasury and Social Security accounts, we must recognize that Social Security is an unfunded retirement program. The small Social Security “trust fund” holds no claims on third parties, like the assets one finds in a mutual fund or 401(k) plan, but merely promises from another branch of the federal government. An asset for Social Security matched by a liability for the Treasury is not a net asset for the federal government.

The scheduled benefits to Social Security recipients, as Bush noted, will have to be fulfilled by taxing future workers. Or – and this is the obligation that Bush correctly indicated is not sacrosanct – the scheduled benefits might be cut. Workers who want a property right to future benefits need funded personal retirement accounts.

If Social Security pays its future recipients less than currently scheduled -- and it has made such cuts before -- that would not be tantamount to the Treasury defaulting on its debts to its bondholders. I'm sure that Dean Baker understands all this. His "amazement" -- a bit of play-acting on a par with Bush's media event -- seems intended to make us confuse the two.

Posted by Lawrence H. White at 11:54 AM in Economics  ·  TrackBack (2)

Union Rules?

From the San Francisco Chronicle:

Bright idea: So, how many Berkeley workers does it take to change a lightbulb?

In an attempt to answer this burning question, we offer up a recent memo to Berkeley Fire Chief Debra Pryor from Rene Cardinaux, the city's director of public works, declaring that firefighters in the East Bay burg have been granted permission to change their own lightbulbs ... or at least the easy ones.

"Currently whenever a lightbulb burns out,'' Cardinaux details in the memo, "Facilities Maintenance will be notified and a request is made to replace the lightbulb. The Facilities Maintenance folks would try and replace the lightbulbs as soon as they could in the midst of their high-priority work requests and other emergencies. Unfortunately, with the limited resources and the great number of high-priority items and emergencies, the lightbulbs are not replaced as timely as the customer desires.

"The suggestion by (Lt.) Michael Nagamoto to have the firefighters replace their own burned-out lightbulbs that do not require special equipment or special training has a lot of merit. I am sure that nobody calls an electrician or a maintenance person to change their lightbulb at home.

"The firefighters are authorized to replace their own burned-out lightbulb as long as it is just a simple lightbulb replacement and does not require special training and equipment.''

One other thing: "The replacement bulb needs to be less than or equal to the recommended wattage for the fixture. If the fixture doesn't work after the lightbulb is changed or there are any complications/problems, Facilities Maintenance needs to notified immediately."

I bet "Facilities Maintenance" is a unionized crowd; if I'm correct we have an example of union workrules sapping public sector productivity.

Hat tip: "Best of the Web Today"

Posted by E. Frank Stephenson at 11:33 AM in Economics  ·  TrackBack (29)

Wal-Mart and Competition

From a NYTimes story on Wal-Mart:

"Executives admit the company is struggling to keep its competition at bay."

So much for being an evil behemoth swallowing up its competitors.

Posted by E. Frank Stephenson at 10:12 AM in Economics  ·  TrackBack (31)

Historic Bus Service

There are few things that get a libertarian like me more upset than border checks. "Who the $#%& are they to stop me from moving about peacefully?" I think.

Today, they opened "historic" bus service in the Kashmir region of India/Pakistan. Good for them.

Posted by Robert Lawson at 10:07 AM in Politics  ·  TrackBack (2)

Forgotten password or stolen password?

Who can really tell the difference? Certainly not this software:

PicoZip Recovery Tool is an easy-to-use program that can help you recover lost or forgotten passwords from password protected Zip files created by compression utilities like PicoZip, WinZip, PKZip, etc.

Riiiight...I can "recover" those forgotten passwords to my ZIP archives.

Oh, the moral hazard.

Posted by Craig Depken at 12:09 AM in Misc.  ·  TrackBack (3)

April 07, 2005
More trouble with $2 bills

A while back I linked to a funny story about an incident at a Taco Bell concerning a $2 bill. It seems that the lowly $2 bill has caused problems again - this time in Baltimore:

PUT YOURSELF in Mike Bolesta's place. On the morning of Feb. 20, he buys a new radio-CD player for his 17-year-old son Christopher's car. He pays the $114 installation charge with 57 crisp new $2 bills, which, when last observed, were still considered legitimate currency in the United States proper. The $2 bills are Bolesta's idea of payment, and his little comic protest, too.

For this, Bolesta, Baltimore County resident, innocent citizen, owner of Capital City Student Tours, finds himself under arrest.

Posted by Craig Depken at 11:58 PM in Funny Stuff  ·  TrackBack (29)

Hubris or Energy Policy?

CNN.com reports that a couple of congressmen are crafting legislation to extend day light savings time by two months - from March to November.

I am a big fan of daylight - especially when I get home from work - but does Congress really need to spend its time on this?

Does the issue satisfy marginal benefit = marginal cost?


The more daylight we have, the less electricity we use," said Markey, who cited Transportation Department estimates that showed the two-month extension would save the equivalent of 10,000 barrels of oil a day.

The country uses about 20 million barrels of oil a day.

Such Congressional action will save .05% of daily oil consumption? I doubt it.

Posted by Craig Depken at 11:52 PM in Politics  ·  TrackBack (1)

Where one Harvard economist allegedly gets the crap he spreads

Boston Globe headline: “Harvard professor accused of stealing manure”. His neighbor’s stable manager says he’s been stealing it for years. Reported street value: $35 a truckload. Story here. The accused is Martin Weitzman, the Ernest E. Monrad Professor of Economics at Harvard. Pricelessly, Weitzman’s online c.v. (link to pdf file) lists the following as his leading research interests:

“Environmental and Natural Resource Economics, Green Accounting, Economics of Biodiversity, Economics of Environmental Regulation, Discounting the Distant Future, Comparative Economic Systems, Economics of Profit Sharing, Economic Planning”

If the accusation is true, I guess Weitzman isn't one of those "market environmentalists" who believe in putting positive prices on environmental resources.

Hat tip to my colleague Barb Flowers.

Posted by Lawrence H. White at 03:46 PM in Economics  ·  TrackBack (39)

Supply and demand for public transit

Need an example for your students of how an increase in the price of a substitute causes a good's demand curve to shift out? Front-page headline in today’s St. Louis Post-Dispatch: “As gas goes up, so does MetroLink and bus ridership.” (MetroLink is our commuter rail line.) Ridership on the rail line is up 11% over this time last year, and rush-hour trains are now standing-room-only. (There are still plenty of empty seats on the buses. Riders could double on some bus routes and there would still be empty seats.)

Here’s the most interesting quote from the article:

While [Metro spokesperson] Williams concedes the boost in passengers "is not terrible news for Metro," the transit agency is having to pay more at the pump, too. The Metro system buys about 450,000 gallons of diesel fuel every month for its buses. Last summer, the agency paid 80 cents a gallon. Now it's paying $1.60 gallon.

"The ridership is helping to offset the cost, but it's not covering it," she said.

Let’s see: the demand curve has shifted up, and the cost curve has shifted up. For a profit-seeking firm, it would clearly be time to raise the price of the product. Perhaps Metro should consider raising its fares? And shutting down the buses that still can’t cover variable costs?

Posted by Lawrence H. White at 03:17 PM in Economics  ·  TrackBack (10)

Robust inference on four - er six - observations

For the record, you might want to mark April 6, 2005 because last night :

Playing without their ailing manager, the Red Sox rallied for five runs off Rivera in the ninth inning -- helped by Alex Rodriguez's costly error -- and beat New York 7-3 Wednesday to avoid a season-opening sweep.

Haven't looked it up, but this is one of the worst outings I have ever heard Rivera having. On the other hand, the worm might have turned in the whole Red Sox- Yankees drama as:
The All-Star closer has blown his last four save chances against the Red Sox, including two in the 2004 playoffs, and six opportunities in all against Boston since the start of last season.

Posted by Craig Depken at 12:25 PM in Sports  ·  TrackBack (25)

Time Preference

Some time ago Bryan Caplan threw down the gauntlet over the concept of time preference--a favorite idea among Austrian Economists and one of the few Austrian concepts to have made it into the mainstream. This post prompted Larry's reply post here on DoL. Corner Solution also weighed in.

Here's my best story about time preference:

When I was an undergraduate at Ohio University--recently named the #5 top party school in the country--I was broke and the weekend was approaching. I was taking econometrics at the time and had this fancy textbook. So I took it to the bookstore in the middle of the semester and sold it back at a steeply discounted price--let's say $20. This was enough to buy about 8 pitchers of beer and should last (at least part of) the weekend. (Athens, Ohio was and still is the capital of cheap beer.)

A few days later after I got a workstudy paycheck, I went back to the bookstore and bought the book back at full price--let's say $40. According to my calculations, the implicit annual interest rate was something like 450359962737049000%.

How else can you explain this without time preference? (Ok, there is the "Hi, my name is Bob and I'm an alchoholic" explanation, but...)

Posted by Robert Lawson at 09:18 AM  ·  Comments (2)

Academic Bill of Rights

The "Academic Bill of Rights" has been introduced here in the old North State (That's North Carolina, a valley of modesty between the two great heap't mountains of conceit, VA and SC). An article, with some background.

It is in some ways derived from the D. Horowitz version, at SAF.

For those interested in some background that is interesting (at least, IMHO), you might check some of the debate.

Informational:
AAUP (actually, CYA)
Horowitz in the Chronicle
Daily Tar Heel
Duke's forum, and also my own statement (check the video!)
Duke Provost Peter Lange, and also Paul Krugman, excerpts
Excerpt of Mark Bauerlein article from Chronicle
"State of Things" radio show on NPR
Conservatives = Creationists

Remarkably Stupid, and Unintentionally Entertaining:
Berube
Larkin
Revolutionary Worker
Holland

Posted by Michael Munger at 09:01 AM  ·  Comments (0)

April 06, 2005
Yet another picture of oil prices over time

This one from Forbes.com which ostensibly takes us back to the $91.59 (2004 dollars) price per barrel back in 1865 (?). It would have been great to see total output over time as well, especially for the 19th century.

(At least the quality of the pictures I link to are improving - he he he)

Posted by Craig Depken at 11:02 PM in Economics  ·  TrackBack (28)

The various uses for Google Maps

Earlier this week, Google Maps (here) introduced the ability to convert atlas-type maps to satellite imagery. The announcement drew some interest on and off the web. Interestingly, the satellite imagery of Washington, D.C. (try typing in 1600 Pennsylvania Avenue, Washington, D.C.) has most of the roofs of the federal buildings blurred out. I can see the security reasons for doing this.

However, the satellite imagery can have numerous applications that can provide valuable information to consumers. I can imagine looking at a "nice" house on realtor.com but not knowing what the surrounding neighborhood looks like. Instead of driving down to the location, an initial satellite view might give a perspective about location relative to amenities, and perhaps even the status of some of the yards, etc.

Other applications might be in looking at how "close" a hotel actually is to the beach or other attractions, whether the attractions are really in walking distance or whether you would want to walk there at all.

Some might be concerned that consumers would use this information to make decisions based upon appearance (from miles up in the air) and that such decisions might align with statistical discrimination, but while observationally equilivalent this is not necessarily welfare reducing.

I wonder what other applications consumers might find for Google's satellite imagery.

Posted by Craig Depken at 05:30 PM in Economics  ·  TrackBack (2)

Midweek gas price update

In recognition of the value of the division of labor, there are a number of websites that consistently keep track of gas prices around the country. A few that have come to my attention recently are

Gas Buddy
Columbus (OH) gas prices [thanks to David Rossie of Capital Journal]
Texas gas prices (same group as above)

Here in Arlington, TX (which is only five hours from the Houston refineries) prices at the QuikTrip are up to $2.15 for regular unleaded (as low as $2.12 at Racetrac and as high as $2.20 at a Conoco) - up another 8 cents from last Friday. We will see if the spike holds around here. I mention the change to the rest of the world because if we see prices increase rather close to the refinery, it is likely that the price increase will be felt further away in the near future.

Differences in tax rates can influence the means of gasoline prices across states, but gas taxes change so infrequently that they are likely not responsible for the variations we are seeing right now. Is it simply speculation in oil futures on the part of institutional investors, is it all demand side (i.e., China), is there sufficient uncertainty about democracy (vs. autocracy) in the middle east? Most likely price is responding to a combination of these factors.

Suppose we were to offer an 'F prize' in fuel, like what was offered for manned space flight a few months ago. What would be the parameters - whether from the market or the social planner's point of view? The market, of course, will offer sufficient incentives for alternative fuels as the price of gasoline continues to rise, however the market's solution is likely to be considerably different than the social planner's (thank goodness).

My initial thoughts on the characteristics of a reasonable substitute fuel:


i) it is sustainable and reproducable for the next century (?)
ii) it provides at least the current fuel efficiency (miles per gallon)
iii) it will work in gasoline based internal combustion engines build after 1995 without requiring more than $100 in modifications to the engine or exhaust system,
iv) it can be produced for $0.50 per gallon or less (this one is arbitrary).

I am sure that others (whether bureaucrats or activists) would suggest regulations/limitations on pollution output, price ceilings, subsidies for the poor, and other issues. The reason an 'F prize' has not been and will likely not be offered is because the market's answer to the question of alternative fuel is likely to be very different from the social planners' (or, alternatively, the activists') desires.

It will be interesting to see what develops in the next few years if the recent price increase (whether real or nominal) represents a regime change in the price of gasoline.

Update: Donald Coffin writes me to suggest:


Why not "at least the current fuel economy (miles per dollar)"? I recognize that the capacity of fuel tanks imposes some limits here (I get 25 mpg, or about $0.10 per mile--10 miles per dollar, so I'm using those numbers). Clearly an alternative that give me 5 mp unit but costs $.50 per unit ain't gonna work (if the unit is a gallon)--I'd need to fuel up too often. Slightly lower fuel efficiency for a lower cost per mile would work, I'd think. And more expensive per gallon ($10 per gallon) with better fuel economy (at least 100 mpg) would work, as your
criterion suggests.

Don Coffin

I agree with Don. In fact, in retrospect, this is similar to an argument I offered over at Heavy Lifting sometime last year. What would the gas-price-is-at-an-alltime-high chicken littles do if gasoline becomes a durable good - we bought only one gallon a year and paid say, $1000 a gallon?

Posted by Craig Depken at 02:25 PM in Economics  ·  Comments (0)  ·  TrackBack (2)

Contra Shiller, Personal Retirement Accounts are a Smart Investment

Like Frank, I'm also back from the APEE meetings. The most blog-worthy presentation I heard at the meetings was from Andrew Biggs, Associate Commissioner for Retirement Policy of the Social Security Administration, in a session organized by Tom Saving. Unfortunately Biggs' presentation is not yet available online.

Necessary background: Last month the well-known finance professor Robert Shiller of Yale released a study (link to Word document) throwing cold water on the Bush proposal for personal retirement accounts (PRAs). The Bush proposal uses a 3% real interest rate as the shadow price in reduced future benefits for a worker opting to redirect her payroll taxes, in order to recoup the Treasury’s cost of borrowing to replace the payroll taxes, thereby to keep the operation fiscally neutral. Can workers expect to beat the 3% real benchmark, and thereby come out ahead on their PRAs? Shiller used historical stock and bond returns, and alternatively more pessimistic assumptions about future returns, to run simulations. He assumed that PRAs are invested in a “life-cycle account” which blends a stock index fund with a bond fund, the proportion in stocks shrinking as the worker approaches retirement. His findings? Using historical stock returns (with a mean of 6.8% real), about one-third of age cohorts would have failed to beat the benchmark. Using more pessimistic stock returns (mean 4.8% real, variance the same), more than 70 percent of cohorts would fall short. Based on those numbers, workers who opted into PRAs would be making a bad choice.

Biggs looked into Shiller’s numbers and found that the cohorts with bad results were not victims of stock market risk. (Someone please correct me if I'm wrong about this, but I believe that stock indexes historically have never failed to beat the 3% benchmark over any 30-year period.) Shiller's bad-result cases were due to low bond returns, combined with the heavy weighting on bonds in the assumed “life-cycle account”. (Another panelist pointed out that the assumed account holds 50% bonds at age 45, which is ridiculously heavy on bonds.) Low bond returns means that returns were well below the benchmark 3% real – historical Treasury bond yields have had a mean of 1.5% real – which implies that the benchmark rate is much higher than necessary for fiscal neutrality, higher than the real rate the Treasury has in fact had to pay. (I have noted before that 3% real is too high a shadow price, given that the Treasury is currently paying slightly less than 2% real in the inflation-indexed bond market.)

Biggs offered a simple, reasonable, and clever alternative that guarantees to keep PRAs fiscally neutral: debit the worker’s future traditional Social Security benefits not at an ex ante fixed rate, but at the real rates (known ex post at the time the worker retires) that the Treasury actually had to borrow to replace the worker’s redirected payroll taxes. Using that as the benchmark rate in simulations with historical stock returns, every cohort’s life-cycle PRA account beats the benchmark. This is not trivially true; it is true only because the stock market has historically done well over every cohort saving’s horizon. Using Shiller’s more pessimistic stock returns, Biggs found that 96% of cohorts still beat the benchmark.

Conclusion: workers who opt into PRAs will be making a smart choice.

Posted by Lawrence H. White at 02:03 PM in Economics  ·  TrackBack (3)

Some more commencement speakers

Some of the more interesting speakers, from today's Chronicle of Higher Education (reg req'd):


Ed McMahon (of Carson/Publisher's Clearing House fame) at Heidelberg Bollege
Anderson Cooper (of CNN fame) at Kean University
Wesley Clark (of NATO/Democrat party fame) at Lyon College
Sen. Clinton (for a second speech) at Marymount Manhattan College
Al Hunt (of Wall Street Journal fame) at Millersville University of Pennsylvania
Jane Goodall (of primate fame) at SUNY College of Environmental Science

Posted by Craig Depken at 01:56 PM in Culture  ·  TrackBack (177)

Incentive Contracts in Sports

Last night's "Outside the Lines" on ESPN was a nifty program about the effects of incentive contracts. The goal of such contracts is an alignment of team and player incentives--getting players to play hard. Alas, incentive contracts can lead to unintended consequences or moral hazard. As an example, the show cited an incident with Edgerrin James in which he had been instructed by then coach Jim Mora to get a first down and then fall down. (Presumably it was late in the game and the Colts had a big lead; Mora probably didn't want to be seen as running up the score.) James got his first down and kept right on running for the end zone because of a touchdowns incentive clause in his contract.

NB--I couldn't find links to the program or its transcript. If anyone does locate links, I'd appreciate your sending them my way.

Posted by E. Frank Stephenson at 09:39 AM in Economics  ·  TrackBack (35)

April 05, 2005
Back from APEE

I've returned from the APEE meetings in Orlando, but other commitments will probably keep me away from DOL the rest of the week.

The conference went well--thanks to Michael Reksulak of GA Southern, Noel Campbell of North Georgia, and Tim Shaughnessy of Louisiana-Shreveport for fine papers. (I apologize if I have incorrectly spelled anyone's name, but at this hour I'm not going to check spelling.) Also, kudos to my student Ted Crouse for a job well-done presenting our paper.

Other highlights--catching up with co-bloggers Bob (the big cheese of APEE this year!), Josh, and Larry and my grad school buddy John Dawson of App. State, a case of mistaken identity with Don Boudreaux of Cafe Hayek, a fun session on teaching economics using movies, comics, and "The Simpsons" (brought to us by Bob, Josh, and former DOL-er Dirk Mateer), and nifty talks by Russ Roberts and Phil Gramm. And--inside baseball here--I saw Mini-me's older sister.

For economists who don't usually attend APEE meetings, I highly recommend them. The sessions and papers are pretty good overall and the conference is unusually collegial because of its small scale and the inclusion of most meals in the conference program and registration fee.

Finally, I'd be remiss if I didn't thank JR Clark of UTC and his staff for a superlative job of organizing the conference.

Posted by E. Frank Stephenson at 11:57 PM in Misc.  ·  TrackBack (3)

Economics everywhere

Here is an interesting post at Critical Montages which discusses how waste in the United States has held steady or is growing. The upshot? Our economy is doing fine if we are consuming and throwing stuff away.

Posted by Craig Depken at 09:53 PM in Economics  ·  TrackBack (29)

Hooray!!

Last night it was still daylight when I got done with my graduate econometrics course at 7:00pm. Tonight, we took the little one for a walk after dinner. All of this because of daylight savings time.

Why do we have daylight savings time?

Annual reading.

Posted by Craig Depken at 09:50 PM in Misc.  ·  TrackBack (2)

Buzzword of the day?

From BuzzWhack:

barrybonds: Financial instruments that have an impressive growth rate -- but also a high risk factor.

Posted by Craig Depken at 12:57 PM  ·  TrackBack (2)

April 03, 2005
Germany - Now and Then

Here are pictures from Berlin from Third Reich in Ruins.

Pretty interesting comparison pictures.

Posted by Craig Depken at 11:38 PM  ·  TrackBack (1)

Rebates

The wise persons here at DoL have had a "rebates" thread going for some time.

There was the Frasca bit; Ralph may often be wrong, but he's never in doubt. And the "never do rebates" strategy does make sense. If you don't want to go to Chicago, don't get on that train. On average, rebates are a net loser of time and money for the consumer. They HAVE to be. When you base your choices on a "Yes, but I'm different" view, you are asking for trouble.

Ralph's wisdom was echoed here.

TLO pretty much comes down on that side, too.

Of course, there are the older posts (this, or maybe this) that started us thinking about it.

But, I was willing to take a shot, because (ignoring Ralph F's wisdom), I might be different. (This is the same thinking that gets people to pour money into slot macines).

Most recently, my other good colleague here at DoL has a view, and some news: Best Buy will stop offering rebates. Of course, their stock price fell five percent (post hoc, ergo propter hoc?).

As for my part, I can say this: JR and Viewsonic have processed my rebate, and I will receive my $100...in 8 weeks. Of course, the purchase was in February, and that means I get my $$ at the end of May, but still: I got paid.

Maybe I'll go play some slots machines...

Posted by Michael Munger at 11:03 AM  ·  TrackBack (2)

April 02, 2005
Best Buy to cease offering rebates

A few weeks ago DOL contributors batted around mail-in rebates - what are they good for, are they redeemed in a timely fashion, etc. The general concensus was that mail-in rebates were a disappointment.

I have had success with mail-in rebates - I have never been stiffed and I have never had to wait more than the time promised to receive the rebate. In my case, the rebate has always been a beneficial version of third degree price discrimination (I actually send my reate cards in while others do not).

All of that said, it turns out I am in the minority because Best Buy has announced that it will discontinue the mail-in rebate over the next two years:

[Best Buy] will phase out using mail-in rebates over the next two years, bowing to customer complaints. Its shares fell more than 5 percent.

With mail-in rebates, customers pay a higher price but get money back - sometimes hundreds of dollars - by mailing in copies of receipts and a form.

"Our customers are telling us they just hate the process," General Merchandise Manager Ron Boire said during a conference call to discuss the earnings report.

He described that process as "they send it in, they remain aggravated until they get their check."

The rebates have aggravated regulators, too. Wisconsin consumer protection officials last year looked into the rebates after 89 consumers complained, and Ohio Attorney General Jim Petro sued Best Buy in August in part over complaints about rebates.


Unfotunately, it is not clear whether or how much prices will fall after rebates are discontinued.

Posted by Craig Depken at 09:44 PM in Economics  ·  TrackBack (4)

Gas Prices/APEE

Per Craig's feature on gas prices--the price of gas at a Chevron near Rome's busiest intersection has been $2.05 on each of the last two Fridays. Georgia has one of the lowest gas taxes in the country so we probably pay less than just about anyone else.

An interesting example of gas tax incidence: When I moved to GA in 1997, my wife and I took a drive up to Chattanooga. Near the GA/TN state line there were a couple of gas stations about 3 blocks apart. The station on the GA side of the line was charging about 12 cents less per gallon than the station on the TN side of the line. After seeing this price difference and hypothesizing that it was caused by differences in state gas taxes, I looked up the tax rates. TN's was 12.5 cents per gallon higher than GA's. Score one for economic theory--on the other hand, who would put a station only a couple of blocks into TN when GA gas just across the line could be sold so much cheaper? And who would buy in TN when they could drive another couple of blocks to save 12 cents per gallon?

As Bob posted a few days back, I will be joining co-bloggers Larry, Josh, and Bob at the APEE conference for the next 3 days. See you when I return ...

Posted by E. Frank Stephenson at 09:13 PM in Misc.  ·  TrackBack (1)

Some words of reason from Harvard

Here is a transcript of some words spoken by Stephan Thernstrom, professor of History at Harvard, during the Harvard faculty meeting that eventually led to a vote of no-confidence for President Larry Summers.

Amongst his gems are:

If the carefully qualified, speculative, deliberately provocative remarks made by President Summers at the National Bureau of Economic Research are grounds for removing him from the presidency, I don't see how we can stop with that action. Shouldn't he be fired from his teaching post, or at least formally censured? If it is a grave offense for college presidents speaking from the perspective of their discipline at a closed academic meeting to advance certain controversial views, why should such a professor be allowed to warp the minds of our students?

and
Is Harvard University really a "community" that requires ideological conformity? The First Baptist Church of Peoria is a community in that sense, with a common conception of God and how best to worship Him. Possibly Bob Jones University is a community. But no great university can long remain great if it attempts to enforce the equivalent of a religious creed on its members. What really holds the members of the Harvard "community" together is much more limited. It is simply a common commitment to pursue the truth through disciplined scholarship, and a faith that freedom of inquiry is the best means to arrive at the truth. I find the "provocative" remarks made by President Summers entirely consistent with that community norm.

and
If the critics of President Summers have their way, it will be a terrible blow to that freedom. Given the visibility of this university, it will be a signal to higher education in general that research on certain sensitive subjects should only be undertaken by those who already know the answers and are prepared to suppress any discoveries that do not fit with the conventional wisdom.

You had to figure that not everyone at Harvard, MIT, Princeton, and Columbia were as exorcised about Summers's comments as it was put forth in the media. Prof. Thernstrom may not be in the majority, but at least there is hope for us mortals who are not allowed to see what goes on at the top of Mount Olympus - the god's are not all crazy.

Of course, the loudest wheels can get the ear of the media and be able to blow things out of proportion and to advance their agenda. I am sure that Professor Thernstrom saw many eyes roll during his words, but he deserves credit for speaking lucidly about academic freedom and why those at Harvard, perhaps above all other academics in the country, must stand firm in favor of academic freedom - for both the statist left and the non-statist left, the statist right and the non-statist right alike.

Posted by Craig Depken at 06:42 PM  ·  TrackBack (1)

Profit margin on a DVD?

According to some open directory documents at the MGM corporate website, how does 50% sound?

Don't know if the information is accurate or not, but the number wouldn't surprise me. The cost of duplicating a DVD is trivial, and thus a $20 DVD, which would wholesale for, say $15, might only cost $5-$7 for production, transportation, and royalties.

If you want to poke around, as long as it is unsecured, go here.

Posted by Craig Depken at 05:38 PM in Culture  ·  TrackBack (32)

April 01, 2005
What does the UN Security Council Do?

From Global Policy Forum is this picture (which is really a pretty clever way to lie with statistics) depicting the vetoes of the permanent members of the UN security council:

Before the Soviet Union collapsed, there were an average of three to six vetoes per year. Since the Soviet Union ceased to exist, the average number of vetoes has dropped to less than three per year. Is this is simply a result of there only being one superpower at the moment or is there something else going on?

I would bet that once China considers itself able to go toe-to-toe with the U.S. the number of vetoes per year will once again increase.

Posted by Craig Depken at 07:57 PM in Politics  ·  TrackBack (2)

From Google Labs

comes Google Rides. For at least a few cities (including Arlington) clickable maps that provide cab and super shuttle phone numbers.

I can definitely see the technology being useful in other areas/markets.

Posted by Craig Depken at 07:19 PM in Culture  ·  TrackBack (19)

Weekly gas price update

Here in Arlington, our local QuikTrip had the following prices this morning - $2.07 for regular, $2.17 for mid-grade and $2.27 for premium. Up three cents from last Friday. and 8 cents in two weeks (approximately 4%).

Posted by Craig Depken at 07:03 PM in Economics  ·  TrackBack (30)

Junk Science Bankruptcy Study

Recently I took issue with a study purporting to find that 50% of bankruptcies are caused by medical expenses--I find this possibility implausible given the wide variation (a factor of 4) in bankruptcy rates across states. Now Todd Zywicki links to the source of the dubious study and some other research gems from the same authors.

Posted by E. Frank Stephenson at 09:28 AM in Law  ·  TrackBack (33)

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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