Division of Labour: June 2005 Archives
June 30, 2005
Here's dirt in your eye
Hat tip to Boortz again: one of his reading assignments includes this link to a blog site: "Let’s throw some serious sand into the gears of the government machine. They have asked for real property, so let us send it to them," and provides addresses of the five Justices and some of the New London bad guys to which you can send dirt from your own property. I'm thinking of shipping off some Louisiana soil myself to Justice Bow Tie.
Also, I was immensely relieved to hear this morning on NPR's "Morning Edition" that officials ruled Roy's (of Siegfried and Roy) tiger to be innocent in his mauling. Not very exciting, but click on the "listen" button, and at the 20-second point, hear the dismissal of another possible reason for the tiger attack (prior to dismissing "a scheme by animal rights activists"). I guess W talking about the "Streak of Evil" would just confuse people.
How Stella lost her groove again
According to the official web site for How Stella Got Her Groove Back, the 1998 film
is based on Terry McMillan's best-selling novel of the same name - the story was inspired by McMillan's real-life romance with a young Jamaican who indeed was twenty years her junior.
McMillan, 53, is now divorcing her husband Jonathan Plummer, 30, saying he has admitted being gay and only marrying her to get a green card. Plummer has filed for spousal support and royalties from the book. According to one news report
Plummer says he didn't know he was gay when he met McMillan in June 1995 when, recuperating from her mother's death, she visited the Negril resort where he worked.
Let this be an object lesson to women who might otherwise get carried away with “Stella’s Top 10 Reasons to Date a Younger Man”.
Comparative Risk of Shark Attack
The news never reports absolute risk. That's because in most cases the associated probability is low. They want us to worry, because the more we fear. the more likely they are to retain our attention. This site by the Florida Museum of Natural History provides some nice data on comparative risk of shark attacks.
Over the last 50 years in Florida there have been 8 fatal shark attacks. Over the same period there have been 13 fatal attacks by allaigators, a species we protect.
Congressional Service Reports for the People
Congress spends almost $100 million a year for in-depth background reports on a wide variety of topics. It then denies you easy access to those reports over the Internet. This site by Open CRS attempts to collect those reports and make them available on line.
A Congress that can’t understand the marginal cost of distributing these already researched reports is less than their marginal benefit to the public, shouldn’t be trusted with our dollars.
June 29, 2005
Why stop at one property
Following up on Robert's post below, I can see a whole new chain of hotels, called "Souter Inns" which could be built on every property that Justice Souter (and the others on the court who joined in the Kelo opinion) owns in the United States. The opinion specified only "well thought out" economic development plans and a positive probability that there would be increased jobs and taxes as a result of any development option that a city would consider. Why stop at one property?
Here in Arlington, where we have our own land grab underway for the Cowboys stadium project, there was an audible sigh of relief from the powers-that-be when the Court decided in favor of localities taking property. However, our esteemed mayor stated that the court case really had little connection to what is going on in Arlington because the city will own the stadium and lease it to the team.
Thus, even if the court had come down on the other side it would have left open the question of public takings for "publicly owned" development that is, in turn, leased to a private enterprise for well below market value. Who exactly is the residual claimaint of development?
What's to stop house-farm developers from refusing to pay market value for farm land on the edges of town (here land is going for 50-60k per acre in some parts) when they can pressure the localities to pay a lower price? There is no "hold out" in that case - no individual or few individuals standing in the path of "progress" - and yet the court's opinion would still seem to prevail.
June 28, 2005
Is the Iraqi central bank building credibility?
Headline on an article in Lebanon’s Daily Star: “Iraq's Central Bank builds credibility with rock-steady dinar value”. Meaning:
The dinar's current value of 1,465 to the benchmark U.S. dollar is virtually unchanged from January 2004, when the introduction of new banknotes to replace the Saddam-era denominations was completed.
But the same article, a few paragraphs later, shows that there’s a fly in the ointment:
In May, CBI governor Sinan al-Shabibi was quoted by Reuters as forecasting that the inflation rate, estimated at 30 per cent in 2004, could fall to 20 per cent this year. The CBI currently estimates annual inflation at around 17 percent.
A basic arbitrage proposition of monetary economics (“purchasing power parity”) tells us that two currencies can’t maintain a fixed exchange rate (together with free trade and financial markets) unless they have the same inflation rate. US dollar inflation isn’t anywhere near 20-30 percent. So I’d say the headline is precisely wrong: the Iraqi monetary expansion that is driving 20-30% inflation is on a collision course with the fixed exchange rate. Continued pegging of the exchange rate at its present "rock-steady" level is not credible. Expect a devaluation unless the central bank brings inflation down.
How to bring inflation down? Some western economists have suggested inflation targeting for Iraq. But as Matt Sekerke and Steve Hanke calmly point out (pdf file), Iraq presently lacks what would seem to be the minimal institutional requirements for inflation targeting (a functioning banking system, a market for government bonds, etc.). Dollarization is the more reliable option for bringing actual credibility to Iraq’s money.
This is too good to be true, but wouldn't it be great!?
Weare, New Hampshire (PRWEB) Could a hotel be built on the land owned by Supreme Court Justice David H. Souter? A new ruling by the Supreme Court which was supported by Justice Souter himself itself might allow it. A private developer is seeking to use this very law to build a hotel on Souter's land. [Press Release.]
[HT: Brad Smith]
BTW, Craig is right (see below). That Google Earth thing is seriously cool. I just took a birdseye tour of the Grand Canyon including the hiking route I'm planning for April '06.
Tim Cavanaugh of ReasonOnline interviews Scott Bullock of the Institute of Justice, the attorney who argued the Kelo case before the Supreme Court. Hat tip: NKB.
Coasian Fire Rescue
You gotta love the Coase Theorem!
Who was John T. Flynn you ask?
My good friend, former DoL blogger, and Ashland University history professor John Moser, has a new book out titled Right Turn: John T. Flynn And The Transformation Of American Liberalism. I just bought a copy. Get yours while you can!
Space Shuttle – Unsafe at Any Speed
Now that NASA is planning to resume flights of the shuttle, there will be extensive news reports on the related risks. The real question, of course, is how safe is safe enough. I am not one who believes that every hint of risk must be removed from our lives before we leave home (although most accidents do happen in the home). It is hard to argue, however, that the costs of shuttle outweigh the benefits. Never has a nation given so much in return for so little.
How much more knowledge of the universe would we have gained had the dollars spent on the shuttle been spent on unmanned space exploration? NASA needs to get over it public relations gimmicks (teachers in space) and get on with some real science. Otherwise, it is just another government expenditure boondoggle.
There is hope for Ted Williams
From Down Under comes this story on zombie dogs.
SCIENTISTS have created eerie zombie dogs, reanimating the canines after several hours of clinical death in attempts to develop suspended animation for humans.
Right now I'm busy putting some final changes to my paper for the Western Economic Association meetings in San Francisco. Then I need to really start studying for comps and sneak moving in as well. So blogging will be light.
June 27, 2005
What Free Market?
In one of today's Supreme Court decisions, the court sided with the FCC by saying the FCC could decide whether or not high-speed cable internet services were "information services" or "telecommunications services." The FCC had previously ruled cable internet to be "information services" and thus unregulated and not subject to the common carrier rules that regulate phone lines (and hence DSL internet). A lower court disagreed with the FCC and the Supreme Court today reversed saying it was up to the FCC to decide because the statute was ambiguous. (If the FCC had decided cable internet was "telecommunications", then that would be ok too.)
Interestingly, Justice Thomas wrote the majority decision and Justice Scalia wrote the dissent (proving yet again that Thomas is not Scalia's lapdog as most lefties believe).
The NYT had this to say in reference to Scalia's dissent: In a dissent, Justice Scalia, wrote that the commission's ruling was trying to further a free-market agenda through "an implausible reading of the statute, and has thus exceeded the authority given it by Congress."
I haven't read Scalia's dissent in its entirety (here are the opinions if you want to read them) but I'm trying to figure out why the Times had to drag the "free-market agenda" stuff into the article. Scalia's point (right or wrong -- I don't know or really even care that much) is that the FCC misread the statute. Whether or not the FCC's decision was pro-free-market or anti-free-market was not Scalia's concern. His concern was the statute and the FCC's (mis)interpretation of it.
But the NYT never misses a chance to take a shot at the "free-market agenda".
Iraq War Casualties
This is an interesting depiction of Iraqi War casualties from March 2003 through June 2005. It is apparent that the "insurgency" is mainly concentrated in the so-called Sunni triangle - with lots of activity in Bagdhad, obviously.
There seem to be many in the government that are talking down our military. This is not terribly surprising because the "war" isn't a galvanizing war such as WWI, and especially WWII. It is not clear that any war we might be involved in would be as "galvanizing" as previous conflicts. Whether sitting members of Congress made a habit of stating that "we are losing" in WWI, or WWII, I don't doubt that it happened. I know that there was continual bickering during the Civil War - but it is still bad form in my opinion.
At a 2000 Liberty Fund conference I argued that the U.S. didn't have the stomach for D-Day style tactics and casualties. Our capital intensive military, which became necessary after the draft was ended, had basically reduced the casualty count to such an extent that it would be difficult to imagine the U.S. population "accepting" 4,000 dead in a day.
I wonder if we wil see more calls for our extrication from Iraq given the female casualties we suffered last week. This was the center of another discussion between myself and a few others at the Liberty Fund conference - whether the U.S. military should place women in combat situations. My claim was that sufficiently high female casualties would turn popular support against any war (rather than against withdrawing female soldiers and marines), which if known by our potential enemies would make our military a less effective deterrent.
If female casualties mount in Iraq, it will be interesting to see if those who insisted on women having equal access to military MOS's and enemy fire are the first to insist that we must withdrawl because of female casualties.
June 25, 2005
Latin American Sweatshop Report
Apparel-maker Fruit of the Loom has its headquarters in Kentucky, but employs 7000-9000 at its two plants in El Salvador. The Louisville Courier-Journal sent its reporter Wayne Thompkins to one of the plants in El Salvador to check on conditions. What did he find when he interviewed workers there (who defied a company policy instructing them not to speak to reporters about their jobs)?
Despite Fruit of the Loom's no-talk policy, there were workers willing to talk outside its Export Salva plant, and most were happy with the conditions.
The government of Azerbaijan has announced a currency redenomination: one new Manat will equal 5,000 current Manats. New banknotes will replace current notes in 2006.
5000:1 seems a peculiar choice. Typically in a redenomination the ratio is a simple power of ten: 1 new = 100 or 1000 or 10,000 old units. Converting pricetags then requires merely lopping off zeroes. With 1 new = 5000 old, sellers must lop off three zeros and then divide by 5, or lop of four zeros and then multiply by 2. Why impose the extra hassle?
Was the government deadlocked between ministers who wanted to redenominate at 1000:1 and those who wanted 10,000: 1, and so decided to split the difference? Or (more likely) is it because 5000 current Manats are at the moment worth very close to US$1, and the country is already heavily dollarized?
Has Tom Cruise been reading Tom Szasz?
Shades of "The Myth of Mental Illness": The star of War of the Worlds challenges psychiatry and its methods, in an interview with Matt Lauer on NBC's Today show. Cruise had recently criticized Brooke Shields for revealing that she had taken an anti-depressant drug for her post-partum depression, and Lauer asks him to explain:
Cruise: I've never agreed with psychiatry, ever. Before I was a Scientologist I never agreed with psychiatry. And when I started studying the history of psychiatry, I understood more and more why I didn't believe in psychology.
ADDENDUM: I didn't mean to suggest more of an overlap between Szasz and Scientology than really exists. As is clearly explained here, while the religion of Scientology shares some "anti-psychiatry" conclusions with the libertarian Szasz, their arguments are quite distinct.
June 24, 2005
A future of empty big boxes
The blogosphere is abuzz with justifiably outraged reactions to the Supreme Court’s anti-property-rights ruling in Kelo v. New London. (See Julian Sanchez in particular.)
What will be the practical result of the decision? Expect more tales like these. (I don’t know about the other cases summarized there, but the summary is accurate regarding my neighboring town of Maplewood, MO.)
Instead of commercial real estate redevelopers doing the hard (but not impossible!) work of assembling large land parcels through voluntary transactions, they will increasingly ask local governments to assemble parcels for them through eminent domain, promising future tax revenues in return.
A commercial real estate report here in St. Louis made the following revealing comments before the ruling:
With so much of retail development occurring in inner cities or inner ring suburbs, developers and economic development agencies will be watching for a U.S. Supreme Court ruling on eminent domain. Most close-in retail development sites require land assemblage and demolition of existing buildings before proceeding with new construction. Eager for the sales tax revenue produced by new, and especially upscale retail development, economic development agencies employ local governments’ eminent domain authority to condemn and assemble land for projects that will produce jobs as well as taxes. Often just the threat of condemnation is enough to speed negotiations between developers and property owners.
Do you like that ring of efficiency? “Speed negotiations”. Sounds so much nicer than “get property owners to knuckle under and sell for less”. The report continues:
Depending on state statutes and local government ordinances, eminent domain can be used to acquire blighted areas for clearance and redevelopment. The definition of blight has been extended in some places to include underperforming economic yield as well as physical blight.
In other words: your land is now up for grabs whenever the town council imagines that a different use might generate more tax revenue for them. Town officials, always hungry for tax revenues, are empowered to project themselves into the role of finding the greatest-revenue-generating use for local real estate. How can they resist? Don’t we all love to play SimCity?
The result to be expected, contrary to well-meaning officials’ intentions, is misuse and waste of land (not to mention the hardships of involuntarily uprooted families). When private developers buy up land through voluntary transactions, they face a market test. If a shopping center or office complex flops, the developer loses his own money and will have trouble getting bank loans the next time. Wishful thinking is thereby constrained. The market ruthlessly weeds out incompetence. When town officials grab land through eminent domain, to assemble a parcel to sell to a developer (more cheaply than he could have managed without eminent domain, otherwise he wouldn’t have waited) whose shopping center flops, where is the personal penalty for the town officials? At most, if voters are informed enough to hold them accountable, they face a slightly higher chance of being voted out (if still in office), or a slightly reduced budget to play with (unless tax revenues can be enhanced somewhere else). Wishful thinking has almost free rein.
So my prediction: expect to see a few more half-empty shopping centers ten years from now.
In the '60s, surfers drove woodies. As a post-ironic consumer of ersatz surf culture (surf music especially, but I even once subscribed to the short-lived lifestyle magazine Beach Culture) since my grad-school years in LA, I drive a "woodie" version PT Cruiser (complete with custom-made surfboard-styled wood rear shelf, surf stickers on the rear windows, and a hula girl wiggler doll on the dash). But for the truly obsessive-nostalgic, only a genuine vintage wood-bodied car will do. You can witness their fetish-objects (some with surfboards on top) at the noteworthy fan site www.oldwoodies.com
June 23, 2005
The solution to illegal immigration?
Now, I am no big-city lawyer, but I have been perplexed at the lack of action on the part of anyone up in D.C. as we absorb up to 60,000 illegal transfers across our southern border each month. (Would we care if they carried AK-47's? Just a question.) I was beginning to think that there simply was no plan to do anything about the borders, but maybe there is a plan after all.
Perhaps, knowingly or not, two of the three branches of government are not-so-slowly solving our illegal immigration problem. Remembering that there were few people sneaking East over the Soviet frontier, arguably because just about anywhere else in the world was better than being in the Soviet Union, we can make the U.S. a very inhospitable place, thereby reducing the number sneaking North across our frontier.
We might have to change the name of the country to make the signal crystal-clear, why not F.U.S.A.? Fascist (or your other favorite 'f' word) United States of America?
"The Congress shall have power to prohibit the physical desecration of the flag of the United States." (Proposed "flag burning" amendment passed U.S. House June 22, 2005)
Message? Your private property is not your's, especially if destroying it will hurt someone else's feelings. Don't come to El Norte because whatever you think you are going to earn, keep, or send home is really not yours to begin with. The government can put you (us) in jail for doing something with your property that can only hurt "feelings?"
(Side note: The proposed amendment is a disaster in the making - what constitutes a flag? Is a flag made out of fireworks on the fourth of July out of the question? If my flag has 55 stars and 14 stripes, can I burn it? Is my flag my property or not? rrrrr)
Though the city could not take petitioners' land simply to confer a private benefit on a particular private party...the takings at issue here would be executed pursuant to a carefully considered development plan, which was not adopted “to benefit a particular class of identifiable individuals...The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue." (Kelo v. New London, June 23, 2005)
Message? The government does know what is the best use of your property, even if more than YOUR feelings are damaged in the process, e.g., there are real economic damages. All the government needs is a "carefully considered" and "carefully formulated" plan that has someone's seal of approval that it might (maybe, perhaps, could be, when pigs fly) create new jobs AND TAX REVENUE!!! Oh, the court came up with a good one there. As long as the beast can feed, which the court has now told us is an unambiguously good thing, then all bets are off.
With a few more good ideas like this we are on our way to reducing freedom in this country to the point that others won't want to come here - hey at least the local plumber will keep his job, but only if it generates tax revenue!
Of particular relevance here is Wickard v. Filburn, 317 U. S. 111, 127–128, where, in rejecting the appellee farmer’s contention that Congress' admitted power to regulate the production of wheat for commerce did not authorize federal regulation of wheat production intended wholly for the appellee’s own consumption, the Court established that Congress can regulate purely intrastate activity that is not itself "commercial," i.e., not produced for sale, if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity.
For those of you who don't recognize this quote, it comes from Gonzales v. Raich (June 6, 2005) better known as "Medical Marijuana." The court goes one better in the very next sentence:
What? The wheat industry has been cartelized (by Congress!!) like the marijuana industry and Farmer Filburn undermines the wheat industry by growing a few bushels on the side for him and the missus? This is simply not credible given the facts.
Moreover, the statement implies that somehow Raich and Mason (the two folks who sued) growing their own marijuana would "upset" the market for marijuana. In Filburn, regulating wheat production was assumed to be aimed at maintaining a high price for wheat - I suppose for the sake of farmers, because who cares about consumers (oh, the dead weight loss)? Is the Controlled Substances Act intended to maintain a high price for illegal drugs?
(Side note: The Gonzales vs. Raich case centered on the DEA destruction of SIX marijuana plants. Hardly a threat to the cartels in Ol' Mexico and elsewhere. Farmer Filburn harvested nearly 12 acres of wheat above his allotment. - Old Farmer Filburn was hardly a threat to the world wheat industry.)
Message from Gonzales vs. Raich? Congress has known what's best for you to put in your stomach and lungs (but not beside them), going on 70 years. Remember, Congress decides what you will do with your private property. Besides, there is a chance you might sell your private property to someone else and we can't have that.
Yep, the F.U.S.A. - we are well on our way. Come a few more years when our freedoms are about the same as Ol' Mexico, El Norte won't look so appealing.
KELO V. CITY OF NEW LONDON
The Kelo decision is now available.
Links at Findlaw
Doesn't look good. Any comments?
Alan Greenspan, free banker?
Greenspan to the Senate Committee on Finance today:
Financial markets, if left free to continuously reprice interest rates and asset values, will identify and respond to imbalances far sooner than a system based on administrative edict. In market-based financial pricing systems, automatic adjustments are inherent. But in a highly administered system, supervisors can identify emerging imbalances only when these imbalances become visibly large and are already troublesome. Adjustment in a system requiring human intervention is accordingly far less flexible than in a system based on the automaticity of markets.
Okay, the context was a discussion of China’s pegged exchange rate system. But doesn’t the argument generalize?
Text of entire remarks here. Hat tip: Fred Foldvary.
Who cares about property rights? American Idol is on!
Sigh. I'm sure I won't be the first on this site to express anger/sadness at this decision today.
Outsourcing and academic tenure
In the course of an unfortunate ad hominem attack on a good economist, blogger Deb Frisch raises an interesting question:
3. Tenured university professors enjoy the most protected jobs in the country. They don’t produce anything like “goods” that are consumed in the market. Isn’t it a little bit hypocritical for economics professors to argue for outsourcing and worship the market? Has any economics professor argued for abolishing tenure or opening up the competition for the $25 million the National Science Foundation spends every year on economics research to foreign labor? I reckon there are economists in Bangalore who would do research for less than the $20,000 a month American economists charge NSF. It would be nice if economics professors would put their mouths where their money is and argue for outsourcing their own jobs.
I’m a tenured university professor at a state university, and I argue for free trade, which includes the freedom to outsource. (As for “worshipping” the market, I always liked my teacher Thomas Sowell’s line: “I don’t have faith in the market; I have evidence.”)
I also think the net effects of tenure are probably negative at state universities in a competitive academic market like the US/Canada. Competition gives us our best hope for academic hiring (and firing) to be based on merit or productivity rather than politics or whim. Competition doesn’t help if all hiring committees have the same strong political biases that override considerations of merit or productivity, or the same mistaken views on what constitutes merit or productivity, but in those cases tenure only makes the problem more permanent.
I’d leave the question of tenure at private universities up to those universities. Better private schools (e.g. the University of Rochester) already offer five-year non-tenure contracts in some cases. Lesser private schools, I predict, would have a harder time hiring productive faculty (i.e. would have to pay more) without some form of tenure.
Has any economics professor argued in writing for abolishing tenure? Yes, across the political spectrum, and it’s not hard to find them. If you Google “abolish tenure economist” you quickly find tenure abolition defended by liberal Robert Reich, libertarians Robert W. McGee and Walter Block, and conservative Martin Anderson.
Has any economics professor argued for opening up the NSF to foreign competition? Not that I know of, but it’s not a bad idea. Though not quite as good an idea as abolishing the NSF. Disclaimer: I’ve never had an NSF grant.
ADDENDUM: Law firms and accounting firms have a form of tenure; it's called "becoming a partner". (A new hire with a freshly minted degree has a probationary period, then either becomes partner or is let go.) Is it any of our business to opine on whether this is a good idea for law firms and accounting firms? No, we presume that competition among the firms will sort it out. Academic tenure is only a public policy issue because so many universities are tax-supported. The only way to finally discover the optimal set of academic tenure systems would be to privatize all the universities.
Calvin and Hobbes
The complete Calvin and Hobbes comic strip is now available in a nice three volume hardbound set. $89.50.
UPDATE: This is an example of Ralph's post on "dynamic pricing". The link above is the one I received in my inbox (as a subscriber to the daily comic strip service). The $89.50 price I got is lower than the $94.50 price advertised on the regular web site.
“Dynamic pricing” is apparently a new term for a kind of price discrimination. Anita Ramasastry discusses whether it should be illegal in an article at Findlaw. Dynamic pricing is when businesses adjust prices for each consumer based upon that consumer’s profile. Moreover, that profile is updated as the business accumulates additional information on the consumer.
Businesses can easily do this on the Internet by placing cookies on your computer that track your interests. Unknowingly, you may be charged more or less for airline tickets or hotel reservations based upon your computer clicks. Consumers who believe they have been unfairly targeted for higher prices are, of course, offended. But is a law banning these practices the best way to deal with the situation?
Doesn’t the use of the Internet cut both ways? While it allows businesses to cheaply collect information on consumers, it also lets consumers more cheaply collect information on businesses, products and services. I don’t buy a consumer durable without first checking out prices at competing sellers on the Internet. In the good old days that would have required trips to several stores and lots of gas.
The price discrimination model demonstrates that with efficient price discrimination some consumers will pay more than the average non-discriminatory price, while others will pay less. If you are a savvy shopper with a more elastic demand, you are likely to benefit from price discrimination and the ignorance of others. So, maybe price discrimination is not such a bad idea. However, I would monitor those tracking cookies if I were you.
June 22, 2005
An economist-blogger “shorts” the housing bubble
Left-of-center blogger Mark A.R. Kleiman, professor of public policy at the UCLA School of Public Affairs, doesn't just yap about bubble-inflated house prices. He’s actually acted: he’s sold his upscale westside LA house and moved into an apartment. Kleiman wryly describes his move as “putting my money where Brad DeLong's mouth is.”
Time will tell whether Kleiman made a shewd move.
PayPal, now owned by eBay, is presently the sole giant in online payments. (Disclaimer: I am a frequent PayPal user, and I have made over 400 purchases on eBay.) Rumors that Google, the dominant search-engine service, has begun working on some kind of payments service caused eBay stock to fall slightly on Monday. Google’s CEO now confirms work on something in the payments area, but says that Google will not be challenging PayPal head-to-head.
Google has confirmed that it is developing an online payment system, although it says it has no plans to take on EBay's PayPal service.
It’s far from clear what would constitute “a payment system to improve the way e-commerce is done”. Some speculate that it means adding a “pay” button to the Google taskbar, or integrating payments into Google’s comparison-shopping engine Froogle (a service I also recommend, if you haven't tried it).
Business Week’s Robert D. Hof argues that it would be foolish to challenge PayPal because of its dominance. Pertinent factoids: Paypal has 72 million accounts. Off-eBay merchants now account for 29% of PayPal's total payment volume. Citibank tried to challenge PayPal with its C2it service, and gave up. Yahoo! did likewise with Yahoo! Payments.
Hof implies that PayPal is a network good: the more members use it, the more useful it is to each member. No newcomer can establish critical mass without a hugely expensive campaign to attract a critical mass.
I’m frankly puzzled as to where the network properties are supposed to lie in online payments. (In auctions, yes, but that’s a different business.) No commercial bank has ever monopolized offline payments (i.e. deposit transfers). PayPal piggy-backs on the commercial banking deposit-transfer system; so too could a new online payment system. It wouldn’t be a big deal for any consumer to have a G-money account in addition to a PayPal account so it needn’t be a winner-takes-all market. I had a C2it account (cost me only a few minutes to open and nothing to maintain), in addition to my PayPal account, before C2it closed. And don’t we all have multiple credit card accounts?
Howl's Moving Castle
Little bit and I went to see Howl's Moving Castle last night (see also the Disney site). I give it 4.5/5.0 stars. We are big fans of Hayao Miyazaki's work. As usual, this one was visually stunning, beautifully scored, and filled with the fantastic. As we left, we just kept saying "Wow!" to each other.
The anti-war message was even more obvious than in Castle in the Sky (1986), but was not overpowering. Also, the story line was perhaps not as tight as his other movies and I felt less sympathy for the characters than usual, but these are minor complaints. I think we're going to go back to see the subtitled version (instead of the dubbed version) next.
Libertas, the site mentioned by Lawrence White below, has a good review of Cinderella Man. I found it an unexpectedly enjoyable film. Other reviews have compared it to Seabiscuit, a call for social justice. However, it is instead a tale of individual strength, perseverance and commitment to family. It also provides a sense of the misery and poverty that accompanied the Great Depression. For Braddock, welfare was not an entitlement. It was a loan that was to be repaid.
June 21, 2005
Liberty Film Festival
The 2005 Liberty Film Festival, which bills itself as “Hollywood's premier event for conservative and libertarian film,” will be held October 21-23 in West Hollywood, California. It’s a counter-Sundance, you might say. And they do say:
The Liberty Film Festival showcases films that celebrate the traditional American values of free speech, patriotism, and religious freedom.
The festival is co-directed by the husband-and-wife team of Jason Apuzzo and Govindini Murty, who also have a conservative film blog called LIBERTAS. Murty recently appeared on American Movie Channel’s “Film Club” discussing the (not-to-be-missed) supermarionation comedy Team America -- which by the way is now available on dvd with restored marionette-sex footage.
What the EU Constitution is about
German Chancellor Gerhard Schröder, no doubt flabbergasted by the French and Dutch voters’ rejection of the proposed EU constitution, as well as UK Prime Ministers Tony Blair’s lack of enthusiasm for the project, frankly acknowledges that he views the EU constitution as a device for centralizing power and promoting the welfare state rather than for promoting free trade and migration:
Schröder said that the continent's welfare state and its "values" were under threat […]
Blair, no doubt with an eye to the British voters' coolness toward Brussels, is demanding that the EU
overhaul and reform farm subsidies which swallow some 40 percent of the EU budget.
Good luck with that, Tony. George W. Bush has given up on trying to reform US farm subsidies.
June 20, 2005
How is this NOT progressive?
From the Tax Foundation comes this report on the number of people who have ZERO (or close to it) federal tax liability. Granted some of these might be the super-rich, but I would wager the vast majority are those on the left side of the income scale.
When the percentage of those who have no federal tax liability approaches fifty percent or more, will the class-baiters be satisfied that the tax system is finally "progressive?" How high does the percentage have to be until Atlas will shrug?
Here's an idea: let's get 100% of the people to have no federal tax liability. Alas, the beast must feed.
Grad School Blogging
A former student has started a blog: Laments of a Grad Student. I plan to check back often.
My last five movies
On a zero-to-four-stars scale:
Madagascar (2005, dir. Eric Darnell) ** Cute. I didn't find it as funny as Shrek or Toy Story, but the six-year-olds down the row whooped it up.
Reshma aur Shera (1971, Hindi, dir. Sunil Dutt) *** Basically a Romeo (Sunil Dutt as Shera) and Juliet (Waheeda Rehman as Reshma) story set among the proud and violent desert folk of Rajasthan. Remarkable cinematography. Amitabh Bachchan is excellent in a supporting role.
Touch of Evil (1958, dir. Orson Welles) **** The film noir classic, with Welles as the corrupt US cop, a tanned Charlton Heston as the honest Mexican cop, and Janet Leigh once again finding trouble in a low-rent motel.
Shatranj ke Khilari [The Chess Players] (1977, Hindi, dir. Satyajit Ray) ***
Destry Rides Again (1939, dir. George Marshall) ** Light comedy with Jimmy Stewart and Marlene Dietrich.
DUI Laws in Ohio
In a working paper of mine that investigates the impact of lowering blood alcohol limits (available here), I mention some seemingly bizarre drunk driving laws in various states, including the fact that it is illegal to drive a lawn mower or a snow mobile while intoxicated. I mention the laws in passing, suggesting that many DUI laws are aimed at an extreme minority.
Nevertheless, the law is on the books and the law can be enforced. From Delhi, Ohio comes this story:
They arrested 22-year-old Joseph Mundy early Wednesday morning and charged him with drunken driving. The odd part: Mundy was behind the wheel of a riding lawnmower.
Ignorance of the law, or of my paper, is no excuse young man.
Give me your tired, your poor, your remitters
I've contributed an op-ed appearing on Tech Central Station today. It begins:
Immigrant workers often send some of their earnings to family members back in the home country. Critics of immigration have begun expressing concerns about such remittances.
In particular, I criticize frettings about remittances by Victor Davis Hanson. If I do say so myself, read the whole thing.
Online Gambling Ban?
A friend [HT: Paul] writes in with this link saying, "Sometimes it's hard to be a Republican. Why don't they just leave us alone?"
Indeed. How about they let us do anything that's peaceful?
June 19, 2005
With our own politicians comparing U.S. prisons to the Soviet gulag it is sobering to hear from someone like Pavel Litvinov who was there. It is also sad to know that Fahrenheit 451 (not 911) is real.
The man took Sinyavsky to the furnace room, where a group of people were squatting in the dark recesses. In the light of the furnace flame, one of the men got up and started to recite the biblical passages by heart. When he stopped, the stoker, an old man, said: "And now you, Fyodor, continue." Fyodor got up and recited from the next chapter. The whole text of the Bible was distributed among these prisoners, ordinary Russians who were spending 10 to 25 years in the gulag for their religious beliefs. They knew the texts by heart and met regularly to repeat them so that they would not forget. And this happened in 1967, when the gulag had become smaller and the Soviet regime milder than it had been under Stalin.
June 17, 2005
Buzzword of the day
Deja poo: The feeling that you've stepped in
I like that one.
Busy Day at CNN.com
First, it seems almost 3/4 of us prefer to watch movies at home rather than the theater, according to an AP/AOL poll (and cnn.com's online poll). A quick search on Econlit didn't seem to show very many articles that analyze consumer substitutability between theater and home movies. John Lott and Russell Roberts have one in Economic Inquiry about price discrimination for movie theater popcorn, but I'm sure that is only one reason why demand is becoming less elastic. The story also notes that "the poll found that people who use DVDs, watch pay-per-view movies on cable, download movies from the Internet and play computer games actually go to movies in theaters more than people at the same income levels who don't use those technologies. That suggests the technology may be complementing rather than competing with theatergoing." There seem to be a lot of different research-related ideas here. If anyone knows of any papers, or, heck, if anyone is interested in working on a paper, I'd be willing to discuss.
In the "do as we say..." category, it seems PETA isn't very ethical when it comes to dead animals. But, hey, it's not like the dead dogs and cats are complaining.
Then, this article highlighting the celebration of conspicuous consumption.
Oh, and Bob's last five movies question, with my 4-star ratings: Donnie Darko (****), The Life Aquatic (***), Team America (**), Eternal Sunshine of the Spotless Mind (****), and Big Fish, I think (**).
A new survey by the Governors Highway Safety Association found that the highway patrol tends to give motorists a cushion of up to 10 miles per hour. This will come as no surprise to most of us. They conclude:
"Law enforcement needs to be given the political will to enforce speed limits and the public must get the message that speeding will not be tolerated," said Champagne, who also is executive director of the Louisiana Highway Safety Commission.
What are the last five movies you've seen?
Here are mine (all recommended):
Million Dollar Baby (2004) Surprisingly good movie. The ending was disappointing though. If you're on a respiratory and can communicate, can't you just tell the doctors to unhook you?
Millions (2004) Excellent film about two kids who find a bunch of money. British film.
Eat, Drink, Man, Woman (1994) Very good movie made in Taiwan. Chick flick basically (not that there's anything wrong with that.)
June 16, 2005
Getting your security fix....
Wow. This (from WaPo) is pretty ugly:
Cyber-security officials in Great Britain issued an unusually dire alert today, warning that hackers are targeting e-mail-borne viruses against U.K. government agencies and high-profile British corporations with the aim of stealing sensitive and lucrative data.
The Economist has the 'rest of the story' (with apologies to Paul Harvey) about the famed first heart transplant by South African doctor Christiaan Barnard in 1967. The heart was taken from the donor body (a white woman) by -- gasp! --a black man, Mr. Hamilton Naki. Later Dr. Barnard transplanted it into the recipient to the acclaim of the world.
Naki was a highly skilled surgeon but because he was black he was not allowed to operate on whites in Apartheid South Africa. The hospital skirted this law by hiring (and paying) him as a gardner. Naki just died at the age of 78.
But get this. Mr. Naki would not be allowed to operate in the United States either--not because he is black of course, but because...
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he never went to medical school or even college! It turns out he worked his way up the ranks at the medical center by first assisting with operations on animals and then on people. He was so skilled that he eventually trained a good portion of the white doctors on the intricacies of heart and liver transplantation.
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Agri-Subsidies: Good or Bad for the Third World?
Trent McBride at catallarchy.net asked me to weigh on this debate about the impact of agri-subsidies on the third world. He asks this provocative question, I’m all for eliminating agricultural subsidies for a whole host of reasons. Helping the world’s poor doesn’t seem to be one of the benefits. Usually we scoff at terms like “dumping” and “even playing field". And rightly so; so why are they accepted here?
Here's what I wrote to him.
From a purely libertarian political philosophy of course there is no debate. Agri-subsidies are wrong. Period. End of story.
From a welfare economics point of view there is of course considerable debate. No surprise there. Figuring out the winners and losers (and the net gain/loss) is tricky business in the best of circumstances. Nevertheless, here's my best shot.
First, let me assume that agri-subsidies have the effect stimulating supply in the first world thus lowering world prices. (Tyler Cowen is entirely correct however that many ag programs in fact raise world prices by reducing supply, but let's not think about this right now.) Second, let me assume we're only asking about the welfare implication in the third world. (If we are concerned about the welfare of the entire world then these subsidies are clearly net losses to the world.) So the question is do first world agri-subsidies, that have the effect of stimulating supply and lowering prices, help or hurt the third world?
I think this depends on whether the third world country is (or rather would be under free trade) a net importer or net exporter of the food in question. If a country is a net importer of the food being subsidized, then they are better off (in the usual Marshallian way of things). The gains to the consumers in the form of lower prices/more food consumed will exceed the losses to the domestic producers in the form of lower prices/less food sold. If it is a net exporter, then the country is worse off. The gains to the consumers will be less than the losses to the producers. Inasmuch as many third world nations are (or rather again would be under free trade) net exporters of food, then they are probably worse off as a result of the subsidies. (This is another assumption, but it seems reasonable to me.) It is conceivable that the first world could be subsidizing food that other countries would normally import. In this case, they gain by receiving the dumped products.
Notice that in the U.S. dumping debate, we are inevitably talking about products for which the U.S. is a net importer (steel for example). Thus we are correct to argue that dumping, if it occurs at all, is actually beneficial to the U.S. on net.
Medical Stats Revisted
Brandon Berg writes in to clarify my confusion in this post on medical statistics. He is obviously correct:
The 2/1000 and 67/100 statistics you give are not comparable, because they're in different units. When you say that 2/1000 people would not get colorectal cancer, that means that for every thousand people in the total population, two could avoid cancer. When Dr. Key says that two-thirds of colorectal cancer cases could be avoided, he means that two out of every three people *who get cancer* could have avoided it through lifestyle changes.
If 3/1000 people in the general population get colorectal cancer now, then the statements are consistent. Two-thirds of all cases would be avoided.
But lumping fresh red meat and processed meats into the same category is just junk science. I'm aware of only one study that disambiguated them, and it failed to find a link between fresh red meat and colorectal cancer.
June 15, 2005
When life gives you a bewildering variety of lemonades
Okay, this may strike you as ridiculously trivial, but what's a blog for?
Tropicana now has two versions of “light lemonade” at my local supermarket: one in plastic bottles of various sizes and one in a waxed cardboard carton. Since they’re both labeled “Tropicana Light Lemonade” and “Made with Real Fruit Juice”, you might think only the packaging is different. In fact, the lemonades aren’t the same. The bottled drink contains 3% juice, 5 calories, 65 mg sodium, 10% of your daily vitamin C, and is sweetened with aspartame and Ace-K. The carton drink contains 8% juice, 10 calories, 5mg sodium, 100% of your vitamin C, and is sweetened with Splenda and Ace-K. Incidentally, the first is stocked in the soft drink aisle, warm, $1.49 for a two-liter bottle. The second sits among the refrigerated juices, $1.19 for a 64 oz. carton.
What’s going on here? The cartons are relatively new, so one hypothesis is that Tropicana is in the midst of switching recipes toward Splenda, and what’s in the bottle is the old recipe. Curiously, though, when you Google “‘Tropicana light lemonade’ splenda”, then click through, the current page at smartspot.com (sponsored by Tropicana’s maker, Pepsico) has the aspartame recipe, whereas Google’s older cached version has the Splenda recipe.
Non-blind taste comparison: the carton version takes more like real lemons.
The Big G to the rescue
This story reports that Rep. Edward Markey (D, MA), has a bill to bring theme parks under federal oversight. Gee, thanks for the heads up. As soon as the government gets into the business of regulating the rides at Disney, and other amusement parks, it is time to stop going to Disney and other amusement parks.
As soon as government takes over the regulation of amusement parks, the incentives for Disney to keep rides safe is reduced because their liability is reduced. Why is it always the first reaction of the Big G that private incentives are not enough to ensure a safe ride, a safe food product, or a safe drug?
As the story quotes:
Monday's death of Daudi Bamuwamye of Sellersville, Pa., “is a perfect example of why the federal government should be able to investigate”.I will withhold my comments on the regulation of child seats and stick with the issue at hand.
I have some experience with the amusement business (it's in the family), and liability concerns ensure that ride owners, whether Disney or the local carnival, are very careful about the quality of the rides, ride operators, and overall safety.
Moreover, there is already state-level oversight of the amusement business, from rides to games to food. Local oversight used to blur with the the shake-down, but today inspections are usually very strict, to protect the "children" and other innocents. For example, in the state of New Jersey it is illegal to have a hand-spun wheel game, the wheel must be spun by electric motor that is started and stopped by those playing the game. Rides are already so strictly regulated as to make the market extremely oligopolistic (a simple burlap-sack type slide can cost almost a million dollars). The amusement business is big business, and it already self-regulates to an amazing extent (a heck of a lot better than the child safety seats). To suggest that the federal government would offer some additional level of security against accidents is simply not credible.
Some are quick claim that Disney it is a huge corporation that can afford to pay off a few people who are injured or killed by their rides. Therefore, Disney, Six Flags, and the like, are not concerned about the safety of their rides and this justifies government intrusion in the market. But such a stance is patently wrong.
Rather than a static world, where reputation effects might not matter, we live in and Disney operates in a dynamic world. Disney is concerned about maximizing profit today, sure, but it also wants to maximize profit in, say, five years when I may want to take the little one to Disney. If Disney's reputation is in the tank, we won't go.
I suppose it is to be expected that those who have self-selected into the government machine would propose to extend the government's role in our lives, but it is still very frustrating.
What Mira Nair is up to these days
Her Vanity Fair starring Reese Witherspoon was a bit of a disappointment, but anything by Mira Nair -- the director best known for the marvelous Monsoon Wedding -- is worth watching. The BBC reports that Nair is now making The Namesake based on the novel by Jhumpa Lahiri. The cast includes Tabu and Irrfan Khan, the same pair that starred in Maqbool, in my view the best Bollywood film of 2004. It also includes – incongruously – Kal Penn, the Indo-American comic actor who played Kumar in the stoner comedy Harold and Kumar visit White Castle, not to mention Van Wilder’s sidekick Taj in National Lampoon’s Van Wilder.
For her next project, Nair plans to make Gangsta MD, which (as previously mentioned here) is inspired by the Bollywood comedy Munna Bhai MBBS. The BBC says Nair “plans to cast Chris Tucker in the lead role”. I guess Chris Rock wasn’t available. And I guess she’s disregarding Chris Rock’s own advice at the Oscars, which is to shelve any movie project if you have to settle for a second-stringer in the lead role.
Brad Smith's Letter of Resignation (reprinted with permission)
June 14, 2005
The Honorable George W. Bush
Dear Mr. President:
As you know, my term as Commissioner at the Federal Election Commission (FEC) expired on April 30, 2005 and I have continued to serve as acting Commissioner since then. This is to advise you that I will resign effective midnight August 21, 2005.
It has been an honor and a privilege to serve at the FEC for the past five years. Much has been accomplished in this time, including a major overhaul of the campaign finance laws. The Commission has also launched innovative new enforcement programs for reporting violations and alternative dispute resolution, while increasing due process protections available to respondents. The result is a fairer, more efficient, more streamlined organization. The Commission has substantially reduced case processing time, is collecting record fines, and has eliminated the backlog of cases that plagued the Agency during the 1990s.
I remain concerned about the effects our campaign finance laws are having on grassroots political participation. Political activity is more heavily regulated than at any time in our nation’s history. For example, in accordance with the law, during my tenure the FEC has assessed penalties against parents for contributing too much to the campaigns of children; against children for contributing to the campaigns of parents; and against husbands for contributing to campaigns of their wives. We have required citizens to respond to complaints for the display of homemade signs supporting a candidate. These are just a few examples: the Commission’s regulations take up nearly 400 pages of fine print. I urge you to consider the effects of regulation on grassroots, citizen political activity when proposals arise for still more regulation.
It has been a privilege to serve in your Administration. I remain,
More on Medical Statistics
Earlier today I posted on a recent medical study that showed a 35% increase in colon cancer resulting from eating red meat daily. I criticized this because a 35% increase of a very small number is -- well -- a very small number. If I have my numbers right (and I would be very pleased to know if I'm off base here), this 35% increased risk is on the order of 0.1 percentage point. That is, 1 person out of 1000 who eats a lot of red meat daily is likely to get colon cancer compared to people who eat red meat only rarely. To be sure 1 person out of a 1000 is not zero, but it isn't a particularly big number either.
The study also found that (1) eating a lot of red meat and (2) not eating a lot of fish would combine to increase your colon cancer risk by 63%--something on the order of 0.2 percentage points or 2 persons out of 1000 (again if I have my math right).
But get this quote...Professor Tim Key, Deputy Director of Cancer Research UK's epidemiology unit, said: "We estimate that more than two thirds of colorectal cancer cases - 25,000 cases in the UK - could be avoided by changes in lifestyle in Western countries."
I can not see how this conclusion can be drawn. I read the study to say that at most 2 out of 1000 people would not get colon cancer if they switched away from eating red meat and into eating more fish. He is saying that 67 out of a 100 cases could be eliminated. To be sure, he may have been talking about the improvements from combining all lifestyle factors including obesity, lack of exercise, smoking, etc. But his number is 335 times greater than mine! This is too big a discrepency.
Either I am reading these studies all wrong or these guys need to go back to grade school for remedial mathematics.
Welcome Back, Brad!
WASHINGTON -- Bradley A. Smith, a member of the Federal Election Commission since 2000 who served as the Commission’s Chairman in 2004, has announced his intention to resign from the Commission and return to the faculty of the Law School at Capital University in Columbus Ohio. [Press Release.]
Welcome to Flavor Country
Our local dog trainer reports this morning that our governor's plan to boost teacher (including professor) salaries through a cigarette tax fell through. It was a legislative bill proposed by Blanco, but she couldn't muster the votes and thus withdrew the plan. I guess we won't get to see whether we could be taxed into prosperity.
1. PATRIOT Act follies--I'm refinancing my mortgage and the mortgage company is required to have a copy of my drivers license in order to comply with the PATRIOT Act. What relevance my mortgage has to fighting terrorism is beyond me.
2. While browsing the blogosphere this morning I noticed a couple of fine posts from Lynne Kiesling--one takes on the Live8 tickets bit that Craig previously noted and the other is a superb riff on energy independence and the lard-laden energy bill now in Congress.
Where's the Ooomph?
Maybe I should create a "Where's the Ooomph?" category for all these medical studies showing the most trivial results. Yet another case in point:
Study confirms red meat link with bowel cancer People who eat more than 160 grams of red or processed meat a day are 35 percent more likely to develop bowel cancer than those who eat less than 20 grams a day, according to one of the biggest nutrition investigations ever carried out. [Story.]
Ok. 35 percent more likely than what?
The study in question found 0.278% of the sample developed bowel cancer. If we take this figure as the baseline, we find that a 35% increase comes to a risk of 0.375% for those who eat a lot of read meat.
Big freakin' deal!
I wonder if anyone would bother to read this stuff if the headline read, Study finds eating a lot of red meat increases your odds of getting cancer by 0.1 percentage points.
Why we need tort reform...
A 4-year old boy tragically dies after riding Disney Epcot's Mission: Space ride. My prediction: Disney pays a multi-million dollar settlement even though there was nothing wrong with the ride. Ultimately the ride may not survive as an attraction.
(Btw, this is a seriously cool ride. If you're ever there, be sure to go on this. But do take the warnings seriously! I felt ill for a solid half hour after getting off the ride.)
June 14, 2005
FSU has God on its side
(1) Coach Bobby Bowden is widely known as Saint Bobby
(2) And now FSU's (suspended) QB claims to be God.
Those Gators and 'Canes haven't got a chance next year I tell ya.
[Hat tip: Todd]
E-bay is an "electronic pimp"?
So, Live 8 in London offers a concert to "raise awareness" of poverty in Africa and elsewhere. The point is to pressure the G8 to "do something." Tickets to the concert in London were awarded by lottery and they immediately showed up on E-bay. Rather than embrace the market and suggest that those parts of the world with the greatest poverty might learn a lesson in allocation,
Live 8 organizer Bob Geldof has condemned as "sick profiteering" the sale of free charity concert tickets on auction Web site eBay
So much for understanding markets. If those who put on a concert with the following lineup: U2, Paul McCartney, Coldplay, Madonna, REM and a reunited Pink Floyd(!!), cannot understand the market process in allocating scarce tickets then what is the point of a "concert for awareness?" How does Geldof and the other organizers of such a concert expect the G8 countries to aleviate poverty in Africa? Award food via text-message lottery?
The answer to Africa's problems is markets, markets, and more markets coupled with a healty dose of freedom, freedom, and more freedom - including such miracles as E-bay!! Unfortunately, the lesson about the importance of markets in allocating scarce resources seems lost on Mr. Geldof.
Dr. Coase is chuckling, I presume.
Update: 9:32pm CDT - Ebay takes down Live 8 concert tickets (form Drudge). As if this will stop people from selling tickets.
June 13, 2005
The beast won't die!!
After the Jets stadium was submarined last week, the hopes of NYC 2012 - the winner's curse known as the 2012 Olympics - seemed all but dashed.
But no!! The plan has been revised with an alternative stadium built for the New York Mets. From this story:
The $600 million replacement for Shea Stadium would be paid for by the Mets, built on the Shea parking lot and be completed in time for the 2009 baseball season.
Hmmm...I smell a "but" coming, and two paragraphs later the other shoe drops:
The city and state would contribute $180 million for improvements to the infrastructure around the stadium and pay another $100 million to convert the stadium to Olympic use. Total cost to remodel the stadium for the Olympics is estimated at $250 million.
What a deal. According to the story, the Jets stadium was going to "cost" $2.2 billion (probably off by 10% at least) with the Jets kicking in (supposedly) $1.6 billion. That seems a bit higher than I remember, but okay.
If the Mets stadium plan goes down in flames, what team is next? The Yankees, the, Rangers, or the Islanders? How about the Knicks? We are out of options - perhaps build a stadium for the local professional lacrosse team? (oops, NYC doesn't have one)
The long and short is that the proponderance of evidence suggests that public investments of this magnitude in stadiums are simply not justified on willingness-to-pay or positive externality claims. I would wager that NYC is not much different than Arlington, Sacremento, Philadelphia, or Pittsburgh in this regard. Sports economists have been howling in the wind about this for years, and we have had some impact, but not a lot.
Die, beast, die!!!
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Note: I am not completely against some limited public money dedicated to a stadium, mainly because I am not convinced that there are no positive externalities. However, the net benefits are likely always negative because of the amount of public dollars dedicated to stadiums. Perhaps if the dollars contributed were in the $10-30 million range, not $100-300 million range (or higher), we might find some net positive effects. Unfortunately for most cities positive externalities less than $100 million would be statistical noise and therefore difficult to quantify. Hence, I will go with the concensus.
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Your Tax Dollars at Work
Some excerpts from an article in today's AJC:
"Taxpayers could be on the hook if a Fayette County golf course that got an unusual federal loan guarantee is sold on the courthouse steps in Fayetteville next month.
Wyant Golf Enterprises, a nonprofit that operates the Palmer Course at Starr's Mill, has defaulted on its loan payments. So the lender, Heritage Bank, announced a foreclosure sale July 5 at the county courthouse.
The U.S. Department of Agriculture's Rural Development branch guaranteed 90 percent of Boykin's loan. The feds will back a loan for a recreational facility in a rural area — even an upscale rural area — provided it's open to the public and the operator is a nonprofit or an Indian tribe.
A golf course attracts businesses and residents and creates jobs, explained Arthur Garcia, former administrator of the USDA's Rural Housing Service.
The feds are guaranteeing loans for nine golf course projects across the country, including two in Georgia, said Tim McNeilly with Rural Development's public affairs office. The other Georgia project is a course in Columbia County near Augusta set to open next month."
On Sunday at 8:15 I left the trailhead of Borrego Palm Canyon in the Anza Borrego California State Park for a short hike up the canyon to see a palm oasis. At 8:41 I felt the ground 'jolt' and heard two large booms (perhaps the second was an echo). I then heard what sounded like a large number of rocks falling around the canyon walls. It was over in just a couple seconds. At first I didn't even think it was an earthquake and instead thought it was a sonic boom caused by aircraft. But it turns out there was a 5.2 scale earthquake centered just 20 miles away near the town of Anza.
I suppose this is 'dog bites man' kind of stuff for Californians, but this easterner thought it was pretty damn cool.
After the excitement in the desert, I drove back toward San Diego to hike a few more hours around Cuyamaca Rancho State Park. I bagged Cuyamaca Peak (6512'), Middle Peak (5883') and Stonewall Peak (5730').
Supply side or Demand side?
The 2004 Annual report of the Dallas Fed came in today's mailbox. Full Report here. This year's report is on lifetime learning. While not as slam-dunk exciting as the 2002 annual report on free trade, there are a few interesting tidbits.
The one I found the most interesting was this picture which shows how U.S. student international rankings in math and science fall from fourth to eighth to twelfth grades:
In the fourth grade U.S. students are in the 90th percentile and 55th percentile worldwide in science and math worldwide. This indicates to me that our elementary education is pretty strong - a,b,c and 1,2,3 are mastered early.
By the twelfth grade we rank less than the 30th and around 10th percentile worldwide in science and math worldwide. Clearly we fall off dramatically. But what is the reason? Is it a supply side issue - are our highschool educators compared to, say, Germany's, not as strong as the same comparison at the elementary level? Is it a demand side issue - American students don't give a rip about science and math by the tenth, eleventh, and twelfth grades because they are busy playing Halo, text messaging their buddies, and otherwise goofing off?
I know some high school math teachers who have undergraduate and masters degrees IN MATH. I also know other high school math teachers who have never taken a college math course. Ceteris paribus, my money is on the one with the math education. Yet, if the latter outnumber the former then regardless of a kid's desire to learn math and science their teachers are uninspiring or lack the knowledge needed to convey the topics appropriately. After all, 1-2-3 is easier than the Heisenberg Uncertainty Principle.
The learning production function has multiple inputs, which has been made evident from the large literature focusing on the returns to education. However, falling from 90th to 30th, for whatever reasons, would seem worthy of national outrage.
Adam Smith in the Houston Chronicle?
I managed to work him into this "story" about the protectionist Wright Amendment in the June 11 Houston Chronicle:
UT-Arlington's Depken observed that "it's politics where economics gets trumped,"and "it's been that way since Adam Smith."
He goes on to observe that "it's politics where economics gets trumped," and "it's been that way since Adam Smith." How right he is, and for once we get an accurate use of Adam Smith?s legacy.
Thanks for the nod.
I haven't heard of Mr. Kennedy's blog before, and haven't had the time to read many of his entries, but the name sounds like something DoL'ers would be interested in.
Have a curry with your Murree
The Murree brewery in Rawalpindi is Pakistan’s only firm licensed to produce beer and whiskey. Muslims – 97% of the Pakistani population – are proscribed (both by their religion and by their government) from buying and drinking its products, but the other 3% have been known to resell it to them. (Ironic note: the word “alcohol” comes from Arabic.) The AP reports:
The brewery ostensibly caters to the country's small communities of Christians, Hindus, Sikhs, Parsees and foreigners. In reality, much of its output supplies a black market for illicit drinkers.
The firm uses a couple of decent slogans for marketing its beer in Indo-Pak restaurants overseas: “Have a curry with your Murree” and “Eat, drink and be Murree”. But it is about to introduce an 18-year-old single malt whiskey, and is still looking for a name for the new product. My suggestions:
June 10, 2005
Gasp – Canada’s Supreme Court legalizes private health insurance
Many critics of US health care point to Canada’s single-payer monopoly system as a “model” to be emulated. One small problem with that system: sick people languish in Canada’s waiting lines. One such person was George Zeliotis of Montreal, who says he became addicted to painkillers during his yearlong wait for a hip replacement, and wanted the option of paying a private clinic for faster service. The Province of Quebec refused to let him get private help. He and his doctor, Jacques Chaoulli, brought suit seeking permission.
Remarkably the Supreme Court of Canada has now mercifully widened the options for sick Quebecers like Mr. Zeliotis. (Contrast the US Supreme Court’s recent ruling against medical marijuana, which cruelly limits the treatment options for California’s sick.) The Canadian court struck down Quebec’s ban on private health insurance, opening the door to private health care. Canadian health care may now be moving toward the US “model”.
"The evidence in this case shows that delays in the public health-care system are widespread and that in some serious cases, patients die as a result of waiting lists for public health care," the Canadian Supreme Court ruled.
Naturally, health-care egalitarians predict dire consequences from the Pareto-improvement of allowing anyone to buy better care:
Creation of a private health-care system will benefit only wealthy people who can afford it, said Adam Natsheh, cochairman of the New Health Professionals Network, a lobby group that supports government-funded health care.
Better to have a system that benefits fewer people, Natsheh apparently thinks.
It takes all kinds...
Here's what Sgt. Shawn Tyler said transpired when he executed a traffic stop on Lanora Lucas:
Bad News for the Backstreet Boys?
The Backstreet Boys are offering two lawn/mezzanine tickets for every two reserved seat tickets you purchase for their upcoming tour. The pricing scheme is a multi-corporation collaboration, but I wonder if this is good news or bad news for the band? (Note: I do not listen to the Backstreet Boys, but I don't condone or condemn doing so. My little girl is blissfully unaware of BB and other boy bands.)
From the band:
"We're thrilled to be collaborating with Clear Channel Music Group and AOL with this fantastic promotion that's all about giving back to our fans who have always been loyal to us," the band said in a statement.
Hmmm..."giving back to the fans?" Weren't they doing that already through their "music"? The whole mutually beneficial trade thing seems to get lost in statements like this.
My immediate reaction was that the Backstreet Boys must be in trouble - or perhaps concerts in general? - and therefore the "four-for-two" pricing is a signal of weakness. On the other hand, the pricing scheme could work out for the band.
Mom and dad might buy tickets for the kids if they can go sit on the lawn while the daughter(s) go watch the show in the regular seats. Family "togetherness" is ensured but more importantly, perhaps, mom and dad feel a sense of safety - they didn't let their daughter go to a concert "alone." In the end, perhaps the band shifts demand using the "four-for-two" pricing rather than sliding down the demand curve.
‘litigate by day and copulate by night.'"
Continental Insurance denied enhanced benefits to an individual who had been hurt on a boat owned by one of its insureds. Stephen Gimopoulos had been cohabitating with the boat owner. Continental Insurance argued that he was a household member and therefore, according to the terms of the insurance contract only entitled to reduced benefits.
The majority on a Florida appeals court disagreed, which raised the ire of a dissenting Judge Hill
Noting that Gimopoulos had sued Roberts -- and that Roberts' counsel had advised her to "confess judgment" in that action -- in their efforts to extract money from the insurer, Hill quoted Holt v. Holt, 77 F2d 538, a 1935 appellate decision from the District of Columbia.
"In essence," he wrote, "they undertake to ‘litigate by day and copulate by night.'"
It appears that insurance companies must be more specific in their contracts as to who is a household member and who is not.
June 09, 2005
Howard Dean on Republicans Working
Howard Dean (as quoted by Larry Elder):
"[T]he idea that you have to wait on line for eight hours to cast your ballot. . . . You think people can work all day, and then pick up their kids at child care or wherever, and get home and . . . still manage to sandwich in an eight-hour vote? Well, Republicans, I guess," said Dean, "can do that, because a lot of them have never made an honest living in their lives."
Skeptical of Dean's suggestion that Democrats were more likely to be working than Republicans, I consulted a General Social Survey tabulation of the 2000 presidental vote vs. labor force status. (I don't claim this is the best possible data to test the Dean hypothesis, but it seemed reasonable and was readily accessible.) The findings: 54.2% of Repubs work full time vs. 48.7% for Dems. As for part time--11.1% of the elephants vs. 9.7% of the donkeys. Not big differences, but Dean is clearly wrong.
Now, note the words "honest living." I think it is safe to assume that Repubs are more likely to work in the private sector, and more likely to be--gasp--capitalists. Gov. Dean seems to be letting his anti-capitalist streak show.
Lest this post seem too Repub for some, here's Lew Rockwell's list of "Bush's Top Ten Economic Errors." Happy reading.
Hurricane Season is Here
"Researchers' methods may be complex and rigorous, but their results over the past six years -- at least for the total number of hurricanes -- haven't been much better than an educated guess. To evaluate the forecasts, I measured the average error for each one -- the difference each year between predicted hurricanes and the actual number. (Thanks to Iowa State statistics professor Philip Dixon and National Center for Atmospheric Research scientist Barbara Brown for advising me on this evaluation, and reader Paul Haskins for suggesting it.) I looked at forecasts made in May or earlier, before the start of hurricane season -- some researchers continue to update their predictions later in the year. It turns out that all four forecasts have missed by between 1.3 and 1.5 hurricanes each year. But a more simplistic method, a five-year moving average of hurricane counts, does just as well, missing by an average of 1.4 hurricanes each year. (To arrive at a five-year moving average, you simply add the counts for the previous five years and divide by five. For instance, to get a prediction for the number of hurricanes in 2000, I averaged the actual counts from 1995 through 1999. For 2001, I used counts from 1996 through 2000. I did this for each of the six years I evaluated.)"
Maybe people will lighten up on economic forecasting.
South Park Libertarians, Self-image department
Picture yourself -- create your own likeness -- as a South Park character!
Now if anybody can tell me how to save the image, I'd be grateful.
Hat tip: Suitably Flip.
Auto Industry Optimism
Alan Reynolds is; read why here.
I have an optimistic take but of a different sort--GM (and Ford to a lesser extent) is floundering but we're not hearing any serious calls for protectionism. What a change from the early 80s ...
June 08, 2005
De Gustibus: Beer Edition
Killer Grease Mungowitz doesn't like my choice in low-carb beer (Rolling Rock's Green Light)?
OK, I can live with that. De gustibus non est disputandum.
However, I have just tried Beck's new Premier Light and it is pretty darned good. None of this "de gustibus" crap. This stuff is objectively good. And at 64 calories I can drink two for every one Budweiser!
I've been tagged!
Former DoL blogger John Moser has tagged me (in the blogosphere's version of a chain letter) with the following questions:
1. How many books do I own? Looking around my office, I'd guess I'm looking at about 500 books plus about 100 at home. Too many of them are filled with numbers instead of words though.
2. What’s the last book I bought? The World Bank's World Development Indicators 2005. How pathetic is that?
Currently I'm re-reading Harry Potter and the Order of the Phoenix in anticipation of the July 16 release of Harry Potter and the Half-Blood Prince that Amazon.Com has promised me will be delivered to my door that very day.
4. What are the five books that mean the most to me?
Adam Smith's Wealth of Nations--still the best economist ever.
Who should I tag? Oh hell, I hate chain letters. But if any of the other DoLers want to take a shot at these questions, be my guest.
Schumpeter on the Tendency Toward a Competitive Equilibrium
Many theorists take the opposite view [that competive markets tend toward a competitive equilibrium] Let us assume that there is a certain number of retailers in a neighborhood who try to improve their relative position by service and "atmosphere" but avoid price competition and stick as to methods to the local tradition - a pricture of stagnating routine. As others drift into the trade that quasi-equilibrium is indeed upset, but in a manner that does not benefit their customers. The economic space around each of the shops having been narrowed, their owners will no longer be able to make a living and they will try to mend the case by raising prices in tacit agreement. This will further reduce their sales and so, by successive pyramiding, a situation will evolve in which increasing potential supply will be attended by increasing instead of decreasing prices and by decreasing instead of increasing sales.
Such cases do occur, and it is right and proper to work them out. But as a practical instances ususally given show, they are fringe-end cases to be found mainly in the sectors furthest removed from all that is most characteristic of capitalist activity. Moreover, they are transient by nature. Ini the case of retail trade the competition that matters arises not from additiional shops of the same type, but from the department store, the chain store, the mail-order house and the supermarket which are bound to destroy those pyramids sooner or later. *
* Joseph Schumpeter. 1942. Capitalism, Socialism and Democracy. New York: Harper & Row, 85.
A Different Take on Inequality
Jim Baker of Baseball Prospectus (no linkto article as it is premium content):
Perhaps you’ve been following the ongoing series that the New York Times is doing. They are discussing the concept of class in our so-called "classless" society. You can argue that no society that thinks getting barbed wire tattooed around one’s bicep is a good idea has any class, but that’s another story. *
Jim Baker, "Prospectus Matchups," June 7, 2005.
Posted by Joshua Hall at 07:51 AM
June 07, 2005
Sanity in New York?
This is big, and to me unexpected. The New York "state" panel that needed to vote unanimously to approve state funds for the Jets Stadium in Manhattan failed to do so!!
If a public stadium on Manhattan is truly dead, the savings to New York citizens would be substantial: $300 million in city money, $300 million in state money, and untold billions saved if NYC doesn't get the 2012 Olympics (which it seems Paris is likely to win). I will withhold my final victory dance for when the Jets announce that, like the Giants, they will pay for their own stadium.
Victories seem to be few and far between in the stadium mess - savor them when they occur, however shortlived they may be.
Perhaps You Should Look A Gift Horse in the Mouth
During these years, the fued between [Conn] Smythe [owner of the Toronto Maple Leafs] and [Art] Ross [owner of the Boston Bruins], who didn't speak to each other for twelve years, even at governors' meetings, reached epic proportions. At one point, Ross hired two longshoremen to rough up Smythe at a game. On another occasion, Smythe took out a large ad in a Boston paper mocking Ross. "If you're tired of what you've been looking at, come out tonight and see a decent team, the Toronto Maple Leafs play hockey," it stated.
The coup de grace came at a game in the Boston Garden. Smythe, ostensibly as a peace offering, had King Clancy skate across the ice in front of the crowd and present a bunch of roses to Art Ross, who had just recovered from a painful hemorrhoid operation. "Insert these up your you know where," read the attached card, written in Latin. Ross, who couldn't read Latin, nodded his thanks to Smythe and grandly passed the bouquet over to the matron of a powerful Boston family, who, unfortunately, could.*
* David Cruise and Alison Griffiths, Net Worth: Exploding the Myths of Pro Hockey, New York: Viking Penguin, 1991, p. 39.
Why my job application to Harvard was ignored
Daniel Klien - moving to George Mason - has some interesting comments on the market for PHDs in Economics. I haven't read the article in depth, but the pictures sure are interesting, including this one which relates the rank of the PHD program to the percentage of the faculty from the top 20% (worldwide) economics departments.
My Alma Mater is ranked 58. The faculty in Harvard's economics department has an average PHD rank of 2.93 (somewhere between Chicago and Penn).
HT: Chronicle of Higher Education
Sarbanes Oxley Causing Banks to Go Private
From today's AJC:
Walter G. Moeling IV, an Atlanta banking attorney who has followed the industry for 37 years, says that since January 2003 at least 41 banks across the country, including four in Georgia, have gone private or are in the process of doing so.
"They're going to their shareholders and saying, 'Look, our rules have changed, our costs have changed, and it's getting too expensive to stay public,' " said Moeling, who heads the financial institutions practice of Powell Goldstein LLP. "It's a great example of the unintended consequences."
Bush/Kerry College Grades
Well, well--dumb George made fewer Ds than smart John. Overall, their grade point averages were similar.
Story here; ht Drudge.
Of course, Bush and Kerry went to college before the heydey of grade inflation. For more see gradeinflation.com; scroll down for a chart of GPAs 1967-2002.
"A really cold case: Fulton tries to prosecute dead man"
The latest follies from the Fulton County (Atlanta):
"Jason Warner was killed last fall, but that didn't stop Fulton County prosecutors from bringing drug charges against the Atlanta man this spring."
San Diego Bound
I probably won't be blogging for a few days (not that I've been blogging up a storm lately anyway--this book revision is killing me!) as I'm going to San Diego for a Liberty Fund symposium on "Taxation, Economic Prosperity, and Distributive Justice." I'm looking forward to meeting a few people whose names I know but I haven't met including Lawrence Kotlikoff, Eric Mack, Edward McCaffery, and Joel Slemrod as well as seeing old friends such as my old teacher Richard Vedder.
After the symposium, I'm taking the time for a one-day hike in the Cuyamaca Rancho State Park and hope to bag 2 or 3 small mountains (the goal is Cuyamaca Peak, Middle Peak and Stonewall Peak.)
Speaking of San Diego, is there any job easier than a San Diego weatherman?
Ignoring Ice Cube's Dictum
As Ice Cube said in "Dopeman", "To be a dope man you must qualify/don't get high off your own supply."
According to economist Robert Fairlie:
Data from the NLSY [National Longitudinal Survey of Youth] indicate that 99.5% of drug dealers used marijuana or hard drugs at least once in 1980 compared to 48.9% of non-drug dealers. Furthermore, drug dealers are not simply occasional users, as nearly 87.6% used drugs 51 or more times.*
Robert W. Fairlie, "Drug Dealing and Legitimate Self-Employment," Journal of Labor Economics vol. 20, no. 3 (2002): 550.
These have been making the rounds, so here are the links.
Rapid color changer [not safe for epileptics (not a shot, I just don't know)?]
Don't tell the terrorists
But now you can make Wall size maps from Google Maps. Granted the images are two or three years old, but the general scheme of things doesn't change that fast.
How cool is that?
June 06, 2005
Happy Capitalism Day!
N.B.: I assume the date was in chosen in honor of the Great One's birthday in 1723.
An Argument for Private SS Accounts?
Police say granny, 80, ran prostitution ring
Do you want to pay less in cell phone taxes?
If yes, then all you have to do is "move" to Idaho.
[Hat tip: Todd]
If only we paid them more
Community college professor accused of stealing student IDs to secure store credit cards. The CNN.com article is pretty short (mainly because there isn't much editorial interjection), and I haven't tracked down any follow up stories.
However, I would be surprised if the salaries paid the community college teachers doesn't become an issue. The idea would be: pay them more and reduce their "need" to steal. As if community college teachers (a) aren't paid a decent wage for their efforts, or (b) could be dissuaded from stupid behavior by simply "paying them more."
Public Finance 101
Today's NCPA Daily Policy Digest on NJ's plastic surgery tax:
"The New Jersey law already is spurring a backlash. No one knows for sure how many New Jersey patients are declining surgery or are going out of state for treatment since the law was passed. The tax hasn't generated as much revenue as New Jersey originally hoped. When the tax was signed into law last June it was expected to generate $24 million this fiscal year. The state now thinks the tax will only generate $7 million this year."
Dang demand curves--they still slope downward.
Markets in metal houses: Historical preservation via eBay
Suppose you find yourself owning an oddball porcelain-on-steel manufactured house on a lot you’d like to redevelop. Have the house demolished? But who knows, to somebody out there it might be a collector’s item. Instead of paying to demolish it, maybe someone will pay you thousands to come take it off your lot. How to find out whether that someone is out there, and who it is? Put the house on eBay. That’s what Earl and Vickie Swederska in Webster Groves, Missouri did. The house sold for $4000, and buyer came to disassemble it last week. (Apparently there are die-hard fans of the “Lustron” metal houses manufactured in the 1940s.) Buyer gained, the Swederskas gained. One more bit of evidence that the best way to promote historic preservation is merely to lower the transaction costs that stand in the way of mutually beneficial transactions.
Josh Smoker a sophomore pitcher for GA state champion Calhoun HS had a 12-0 record and a--get this--0.09 ERA. That works out to 1 run allowed in 100 innings of pitching. His teammate Brodie Pullen was 12-1 with a 2.28 ERA, numbers that would be top most pitching staffs. Story here.
Oinky, Oinky, Oinky
Yesterday's Rome News-Tribune reports (sorry no link) that Floyd County (home of Rome and Berry College) will get $299,400 in homeland security funds from the state of GA. File this one away for next time the crowd under the gold dome in Atlanta start pleading poverty and pitching tax increases.
Markets in Everything--Sex-Offender-Free Subdivision
The developer of the Milwaukee Ridge subdivision in Lubbock TX is inserting covenants in its deeds to keep out sex offenders. Should an offender buy a house, the developer will have the legal right to repurchase the home at 85% of its appraised value. Details here--see bottom left of the screen.
Hat tip to MR for the Markets in Everything concept.
June 05, 2005
Pay my doctor more, but only if it costs me less
From Harris Interactive comes this poll result:
Support for pay-for-performance systemCan an insurance plan have fewer, higher-quality doctors and charge less across the board without reducing the number of folks covered?
Update: I know that it is theoretically possible to have higher-quality docs/care, charge less, and have the same number of people covered. I question whether it is likely in the second-best world which we face.
June 04, 2005
20% off at Barnes and Noble
June 03, 2005
No Smoking in Bollywood
The Indian government on Tuesday announced a ban on images of tobacco use from all Indian movies and television shows made after August 1. No smoking. Not even images of cigarette packs or billboards will be allowed. (No word about whether consumption of paan, the local betel-leaf concoction roughly equivalent to smokeless tobacco, can still be shown.)
What about foreign films? They've thought of that:
Foreign movies and serials, increasingly popular especially when dubbed into local Indian languages, will have the offending images electronically blurred.
What about older movies? Also covered:
cinemas will be obliged to flash up health warnings over any scene in which an actor from a film predating the ban is shown lighting up.
Leading Bollywood producers, directors, and actors are all protesting the ban. In addition to reasonable complaints about the loss of artistic freedom, we have this one:
Top actor and former censor board chief Anupam Kher said, "[…] Tomorrow, they can turn around and say don’t show guns in movies as it will encourage violence.’’
That’s right, “former censor board chief”. A bit ironic for him to make a slippery-slope argument, no? Indian films have since 1952 been subject to official censorship by the Central Board of Film Certification. The CBFC already restricts – though arbitrarily through a film-by-film screening process rather than through such explicit rules as the smoking ban – violence, sex, and profanity in Indian films. The smoking ban is one more piece of artistic freedom unfortunately lost. To be consistent, Bollywood figures who protest the smoking ban should also be calling for abolition of the CBFC.
[Hat tip: Ann Reed]
The euro and its issuer, the European Central Bank, are under attack these days, especially in Germany and Italy. Bloomberg reports that Stern Magazine reports that a German Finance Ministry report blames the euro for Germany’s economic stagnation:
The introduction of the euro has cost Germany its former advantage of lower financing costs, which partially explains why it's lagging behind the other euro members, the ministry said in the report, according to Stern.
According to the Chicago Sun-Times, Stern commissioned a recent poll in which a majority of Germans said they would rather still have the DMark than the euro. A common complaint, reported as fact by the Sun-Times:
The euro requires a one-size-fits-all interest rate policy set by the European Central Bank, meaning countries with lagging growth can no longer resort to rate cuts.
The usually sensible blogger Jane Galt has joined the piling-on:
There is some truth to the accusation. The ECB monetary policy is wildly inappropriate for Germany, which currently has low inflation and slow growth.
Meanwhile, Forbes reports that the Italian welfare minister Robert Maroni has suggested that Italy should consider at least temporarily readopting the lira:
In an interview with the daily La Repubblica, Maroni said the introduction of the euro has not been an adequate measure to tackle an economic slowdown and a decline in competitiveness in Italy.
Unfortunately, as much as I like criticism of central banks, these critics are attacking the ECB on specious grounds. They basically complain that the ECB isn’t inflating enough to promote growth in Germany and Italy. The critics have an entirely wishful notion of what expansionary monetary policy can do. A cheap-money policy simply can’t enhance sustainable growth, which depends instead on real factors like adoption of technological improvements, capital accumulation, and labor market flexibility. Cheap money from the central bank, by temporarily lowering real interest rates, can at most promote a temporary surge of unsustainable growth that lapses into later stagnation. Germany and Italy have stagnation first and foremost because of labor market inflexibilities that cheap money will do nothing to fix.
National Carbohydrate Day
Okay, better known as National Donut Day - Krispy Kreme's giving them away today.
When Krispy Kreme hit the Metroplex a couple of years ago you would have thought Texans had never seen a donut. This is not true because there are local donut shops all over the place. Nevertheless, there were people lining up at 5:00 in the morning to get hot donuts to take to work - de gustibus non est disputatum.
But there is something to watching the donuts on their journey at the Krispy Kreme.
Jesse Walker on Campaign '04
Six months after Election Day, campaign '04 feels a bit like that bourbon-fueled nighth you made out with the clerk in the next cubicle, or the summer you joined that self-improvement group that turned out to be a cult, or the year in junior high when you wore parachute pants everywhere and insisted against all evidence that you could breakdance. Mistakes were made. In retrospect, everyone involved looked a little foolish. The tactful thing to di is pretend it never happened.*
Jesse Walker, "'Values' and the Democrats," Reason (July 2005), 22.
Hazards of Smoking
The lawsuit alleges Pennsylvania man was injured when methane gas leaked into the toilet and ignited when he lit a cigarette.
KGrease, Kirznerian Entrepreneur?
Not really, but he does have an ability to help other entrepreneurs find their "errors."
June 02, 2005
Lie of the day
A New York State Supreme Court judge has thrown out Cablevision's lawsuit against the Metropolitan Transit Authority. The MTA sold the NFL Jets the land for a new stadium on Manhattan for $250 million when Cablevision offered $400 million. The MTA claimed it considered non-monetary concerns when determining who to sell to. Cablevision claimed the bidding process was rigged (it likely was) and was illegal.
Politicos in the Big Apple are excited because their hopes of being awarded the winner's-curse known as the 2012 Olympics are still alive.
From the judge came a true statement:
"An analysis of the MSG arguments and the MTA powers leads to the conclusion that the MTA did not act in an arbitrary and capricious manner," ruled state Supreme Court Judge Herman Cahn, according to the New York Daily News.
I agree that the MTA didn't act in an arbitrary fashion - it knew exactly who it was going to sell to all along.
However, the biggest lie is at the end of the story:
"It is a complete victory for the MTA, the Jets and the public," Claude Millman, a lawyer for the Jets, said in a statement..
I see only one "winner" in the mix and it's not the MTA and especially not the public.
Peter Drucker on Innovation
Entrepreneurs innovate. Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth. Innovation, indeed, creates a resource. Ther is no such thing as a "resource" until a man finds a use for something in nature and thus endows it with economic value. Until then, every plant is a weed and every mineral just another rock. Not much more than a century ago, neither mineral oil seeping out of the ground nor bauxite, the ore of aluminum, were resources. They were nuisances; both render the soil infertile. The penicillin mild was a pest, not a resource. Backteriologists went to great lengths to protect their bacterial cultures against contamination by it. Then in the 1920s, a London doctor, Alexander Fleming, realized that this "pest" was exactly the bacterial killer bacteriologists had been looking for-and the penicillin mild became a valuable resource.*
* Peter Drucker. 1985. Innovation and Entrepreneurship. New York: Harper & Row, 30.
The future of on-line mapping
Google maps and its satellite imagery is amazing. What's left to do?
The future might be 3-D rendering in Google Earth? Eventually rendered in real-time?
Forget about the government as big brother, perhaps we need to worry more about Google and Microsoft?
Mark A. R. Kleiman has noted my entry on how Justice Stevens temporarily had trouble with supply and demand analysis in an exchange with Randy Barnett during the medical marijuana case before the Supreme Court.
Stevens asked Barnett about the impact on the national price of illicit marijuana if California were allowed to legalize marijuana for prescribed medical use. Barnett reasonably supposed that the impact would be very small, but negative, as it would reduce demand in the illicit market. Kleiman says not so fast:
So if we take some of the demand out of the illicit marijuana market in a way producers in that market can predict, they will likely reduce the amount they produce. If we leave the enforcement effort constant, each remaining kilogram of pot faces more law enforcement. Thus we would expect the price of illicit pot to rise (trivially, as Barnett noted, because the proportion of total cannabis demand that is "medical," even under California's loose standards, is a small fraction of the total) as a result of removing medical demand from the market.
Kleiman’s analysis points to a subtlety of “other things equal” (ceteris paribus) reasoning in economics: it’s not always obvious what we should assume to be held constant. In the case at hand, Kleiman suggests we hold constant the total enforcement effort, so enforcement effort rises per kilogram of illicit pot. But I would have thought that one of the reasons Californians want to exempt medical marijuana is so they can spend less on busting pot users, not so they can raise the pressure on remaining illicit users. If enforcement is scaled back to hold constant the level of enforcement pressure on illicit growers, which I think is the more reasonable assumption, the price clearly wouldn’t go up.
Kleiman himself immediately adds that the price effect could also go the other way, if some other things aren’t constant:
(Of course, that's only a partial analysis. If having an exemption for medical pot made cases against people growing pot for the non-medical market harder to investigate and prosecute, the result might be to reduce the effective level of enforcement pressure. And if the existence of a large, open medical-cannabis market somehow increased demand for cannabis for non-medical use -- for example, by making the drug seem safer to potential users -- that might easily swamp any direct effect of removing patients' demand from the illicit market.)
Here he appeals to “knock-on effects” (mutatis mutandis reasoning). The guidelines for what are reasonable assumptions here are even vaguer. I can see why exempting some pot growers would make it more difficult to bust others – either the police would find a lot of their seizures of pot plants being overturned when the grower produced his prescription, or they’d have to investigate more thoroughly before seizing. That effect would reinforce the downward pressure on price in the illicit market. I don’t see any reason to suppose that an open medical cannabis market would increase demand by making dope seem safer to smoke – isn’t information on the lung and brain effects already known by potential users?
Gretzky as a "Shock"
Just finished Ken Dryden’s The Game and I can see why it has received so much acclaim over the years. It is as engaging as Ball Four and yet very different. Ball Four deals more with the day-to-day grind of what it is like to be a professional ballplayer. The Game does that, but it also delves much deeper into its respective game and the people who play it.
I was particularly struck by his analysis of how hockey has evolved over time. Consider his description of Gretzky’s influence on the game:
… For five seasons between 1982 and 1986, the Edmonton Oilers averaged four hundred and twenty-three goals a year, when no team in one season had ever scored four hundred goals before. Gretzky himself averaged two hundred and seven points, when no player in a single season had ever gone higher than one hundred and fifty-two. In the past defenders and teams had learned to devise strategies to stop opponents with the puck. Without the puck, that was interference. But now, if players without the puck skated just as hard, but faster, dodged and darted to open ice just as determinedly, but more effectively, as those with the puck, how did you shut them down? Goalies had learned to devise strategies to stop shooters with big slapshots coming down the wing. Wearing equipment that barely protected their bodies and left much of the net exposed, they couldn’t move far enough fast enough. So they moved out of their nets to cut down the angle, so they didn’t have to move at all. But now if that big slapshooter did not shoot, and instead passed the puck to a teammate across the ice, how did the goalie prepare to stop both? It took defenders, teams, and goalies some time to learn.
In economic terms, Gretzky was a “shock” – a disequilibrating force that goalies and defensemen were eventually able to respond to and return the game to something of a long-run steady state. As someone who grew up playing hockey during the Oilers heyday, this makes me sad, because you saw plays you rarely see anymore, such as end-to-end rushes by defensemen. Dryden’s analysis makes me realize how rare that was and how we are unlikely to ever see that again.
A Tough Decision To Make
Mark Crain, on the Center for Public Choice's move from Virginia Tech to GMU:
About a dozen devoted doctoral students, caught midstream in their graduate studies at Tech, case their lot with us, and transferred to George Mason's just-implemented Ph.D. program in economics.*
* Mark Crain, "The Long Run," in Celebrating 20 Years: 1983-2002, Center for Study of Public Choice.
More Google Maps
Bidding for the Nationals
This WaPo article details the bidding for Nationals, including a bid from George Soros. Most interesting to this Braves fan is the bid by Stan Kasten, former president of the Braves. I've heard that if his bid is successful, Kasten might look to hire some of his former Braves staffers, including some prominent front-officer personnel.
BTW, I still think the team should have been named the Rent-Seekers, Scandals, or Porkers.
Intro to Economics seems to remain one of the more often (popular?) courses taken at the undergraduate level. It is relatively more prominent among the more selective colleges. However, after a brief rise in popularity during the 1980s, it seems to have returned to its rank in the the 1970s. The 2005 edition of the Condition of Education has just been released.
The top 30 postsecondary courses completed by bachelor’s degree recipients who graduated from high school in 1992, by selectivity of institution awarding the bachelor’s degree, Introduction to Economics
The top 30 postsecondary courses completed by bachelor’s degree recipients who graduated from high school in 1972, 1982, and 1992, Introduction to Economics
The Anti-Wal-Mart Jihad Continues
From today's AJC:
Union organizers, lawmakers and community activists Wednesday accused retail giant Wal-Mart of failing to provide affordable health care coverage to its low-wage workers and leaving a $13 million-a-year bill for Georgia taxpayers.
"In state after state, Wal-Mart is directly shifting its health care costs and responsibilities to the taxpayers," said Steve Lomax, president of United Food and Commercial Workers Local 1996. "It's wrong, and it needs to stop."
I've dealth with this one before--see here.
And for today's F in economics we have this paragraph:
Richard Ray, president of Georgia State AFL-CIO, said many Wal-Mart employees earn $17,000 to $18,000 a year and can't afford to pay 10 percent of their salary for health care under the company plan.
If union busybodies succeed in mandating that Wal-Mart include "health care" as part of its compensation package those folks making $18k per year in cash would make less, probably about 10% less. Repeat after me, incidence depends on the elasticities of supply and demand ...
It's based on a Georgia Department of Community Health survey, showing 10,261 of the 166,000 children covered by Georgia's PeachCare for Kids health insurance in September 2002 had a parent working for Wal-Mart Stores — far more than the state's other large employers.
If unionists and "community activists" really care about workers (rather than sticking it to Wal-Mart) they'd actually encourage more employers to pay cash, offer few medical benefits, and have workers get health coverage from taxpayers (who are probably higher income and pay higher taxes than do Wal-Mart employees). That way workers would have $18k in pay plus medical coverage.
Hmmm... I wonder if I should start a Wal-Mart category. Maybe I should stop gnawing on this old bone.
Do as I Say, Not as I Do
"SAN FRANCISCO — Kirk Reynolds made just the kind of offensive guffaw he'd preached to the 49ers players about avoiding. San Francisco's well-liked public relations director is suddenly on his way out of the organization after producing a controversial in-house video meant to prepare players for dealing with the media.
It showed them exactly what not to do, all right.
The 15-minute film leaked to the San Francisco Chronicle features racist jokes, lesbian soft-porn and topless blondes — and even a scene of Reynolds impersonating San Francisco Mayor Gavin Newsom in the mayor's office."
Flat Tax Hypocrisy
This paragraph appears in the USA Today article quoting Prof. Gwartney:
"But Social Security can be a tough tax to dodge because it is a pure flat tax, skimmed off the top before deductions. It applies to all income earned for services rendered, so its reach is extremely broad, covering endorsements and bonuses."
This seems to suggest that applying a pure flat tax to wealthy folks incomes would be a good thing because it is a tough tax to dodge. How come we never hear this argument in discussions of switching from the current tax montrosity to a flat tax? If soak the rich types think making SS taxes difficult for wealthy to dodge then why shouldn't they make the same argument for reforming the income tax? Methinks the goal here is simply to raise or eliminate the SS earnings ceiling.
ADDENDUM: Nice posts Josh--the Mellencamp one is especially good.
Gwartney in USA Today
Reason's Matt Welch on Farm Subsidies:
More intriguing are the namesakes - and likely family members - of singer John Mellencamp, who co-founded the annual Farm Aid benefit concert 20 years ago because (as he recently told the Washington Post) the government was "running the small family farm...out of business." There are 34 Mellencamps in the Environmental Working Group's database, 12 of whom come from a single 20,000-resident town, Seymour, Indiana, which happens to be John Mellencamp's birthplace.
From 1995 to 2003, Seymour's Mellencamps received a whopping $1,297,247 in subsidies.*
* Matt Welch, "Welfare Queen," Reason (July 2005), 12.
June 01, 2005
Measuring Labor Market Flexibility
As a part of the Economic Freedom of the World project, I'm always on the lookout for ways to measure the severity of regulations.
In the area of labor market regulations, we've been using, among other things, some survey data from the World Economic Forum's Global Competitiveness Report (GCR). One question asks business executives whether "hiring and firing workers is (1 = impeded by regulations, 7 = flexibly determined by employers)".
Recently the World Bank has begun publishing its Doing Business In (DBI) reports in which they report a "Flexibity-of-hiring index" and a "Flexibility-of-firing index" based on a reading of the country's formal labor laws.
I wondered if the GCR data conformed with the DBI data since they both purport to measure the same thing.
In the GCR data higher numbers indicate more flexibility, while in the DBI data higher numbers indicate more rigidity (I used the average of the two DBI indexes), so we expect a negative correlation between the two series. The scattergram below shows the results. While the regression line slope is negative (and "statistically" significant) the overall fit of the regression is so poor that I'd conclude that these two measures don't really run together all that much.
This begs the question. Who should we believe? The business executives or the lawyers?
My money's on the business executives in the GCR survey.
N.B.: I have a paper out in the Journal of Labor Research about measuring labor market flexibility.
Back from St. Augustine and Ormond Beach, FL. St. Augustine is highly recommended, if you like old towns. Take the ghost tour and a digital camera with a flash.
Another Voice in the Summers Kerfuffle
"Take it from me, the daughter of an extreme feminist and the Harvard math chair who is going into science herself -- Harvard isn't to blame -- and women, just face it and get over it: human biology is sexist."
Full article here; hat tip Todd Zywicki.
The highlight of today's Rome News-Tribune--Sheldon Richman's take on base closings! RNT doesn't have the article online but it's available here.
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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