Division of Labour: August 2005 Archives
August 31, 2005
Other People's Money/Atlanta Gas Panic
I'm just back from an evening in Atlanta. I had the good fortune of being invited to join Andrew Cohen and his GA State U. students and colleagues for a showing and discussion of Other People's Money. It's a good flick for discussing corporate control issues (fiduciary duties of corporate boards and managers, hostile takeovers, etc.), but it has an ill-fitting sexual subplot. Thanks Andrew for your hospitality.
Today has been a wacky day in the Atlanta gas market. Apparently rumors that Katrina would make gas unavailable proked some panic buying and hiking gas prices above $5 at some stations. The AJC has details here (including the Governor's declaration of a state of emergency and imposition of temporary price caps), and a former student of mine reports that many stations in the suburb of Kennesaw were drained. Other than a 30 cent jump from the weekend (when, like co-blogger Craig, we filled both our cars' tanks) and a couple of closed stations, I saw little evidence of the supply disruption.
A remedy that might work
Pres. Bush says he will dip into the strategic petroleum reserve, but to what end? There is no shortage of crude oil on the market, and we do not lack the ability to get oil out of the ground or off of a ship. Rather, our limitations lie in our ability to refine the various formulations of gasoline that, in their infinite wisdom, the EPA and the environmentalists have deemed necessary.
There are a lot of people comparing the current pending shortage to the OPEC-induced oil crisis of the 1970s, but this is patently wrong. The current shortage is a refinery problem, not an oil-in-the-tanker problem. Others are suggesting that Bush impose price caps - after all so did another Republican, Richard Nixon - but this isn't the easy answer it appears to be (although it might be politically expedient).
I have people on the ground in Powder Springs where the next few days of gasoline supply for Atlanta will be coming from. I am trying to get in touch with them and find out what is going on. After the supply in the tanker field runs out, what then for 4 million plus people in Atlanta?
Over at Heavy Lifting I posted this picture a few days ago:
What do we see in this picture? Artificial constraints on the gasoline market which, when the nation faces severe shortages of refinery capacty, make very little sense. Reformulated gasoline, as a policy, is a luxury good that is easier ot pay for when the price of gasoline/oil is relatively low and the refinery capacity constraints do not bind. Now that we have binding refinery capacity constraints, the reformulation rules make no sense and should be suspended indefinitely.
While releasing the SPR might be a good political move, it will likely do little to the price of gasoline. Why? Released SPR doesn't help us with our refinery capacity. Lowering or suspending state fuel taxes will do nothing for the supply side of the market and will only slide us down the demand curve - greater quantity demanded with no increase in the quantity supplied will lead to greater pressures on price. Again, lowering state and federal fuel taxes doesn't help us with the refinery capacity.
A policy with a reasonably good chance of success would be for the president to pass an executive order suspending, indefinitely, the restrictions (in as much as possible) on transporting fuel across the reformulation boundries. I bet the folks in Atlanta would rather be able to drive with the gasoline approved for Dallas or Louisville instead of not being able to drive at all because of reformulated gasoline requirements. How about the folks in Denver, Seattle, Nashville, and so forth?
Allowing supply to adjust across state and city boundaries within the confines of the refinery capacity constraints is an easy to implement policy and would likely ease price increases. Reducing the number of different reformulations that must be created by the refineries seems a natural policy option - one much more likely to allow the market to adjust to Katrina than dipping into the SPR. Why is this policy option not even mentioned?
BTW, I seem to have been the only economist I know that took the time to fill up both of my vehicles on Sunday afternoon/evening. The Golf got 87 octane at $2.55 and the Benz got high-test at $2.75. Today, the Golf was refilled (4.3 gallons) for $2.89 per gallon and high-test running at $3.09 (Benz won't be due a refill for a month or so). I reckon I saved about $7.00 between the two vehicles - perhaps I value my time too high.
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Update: A little surfing on Google provided information on H.R. 1459 and H.R. 1493, introduced by Rep. Roy Blunt [R-MO] titled "To amend the Clean Air Act to reduce the proliferation of boutique fuels, and for other purposes."
From the text of the bill, now languishing (from what I can tell), in the Subcommittee on Energy and Air Quality:
...the Administrator under clause (i)
The rest of the bill goes on to water these waivers down, but does provide language for a study on boutique fuels. I give it up to Rep. Blunt for his foresight.
Perhaps there are a few people in Congress that are proactive after all.
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Don't wait to go bankrupt!
Remember the bankruptcy reform bill that Congress recently passed? I drove by a bankruptcy-and-divorce lawyer's office this morning that had a prominent sign out front: "Hurry! Bankruptcy law changing soon!"
Randy Barnett, Tory Guru?
The Observer reveals that British politician David Davis, considered a front-runner to take over leadership of the Conservative Party, has been favorably impressed by Volokh Conspirator Randy Barnett’s arguments for liberty and the rule of law. Although not the part about liberty to use cannabis.
Pet peeve: I wish newspapers would stop describing libertarian and classical-liberal views, like Barnett’s and the IEA’s, as “right wing” and “conservative”.
Hat Tip: Stephan Kirchner at Institutional Economics.
August 30, 2005
In 2004, the Academy of Economics and Finance held its annual meetings at the Grand Casino Biloxi. In 1996, the missus and I spent our honeymoon at the Fairmont in New Orleans (where last year's SEA meetings were held) and some time at the Grand Casino Biloxi.
Here is the Grand Casino sitting on the WRONG side of U.S. 90. The circular building to the right of the casino barge is, I believe, a Catholic church - which always struck me as somewhat humorous. There's nothing funny about this now.
Here's the interior of the hotel lobby:
Here's Treasure Bay which was right next door - I won about $350 playing Let it Ride here during the conference - pulled a straight flush.
Some slot machines - anyone guarding these from looters?
Anyone have pics or information about Jefferson Davis's house Beauvoir (pic here)? It is only two miles or so from the Biloxi Grand, so I assume that it is gone. Some might celebrate this fact, but the house and grounds were beautiful, which are characteristics exclusive of their previous owner.
Others will no doubt question whether cleaning up New Orleans is worth it. Given the current and near term damage, every house with more than a foot of water (and maybe less) will likely be a total loss, the Quarter will be unvistable for quite some time (at least for me, and I love the city), and cleanup won't change the underlying problems that the city is a) below sea level and b) in the path of potentially powerful hurricanes.
Today the allusions to the Lost City of Atlantis made on Sunday (which I panned to a certain extent) don't seem so far-fetched. However, I hope the city can recover - economists have a prediliction of going to New Orleans for conference - and it would be great if the city can figure out how to protect itself from this problem in the future (perhaps corruption has come home to roost?)
Oh Boo Hoo
The military transport plane carrying Senators Lugar and Obama is delayed three hours by Russian border police. International incident ensues. Russia apologizes. [Story.]
I meanwhile miss the last flight to Columbus from Boston last week in no small part because of the American border police. This causes me a 13 hour delay in getting home. Where's my freakin' apology?
If you can't beat them, join them
In a speech to the annual meeting of the Indian Banks’ Association, the government’s Finance Minister has criticized India’s public sector banks for being “consistently outperformed” by private sector banks.
If scolding doesn’t work, why not try creating the right incentives for better performance by privatizing the banks?
Here We Go Again
Just as every storm brings up the price gouging business, so too it gets ignorant people to reveal themselves via the broken window fallacy. From the WaPo (with a hat tip to Russ Roberts):
"There will be a lot of rebuilding that is going to need to occur. These things do spur GDP growth," said Ken Mayland, president of ClearView Economics in Pepper Pike, Ohio.
Repeat after Russ: Destruction is bad.
Tips, Service Charges and Taxes
It has been pointed out in previous posts that a tip belongs to the employee and a service charge belongs to the employer. If we view tips as a subsidy in a competitive market, then the entity receiving the payment is irrelevant. The distribution of benefits will depend upon the relative elasticity of the supply of labor and the demand for labor. However, the imposition of an income tax might favor one over the other. If it is more likely that service charges will be reported as income to the IRS than tips, then the after-tax income from tips is greater than the after-tax income from service charges. This may partly explain the waiter’s preference for tips. It is more likely that there will be an underreporting of tips than an underreporting of service charges.
On the other side of the market, underreporting can create problems for employers. See this discussion of United States v. Fior d’Italia, Inc.
August 29, 2005
Price Gouging Bad?
Politicians are again warning us not to engage in price gouging. There will probably be some followup heartbreak stories by the MSM. The best argument against such laws appears in an article by David N. Laband that appeared in the aftermath of Hurricane Hugo in 1989. It is currently available on an AIDS BBS. Why it is listed on this web site has always been a mystery to me. It could be used as an argument against setting price ceilings on drugs.
Update: The comments are open for any personal stories of price gouging. We always need new material for class.
Update 2: Craig wants a definition of price gouging. In Florida price gouging may be defined as charging an unconscionable price. The Florida statutes define an unconscionable price as follows:
2. The amount charged grossly exceeds the average price at which the same or similar commodity was readily obtainable in the trade area during the 30 days immediately prior to a declaration of a state of emergency, and the increase in the amount charged is not attributable to additional costs incurred in connection with the rental or sale of the commodity or rental or lease of any dwelling unit or self-storage facility, or national or international market trends
In other words, if the higher price generates economic profits it is price gouging.
Brits and the F-word
Two news items suggest that the Brits have an unusual affection for the f-word (the word, not the act):
1. A [British] secondary school is to allow pupils to swear at teachers - as long as they don't do so more than five times in a lesson. A running tally of how many times the f-word has been used will be kept on the board. If a class goes over the limit, they will be 'spoken' to at the end of the lesson. [link here]
2. An Austrian village called F***ing will not change its name despite sniggering Brits making off with its roadsigns. [link here]
ADDENDUM: Over the weekend, I finally started reading I Am Charlotte Simmons by Tom Wolfe (also a Washington and Lee grad). His riff on college students' f*** patois is must reading for Brits with an f-word fixation.
Altig on the Fed's influence
I should have mentioned this sooner (distracted by end-of-summer travel), but earlier this month Dave Altig at Macroblog offered a thoughtful comment on my article on the Fed’s research influence in the current issue of Econ Journal Watch.
One way the Fed influences research is hosting academic visitors at the Reserve Banks. Based on personal knowledge from his time as an economist at the Cleveland Fed, Altig names names of Fed visitors I missed by relying on incomplete publicly available lists. There may in fact be no editors at the JME or JMCB who have not been Fed visitors.
I argue in the article (following Milton Friedman and a few others) that researchers whom the Fed supports have a disincentive to question the institutional status quo. Altig worries that this argument may “overstate the homogeneity of views within the system”. I certainly grant (and noted in the article) that researchers at some of the Reserve Banks have expressed views on the conduct of monetary policy contrary to the dominant view of the Board of Governors. But heterogeneity within the system on how to conduct monetary policy is one thing. Heterogeneity on questioning the status quo structure of the system is another. That's the dog we don't hear barking.
All your gold are belong to us
In April 1933, using emergency powers granted by the Congress, President Franklin D. Roosevelt issued an executive order (you can see it here) commanding US citizens to surrender their gold coins and bullion to the Federal Reserve system. The Fed paid the then-official price of $20.67 in Federal Reserve notes per gold ounce. After collecting the gold, the US government devalued the dollar, declaring the gold worth $35 per ounce of gold, earning itself a tidy profit.
When I talk about this episode in class, and use the word “confiscation”, some students think I must be exaggerating the imperiousness of the US government. But read on.
The coins were to be melted and the gold sent to Fort Knox. Roosevelt's advisors apparently thought that the confiscation was necessary to allow the Fed to devalue the dollar against gold and thereby to allow it to re-inflate the economy – although other countries managed to devalue and inflate without confiscating gold.
Did all US citizens comply with the order? Nearly. According to CNN,
Only about 25 out of 445,500 [double eagles minted in 1933] are known to have survived destruction after the United States abandoned the gold standard in 1933 and ordered them melted down.
The news angle here involves a few coins that escaped melting:
Ten "Double Eagle" $20 coins minted in 1933 were discovered in September in a Philadelphia antiques and jewelry store and voluntarily handed by its owners, the Langbord family, to the Mint for authentication.
The Langbords now say they plan to sue to get the coins back. The coins have an estimated street value, based on numismatic rarity, of $1 million each. The Mint wants to put them in its museum.
CLARIFICATION: Since 1975, US citizens are again allowed to own gold coins, including pre-1933 US mintages. The 1933 mint-date double-eagles are a special case in that they were never officially issued. The Mint contends that any 1933 gold coins in private hands must have been filched.
APEE Essay Contest
Students! The Association of Private Enterprise Education announces:
More Fulton County Follies
From the county that prosecutes dead people and uses diminutive grandmothers to guard former football players accused of rape, we now have investigators looking into allegations against the Board of Tax Assessors:
• Collusion between appraisers and land agents to give certain commercial properties lower values.
• Scores of properties that should be taxed given tax-exempt status instead.
• Retaliation by appraisers against residents who appealed their assessments.
• Assessors overstepping their authority and meddling in the daily activities of the department.
The potential for this type of hanky panky is probably one reason that two dozen Georgia counties, including Fulton and Floyd (where I live), have adopted assessment freezes that tax houses at their purchase price.
Josh Hall and I are proud alumni of Ohio University, which was just named the #2 party school by the Princeton Review.
Josh's current grad school (WVU) came in 14th, while my grad school (FSU) has (inexplicably) been dropped from the top 20. Craig's UGA is on the list at 12th. Sorry Frank, Washington and Lee and NC St are nowhere to be seen this year.
Frank and Ernest on the Multiplier
You macro types should check out today's Frank and Ernest comic strip.
August 28, 2005
Comments on Fox News
I turn on Fox News to see what's happening and the only news in the world is that a hurricane is heading for New Orleans. Now, NO is one of my favorite cities - what with the Hotel Moteleone (killer hotel bar), Clover Grill, the Napolean House, Cafe du Monde, (for tourist watching), and more kick-butt restaurants and bars than you can visit, how can you go wrong?
However, Fox News (and I can only assume the other channels, although I don't watch them) reports that NO is "under seige" and runs banner headlines such as "walls and roofs of well-built houses may collapse" and "people and pets exposed to winds may die" and the such. This is not news!! This is hypothetical sky-is-falling rambling which is neither news worthy nor entertaining (at least to me).
The marginal cost to Fox for being "wrong" about their dire predictions is essentially zero. The marginal benefit for having hyped the hurricane for the entire weekend if the hurricane event is catastrophic must be pretty high - I suppose Fox could then claim in the future that they "were there."
The anchors have interviewed the requisite weatherman who will ride out the storm, but have also interviewed "experts" on electric power line repairs, cholera and West Nile virus (evidently there is potential for an epidemic), they have discussed the long lines to get into the Superdome (which haven't been clearly explained), the possibility that the entire city will be under twenty feet of water (allusions to the "Lost City of Atlantis" have been made more than once), and that too many people think the storm might miss NO and that is a shame.
Fox News now anticipates what will happen in the future, and reports such anticipations as news, even while it reports in real time what is happening and then reports on what happened in the past. News used to be past and present tense - primarily past tense. Now, news seems to be past, present, and future tense. The trend of pulling news from the future to the present is wearing on me, which is why I don't often watch cable news.
August 27, 2005
After all, only criminals use cash
The leader of Norway’s Business Security Council, Rasmus Woxholt, has recommended abolishing Norway’s largest-denomination banknote, the thousand-kroner note, worth about USD 155, as a way of “hitting” organized crime.
Cash is the goal and medium for everything from drug trafficking, to gambling to blackmail, Woxholt said, and raises the idea of limiting notes to small amounts, and even toys with the idea of replacing these with large, heavy coins.
And while we’re at it, let’s outlaw the fastest automobiles and powerboats. After all, criminals use them for getaways and smuggling.
August 26, 2005
First the Sox beat the Yankees...
...and now England appears capable of beating Australia after nearly twenty years of losses. With the first three Ashes (the name of the England/Australia series) tied 1-1-1, England has gotten off to a good start in the fourth five-day test. England scored 477 in its first innings whilst Australia has but 99 (after 5 wickets) in its first innings. Australia will need a very good showing tomorrow in the conclusion of its first innings if it is to avoid defeat (or another draw).
UPDATE: England in fact won the fourth Ashes test match today (Sunday) pulling ahead in the series 2-1-1. After forcing Australia to follow on, England needed only 129 runs in their second innings to win (though it took them 7 wickets to accomplish the task). Now England needs to force only a draw to win the series.
Confused? Go here for the rules.
GDP as political football?
This CBO Report, which I haven't read in its entirety, provides the following table of projections:
If this projection is at all accurate does GDP become less of an issue in future national political campaigns? JFK's arguments that the U.S. economy was in the garbage heap fell flat last time around. In the future, do the Dems and Repubs figure out that when the economy is 16 trillion dollars - 19 trillion dollars it will be harder to argue that the economy is in the "worst shape in fifty years" and so forth while keeping a straight face?
More Support for Public Choice Theory
An article in today's AJC runs counter to the "selfless public servant" notion. Some excerpts:
Nancy Hall, acting head of Georgia Public Broadcasting, drives a car with untraceable license plates — the kind intended for an undercover cop worried that a blown cover could cost a life.
Her state car is just one of about 6,000 vehicles in Georgia that have been issued the stealthy tags, many for no clear reason. When police check the numbers on the confidential plates, they get back either no information or a phony name and address....
A month ago, Revenue Commissioner Bart Graham inherited responsibility for the special tags from the now defunct Department of Motor Vehicles — and with it complaints that confidential tags have been issued to county commissioners and doled out to state department heads as perks.
"In some organizations, people get country club memberships," Graham said. "Apparently, in state government, if you are a department head, you got a confidential tag." ...
Some government officials may want a confidential tag because they believe it's "a free pass" that protects them from being ticketed or even stopped by police, Graham suggested.
Gwinnett County Sheriff Butch Conway said his officers don't view it that way. He said the only advantage he sees is that other motorists won't know if the driver who races past is a government employee.
"If they blow by you at 90 miles an hour and they don't have a government tag, then it's just another person," Conway said. "But if it's a government tag, it's likely somebody would take down the tag number and turn them in."
Hey, sheriff, taking down tag numbers and turning in the speeding officers would be a good thing.
Hmmm, maybe Buchanan and Tullock were onto something ...
Beloit Mindset List
Beloit College is out with its annual list of cultural experiences for entering college freshmen, most of whom were born in 1987. A few examples:
1. Andy Warhol, Liberace, Jackie Gleason, and Lee Marvin have always been dead.
I think at least one item on the list--number 58, they never saw Pat Sajak or Arsenio Hall host a late night television show--is incorrect. Didn't Bill Clinton play his sax on Aresenio Hall's show in 1992?
ADDENDUM: I think number 62--Tom Landry never coached the Cowboys--is also incorrect. Landry coached through the 1988 season; of course most toddlers wouldn't remember his coaching the Cowboys.
August 25, 2005
Hawaii Caps Gas Prices
Thanks Hawaii for another example of how politicians can screw things up.
From the Honolulu Star-Bulletin
The price caps represent the maximum cost at which wholesale gasoline can be sold in Hawaii. They are to be adjusted on a weekly basis to reflect changing market conditions in Los Angeles, New York and the U.S. Gulf Coast.
The retail price is not capped, so there will not be any long lines at the pump. If the cap is effective, it should reduce the quantity of gas supplied while also increasing price at the retail level. The spread between the wholesale price and the retail price should increase. What happens to profits at the retail level will depend on the price elasticity of demand. Assuming it is inelastic, profits should increase for retailers.
August 24, 2005
Tip or Service Charge? Part II
After my previous post on this subject, I received the following email from Gary Reed. He makes some really good points about the difference between a tip and a service charge. Thanks Gary
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Here is a link to the law which explain that service charges are the property of the employer.
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Government - the paragon of efficiency
From Page 7 of the Aug. 24, 1905 NYT comes this nugget to be filed in the "nothing ever changes" drawer:
The United Stated Government building at the Louisiana Purchase Exposition, erected at a cost of $500,000, has been sold to a wrecking company for $10,500. The steel trusses in the structure alone cost $100,000.
We are a much-governed people
From Aug. 24, 1905, NYT is a report of the twentieth annual American Bar Association meetings in Narragansett Pier, R.I. The key-note speech was given by president Henry St. George Tucker who had the following nuggets:
We are a much-governed people, and there is nothing which affects the American citizen, from infancy to the grave, awake or asleep, in motion or at rest, at home or abroad, in his personal, social, political, or property rights which is not the subject of regulation by the State.
Wow. What would poor Mr. St. George Tucker have to say about the society an additional hundred years of regulation and control has created?
What are the chances that any president of the ABA could give a speech containing these two paragraphs at a national ABA meeting without being booed off the stage and having his/her reputation and intentions dragged through the mud by the pundits and talking heads?
Why can't we have rhetoric such as this and not what we get today?
August 23, 2005
People are Stupid and Markets Don’t Work
That’s the attitude of this Republican administration. How else do you explain the new fuel economy standards? You are too stupid to buy a high mileage fuel efficient car and the auto producers are too stupid to respond to any increase in the demand for high mileage cars, so the government comes to our rescue by legislating standards. Without the government telling me what to do, I just might buy a muscle car or a V-8 to pull the boat. Thank god, they saved me from that stupidity. Better I should buy a Smart Car.
Congress is also thinking of changing daylight savings time. At the western end of the Eastern Time Zone that means we will have to go to work and school in the dark. Can’t Congress just legislate that the sun remain in the sky longer? Surely Congress has the power to do that.
Any other smart things the government has done lately?
That which is not mandatory will be banned
Said by a wise man. In Turkmenistan:
He [the president] has outlawed opera and ballet and railed against long hair and gold teeth, but now Turkmen President Saparmurat Niyazov is determined to wipe out another perceived scourge: lip synching.
Yep, that's the problem. The CIA World Factbook estimates the country's per-capita income of $5,700. Somehow I don't think banning lip synching is the silver bullet to development.
The Price System at Work
The California Exodus - UHaul-Style
Some high income earners are leaving California because of its punitive tax rates. Could low- and middle-income workers be leaving as well? One crude measure is to examine the one-way rental rates for U-Haul vans. Using U-Haul’s website, I queried a one-way rental for a 10-foot van for October 1st, 2005.
One-Way Trip Price
Corpse Display at Museum
Once again we see there's no accounting for tastes:
TAMPA, Fla. — More than 12,000 people came to the Museum of Science and Industry in the first four days of a controversial exhibit featuring preserved human cadavers and body parts, shattering previous attendance records.
Museum officials said "BODIES, the Exhibition," showcasing human bodies preserved and posed so visitors can see their inner workings, broke records set in December 2003 when artifacts from the Titanic were displayed.
And we have bad news for future corpse displays:
The Ghost of Julian Simon
Today's WSJ has an article on environmental economics. Unfortunately, there is no mention of property rights, PERC, or even moderate enviro think tanks like Resources for the Future.
On Saturday I ran the Reykjavik Marathon in 3:18:42 (7:35/mile pace), which is a new PR. The official results aren't up yet, but I think I was 30th out of 330 overall, 27th out of 258 among men, and 13th out of 54 among men 29-49. The time is still a bit off my necessary Boston Marathon qualification time (3:15), but close enough to make me happy.
One really cool thing is that the winners of the men's full and half marathon are brothers from Sweden AND the winners of the women's full and half marathon are sisters from Iceland.
August 22, 2005
Pink Locker Room
Iowa City, Ia. - You wonder what Bo Schembechler would say, assuming he regained consciousness.
The sole refuge is two waist-level drinking fountains, cold and silver, floating like pinballs on the head of a strawberry shake. Aside from that, the new visitors' locker room at Kinnick Stadium is Barbie's Dream House on acid, a pastel nightmare. You feel naked without a little dog in one arm and a handbag in the other.
Pink walls. Pink stalls. Pink seats. Pink ceiling. Pink carpet. Pink urinals.
Of course there's an Arizona sheriff who dresses prisoners in pink underwear and striped uniforms.
Hat tip: Southern Appeal
David Warsh on Blogs
In the course of another excellent column, David Warsh mentions DOL. Thanks!
Where the higher ed jobs will be?
The jobs do seem to follow the students, at least with a bit of a lag. From this year's Chronicle of Higher Education Almanac of Higher Education comes a few interesting tidbits. One interesting insight was this projection of the percentage increase in the number of high school graduates between now and 2015:
In my home state of Georgia, my targeted state of North Carolina, and where I am currently at, Texas, the future looks good.
August 21, 2005
Declining Teenage Summer Employment
The uncomfortable reality, as Andrew Sum sees it, is that there's a direct link between the steep national decline in teen employment rates and the growing practice of businesses hiring illegal immigrants and paying them off the books.
Sum is the director of the Center for Labor Market Studies at Northeastern University ...
That's not to say the sole reason teens are getting squeezed out is that businesses are breaking the rules, going underground and hiring unskilled immigrant labor.
It's always been the case that some high school kids might not get work because they are lazy, lack initiative, face racism, need contacts, don't have a car or can afford to do something else because they have rich parents.
Other empirical factors cited by Sum include recent reductions in government-sponsored employment programs and the ``age twist,'' the historically unprecedented influx of workers 55 and older into the job market, which may be a function of downsizing, forced retirements, spouses' having to work and the cost of health care.
Teens also face increased competition from 20- to 25-year-old college graduates who have been driven into less attractive jobs unrelated to their fields or who are vamping for time as retail clerks, waitresses and on-the-books construction workers.
My hunch--rising income has much more to do with declining teenage employment than illegals working off the books and all of the other pessimistic possibilities. I'd also suggest additional possibilities not included in the article--increasing college enrollment rates and structural changes over time (a smaller share of output in seasonal industries).
Prof. Sum seems to be a perpetual pessimist--here are his takes on 2003 and 2004. Interestingly, the 2003 blurb indicates that the National League of Cities commissioned the 2003 study. Interestingly, Prof. Sum's solutions include more spending on teen job programs. Coincidence?
ADDENDUM: Prof. Sum's hypothesis that illegals (and other factors) are crowding out domestic teens is testable by regressing state employment/pop rates on factors including estimates of the illegal population in each state. If I can endure BLS's awful website, I might revisit the topic.
My Berry College co-worker and biking buddy Aaron Jermundson has logged over 12,000 miles on his bike this year and ranks fifth in the BikeJournal.com rankings. Three other Rome riders are in the top 50. Yours truly is not logging miles and would be nowhere near the top 50.
Incentives Matter--Student Testing Edition
You could conclude from these exams that American high-schoolers are ill-taught and ill-prepared for the competitive global economy. But what if you look at these tests like a capitalist rather than an educator? Nothing is at stake for kids when they take the international exams and the NAEP. Students don't even learn how they scored. And that probably affects their performance. American teenagers, in other words, may not be stupid. It could be that when they have nothing to gain (or lose), they're lazy. ...
The dubiousness of these test results becomes clear when you compare them to the results of tests that actually do matter for teenagers: high-school exit exams and college boards. Nineteen states now require their students to pass assessments before they can don a cap and gown; seven others are testing students but not yet withholding diplomas. When states begin imposing penalties for failure, it makes a difference—sometimes a big one. Look at Texas: In 2004, results counted toward graduation for the first time, and pass rates on both the math and English portions of the test leapt almost 20 points.
Starr also reports that scores on the SAT and ACT--tests that have consequences--have increased over the last decade.
Hat tip: Wilson Mixon
August 20, 2005
From the Aug. 20, 1905 NYT is a report that Dr. Fred Wolle accepted the position of Chair of the Department of Music at California Berkley for $5000 per year.
According to Historical Economic Services:
In 2003, $5,000.00 from 1905 is worth:
Today's UCB chair of Music is one Bonnie Wade. I don't know what she is making, but Donald Lowe, who is the chair of music at the University of Georgia, is paid $119,985.00 according to this database.
I suppose it is possible that Dr. Wade is paid more than her counterpart in Athens, but I wager it is not anywhere near $605k. It seems that real wages in the music department haven't increased much over the past century. Does this mean that productivity hasn't improved in that area or is it that society doesn't value the music department any more (or perhaps less) than it did back then? What about in other disciplines on campus?
Annie Get Your Gun
Archie Bunker's solution to airline hyjackings was to give everyone a gun as they entered the plane. Using a similar approach the N.C. legislature has passed a law requiring that the courts provide battered spouses with information on obtaining a handgun. Good idea? If so, why not provide the same information to all victims of crime.
August 19, 2005
New London Strikes Back
The secondary effects of the SCOTUS ruling keep coming in.
So, not only do these homeowners get kicked off their property for no good reason, not only do they not receive just compensation, but they also owe several thousands of dollars in back rent.
An interview in Reason discusses the problem of senility among members of the Court, and whether there should be an age limit. Interestingly, the oldest is Stevens at 85, who is younger than the 87-year-old woman whom he helped get kicked out of her childhood New London home.
I've had a low profile for the past week or so because of a series of beginning of semester meetings (groan). As a way of reviving my brain cells following the meetings, I've been reading Jay Winik's splendid April 1865. (The book was published in 2001; my not reading it until 2005 reflects (1) I don't read enough, (2) I have a backlog of books I'm interested in reading, and (3) I generally avoid reading books when first published in order to guage whether my interest outlasts any initial buzz about the books.) John Miller offers a synopsis here; the usual from Amazon is here.
Cheap gas an issue in 1905?
Aug. 19, 1905, NYT reports that the governor of New York is taking a vacation to England, mainly because he wants to rest and the missus has hay fever (which at the time has no cure and a debated source). To be filed in the category of "things never change":
What the local Republican leaders wish is to have the State Gas Commission reduce the price of gas from $1 to 75 cents per thousand cubic feet. They understand that the people will not get the benefit of the reduction until after the law creating the State Gas Commission has been tested in the courts, but they believe that if the commission orders a 25 per cent reduction it will be good campaign material.
What isn't different between this scenario 100 years ago and today? It's August, the politicians are on vacation, gas (in 1905 used lighting and heat) is relatively more expensive than it recently has been, politicians want to be seen as doing something, the politicians know that whatever they do is likely to have no short term effect, politicians want to make a campaign issue out of high gas prices.
Gee, that could have come out of today's paper.
We've come a long way
This one is making the rounds. A board game from the sixties promoting various careers for young girls.
More evidence of how far we have come in such a short time.
Yet another GM hack
Whereis tells you where a particular server is on a Google map.
DOL is "located" in Jacksonville, FL, home of the World's Largest Outdoor Cocktail Party - good onya.
Other sites of interest:
NFL.com - Cary, NC
www.whitehouse.gov - Bern, Switzerland?
August 18, 2005
What Price Excess Demand?
Is this how a black market begins? This was posted before the ibook stampede.
I would love to be able to get one or more of these iBooks! I am a young student in California that is simply looking for a good notebook for taking notes in class and whatnot next year, so if anyone is willing to pick me up one, I would be willing to foot the cost for both the iBook ($50) and an additional $200.00 to anyone just for getting me said iBook!
Please get in contact with me ASAP if you would be willing to help me out!
Thank you so much,
Excess demand and iBooks
In re: Larry's post about the stampede for $50 iBooks, it might have been much worse. The techno-blogosphere had picked up on the deal a few weeks ago and there were threats of a massive turnout of people from all over the country. The Henrico county officials decided that the iBooks were intended only for county residents and made it clear what identification was required to prove residence.
All of this likely indicates that county officials were concerned about bridging the digital divide for locals and not for outsiders. Unfortunately, the officials were wedded to the idea that pricing below equilibrium is somehow more "fair".
Evidence of what?
Aug. 18, 1905, Page 7 of the New York Times brings the following story (repeated here in its entirety):
OSWEGO, N.Y. - Boatmen gathering driftwood in Lake Ontario today discovered the headless body of a three-year-old girl near Four Miles Point. The body was wrapped in an old dress and placed in a sack.It remains to be "seen" whether this story will generate more headlines, investigatory reporting, and so forth in the next few days. However limited the information at the time, you would have thought the story would merit more than four lines in the NYT.
Alternatively, we know what would happen in today's environment - sales tax revenue in Oswego would increase dramatically as the media converged. Stories about how many headless three year olds are found each year, that this year the number is down/up dramatically, the psychological significance of the finding, the agrieved parents, the local minister, etc.
I wonder if this is evidence that we value life significantly higher in today's U.S., which we obviously do but is it a cause of such media coverage, evidence of fewer pressing issues of national concern (which I don't think is true), or a symptom of our twenty four hour news cycle.
What is the appropriate balance to a news story such as this - what the NYT did 100 years ago or what we would see today? Something to mull over.
(Update: In today's Star Telegram is a short story about a decomposing body found near a highschool. On the web, the story is three paragraphs, 74 words)
Electronic Commerce Limits Price Discrimination
The GAO just released a report on college textbooks “Enhanced Offerings Appear to Drive Recent Price Increases.” Textbook publishers often practice international price discrimination, charging lower prices in overseas markets. The ability to access these markets on the Internet may limit their ability to segment the market and engage in price discrimination.
U.S. college textbook prices may exceed prices in other countries because prices reflect market conditions found in each country, such as the willingness and ability of students to purchase the textbook. While geographical barriers have historically limited the reentry of textbooks intended for international distribution back into the United States, known as reimportation, recent advances in electronic commerce have broken down this barrier. In response to concerns that the international availability of less expensive textbooks might negatively affect textbook sales, publishers have taken steps to limit large-scale textbook reimportation.
Some publishers also said they have made an agreement with an online retailer outside the United States to limit the number of copies of a given textbook that can be delivered to a single U.S. address in one order. Because these measures target large-scale reimportation of U.S. textbooks from international sources at lower prices, they will not prevent U.S. students from purchasing single copies of textbooks from international sources.
August 17, 2005
It looks like the NCAA may be backing down from its plan to ban FSU from using the Seminoles name and mascot. It turns out the NCAA based its decision, in part at least, on the basis of complaints made by one cranky member of the Oklahoma Seminole Tribe Council. The problem is that the very same tribal council had voted 18-2 not to oppose the use of the tribal name by FSU. (The Florida Seminole Tribe is solidly behind the university.) Here's the story. [Link via The Sports Economist]
First evolution, next intelligent design, and now this....
The world was created by the Flying Spaghetti Monster.
More on "doing nothing"
Taken out of context, this quote could imply that Smith looked kindly upon people who ignored others. But this is a wrong interpretation. There are many virtues besides justice. In this section on justice, Smith indicates that leaving each other alone will usually satisfy all the conditions of justice. But other virtues such as beneficence exist which do require us to do things for others. Thus Smith is contrasting negative virtues, like justice, that require no action with positive virtues, like beneficence, that do require action.
"Doing nothing" harmful toward others may be enough to satisfy Smith's principle of justice (or a modern libertarian's principle of the free society), but few of us would look kindly on a person who only did nothing to harm others. Most of us, and Smith too, look favorably upon people who not only refrain from hurting others but who also actively engage in actions that help others.
Gee, we never anticipated excess demand ...
More evidence that competition dissipates rents:
The violent stampede erupted Tuesday when thousands showed up at the Richmond International Raceway to purchase $50 used laptops. The Henrico County school system was selling 1,000 of the 4-year-old Apple iBooks to county residents. New iBooks cost between $999 and $1,299.
Maybe next time they'll try auctioning off their surplus equipment. Or was the idea to maximize votes rather than sales revenue?
August 16, 2005
Venezuela Threatens Oil Shut-off!!
We are supposed to get upset and frightened when some petty dictator threatens us with an oil embargo. The MSM tells me so.
However, I really know better. Oil is a fungible good. If oil producers try to sell it anywhere in the world it will be resold to us, and any side payment is likely to be kept down by those willing to engage in illegal sales. Just look at the Oil for Food Program. Apparently, you can buy a top UN diplomat for a few thousand dollars. Saddam was able to get his oil out by paying only pennies on the dollar to greedy middlemen.
We seem to forget that these pissant potentates who had the luck to be born on a barrel of oil need us as much as we pretend we need them. Their lavish lifestyle and their lack of true economic development leave them totally dependent on oil revenues. If they cut off the sale of oil, their regimes would fall before the gas tank on my SUV reads empty.
PPP v. Exchange Rates
As previously mentioned, we found the prices in the U.K. to be unbelievably high--far worse even than New York. A regular hamburger at TGIF for example cost about 8 pounds or about $16. This led us wonder if the Brits simply made more money in pounds to compensate for the higher prices or if they were just poorer in real terms. Answer: they're poorer.
According IMF data, the GDP per capita of the U.K. in 2004 was 19,508 pounds or $35,247 using today's exchange rate. This is just 6% less than the U.S.'s GDP per capita for the same year.
But if the comparison is done using purchasing power parity rates of exchange that account for differences in prices, then the U.K. doesn't look so good. Using World Bank data for 2003 (the latest I had available) the U.K.'s GDP per capita was $27,147 (in ppp dollars) compared to the U.S.'s GDP per capita of $37,562. This shows the GDP per capita in the U.K. to be 28% lower than in the U.S. after adjusting for the higher prices in the U.K.
So where am I off to next? I leave for the Mont Pelerin Society meeting in Iceland on Thursday. According to the Economist's Big Mac Index the Icelandic currency is the most overvalued currency relative to the dollar in the world. A Big Mac will set you back over $6 in Iceland. Yikes!
Adam Smith on the virtue of "doing nothing"
A friend recently reminded of this choice quote from Smith in The Theory of Moral Sentiments (II.II.9):
Mere justice is, upon most occasions, but a negative virtue, and only hinders us from hurting our neighbour. The man who barely abstains from violating either the person, or the estate, or the reputation of his neighbours, has surely very little positive merit. He fulfils, however, all the rules of what is peculiarly called justice, and does every thing which his equals can with propriety force him to do, or which they can punish him for not doing. We may often fulfil all the rules of justice by sitting still and doing nothing.
August 15, 2005
One day ten years ago...
August 15, 1995, the Business school at UGA, Brooks Hall, catches on fire. Fellow blogger Larry White might remember the aftermath, if not the day. Interestingly, there is no mention of the anniversary at UGA Today or at the Red and Black student newspaper.
A scan of an article that featured me in the Fall 1996 Report of the President (sorry no on-line version). More over at Heavy Lifting.
Autism and types of mind
Arnold Kling over at EconLog caught my eye with an entry yesterday entitled “Economics and Autism” because (1) I’m an economist and (2) I have two sons with autism. Kling links to a recent op-ed piece by Simon Baron-Cohen on findings about the relationships among autism, male-female differences, and genetics.
Baron-Cohen reports on questionnaire research that has found a higher percentage of men than women to fit an approach-to-the-world type he calls “systematizers” (54% vs. 17%). Men are correspondingly less often “empathisizers” (17% vs. 44%). Autism, he proposes, is symptomatic of an extreme systematizer-type brain with “an unusually low drive to empathize”.
I have no doubt that this captures something true and important about high-functioning individuals with Asperger syndrome (a relatively mild version of autism that shades into socially awkward nerdiness), and particularly those who have the “splinter skills” that are typically systematizing (e.g. Rain Man’s mathematical skills) rather than empathetic. I am doubtful that it explains much of importance about individuals at the other end of the spectrum, e.g. those who never learn to talk. It doesn’t seem to explain the association of autism with developmental disability.
Of course, my authority to speak about autism is no greater than Baron-Cohen’s to speak about economics supposing he had been trying for years to understand his economist son.
The part of Baron-Cohen’s findings that really surprised me, though, was that “autism is the genetic result of ‘assortative mating’ between parents who are both strong systemizers.” That is, his research finds that not only are fathers of autistic children more likely than others to think like engineers, but so are their mothers. I'm not surprised at the idea that autism has a genetic component, or that engineering-type careers are correlated with carrying the gene (we all know the engineer stereotype), but at the finding that mothers of autistic children have more "engineer-like" minds than other mothers. I wouldn't have made that generalization from the support-group mothers I knew in Athens, GA. They were highly empathetic -- but that's what the support group was for, so maybe it was a matter of self-selection? -- and not observably "systematizer" types.
Simon Baron-Cohen is, by the way, a cousin of Sacha Baron-Cohen, the comedian known for playing the clueless fictional reporter Ali G.
Tip or Service Charge?
The NYT reports that some upscale restaurants are considering replacing voluntary tips with a service charge. Some of that service charge may be diverted to the kitchen staff, which doesn’t please the waiters.
Messing with the system of tips may not be worth the trouble. Diners like to have some control over their service. Having worked my way through college as a waiter at a good restaurant, I realize that the tip paid to the waiter is only the tip of the iceberg. That initial tip paid the waiter may support an underlying system of market arrangements, or what others might call extortion. It creates a system of naturally evolved incentives and disincentives that efficiently deliver food from the kitchen to the diner’s table. The tip paid the waiter may be used by the waiter to tip others. Want your food hot and cooked in a timely manner? Better tip the person in the kitchen who has control over that. Want your tables clean and the bread and water attended to? Better tip the busboy. Want to serve the tables where the big spenders sit? Better tip the maitre d’.
2005 Cost-of-Doing-Business Index
The Milken Institute just released their estimates of the cost of doing business for 2005 by state.
Generally, the states with the higher cost of doing business are those with higher population density, New York and California. Others, such as Hawaii and Alaska have higher costs because of their location. What the index doesn't capture are the advantages from being close to your market. Therefore, high density states, especially in a period of rising energy prices, may have a comparative advantage that is not reflected in this index.
August 14, 2005
NYT 100 years ago
On the front page of the NYT from Aug. 14, 1905 is a short story that provides a good example of negotiating with incomplete information. A man was run over by an automobile, rendered unconscious, taken to the hospital, and later given a clean bill of health by the doctors.
The victim and the auto driver discussed terms and the victim
agreed to accept $2 as a balm for his hurts.
I went over to Economic History Services to get a feel for what what $2 from 1905 would be worth.
Here was their breakdown:
In 2003, $2.00 from 1905 is worth:
Interesting juxtaposition to what seems to be standard operating procedure these days.
Other (select) headlines from the front page:
Nominee for a social Darwinism award reported on page 7: James Rogers dies of a broken spine after diving from a springboard into a pool of water that turned out to be only one foot deep. Oops.
More London Blogging
After spending a couple weeks here so close to the bombings of 7/7 and 7/21, I can say the locals are still pretty much on edge. A funny case in point, yesterday on the tube we heard a very loud "pop" at the end of the coach. I can tell you that that coach went quiet in a second and every head turn at once. You could feel the tension. As it turns out it was just some unlucky soul's champagne cork that had unexpectedly popped in her bag. After some nervous laughter--"It's not a bomb I promise!"-- she proceeded to pass the bottle around. :-)
I fancy myself a pretty solid civil libertarian but I have to say I am rather comforted by the abundance of CCTV cameras around town.
Back to the good ol' U S of A tomorrow. What do I miss most about home when I travel? Good mexican food. Go figure.
They do have great restaurants here but with a 10 year old in tow and trying to keep on a budget we mostly hit cheaper chain joints and I hate to say it but the American chains offer the best values (TGIF, Pizza Hut). I did manage to get some fine fish n chips on the Brighton Pier and a great traditional meat pie at a stand in a market in Oxford. If you have no budget constraint and want to go out for some American food, try the Big Easy in Chelsea. Excellent grub.
August 13, 2005
Who should follow Greenspan?
The Wall St. Journal surveyed 56 “economists” (i.e., economic forecasters) last week, and after asking their predictions on interest rates and the like, asked which of five candidates they’d like to see succeed Alan Greenspan. Results:
Economists were divided on the question of whom they would prefer succeed Mr. Greenspan, who is expected to retire from the Fed early next year. Ben Bernanke, a former Fed governor and current chairman of President Bush's Council of Economic Advisors, drew the support of 30% of the economists, while Martin Feldstein, president of the National Bureau of Economic Research, and Fed governor Donald Kohn each received the backing of 15% of the group. Former White House economic advisor and Columbia University professor Glenn Hubbard and Clinton administration Treasury Secretary Robert Rubin each were selected by 11% of the group.
Loose-money supply-siders aren’t keen on Bernanke, however, judging by John Tamny’s piece in National Review Online. I say “loose money” because Tamny frets that Bernanke thinks like Greenspan, whose “unnecessary preoccupation with GDP growth ‘in excess of trends of potential’ led to his mistaken 1999 decision to tighten (by way of repeated hikes of the fed funds rate) despite the fact that bond yields, the dollar, and gold were screaming deflation rather than inflation.” Really? And did this tightening then plunge us into deflation? I must have missed it.
Tamny calls Bernanke a Keynesian, based on not much more than thinking that the only two schools of thought are Supply-siders and Keynesians. In truth Bernanke is an advocate of inflation-rate targeting, in the relatively weak form of an explicit guideline (for discretion) rather than a (fully specified) rule for monetary policy. Analytically he's a mainstream macroeconomist, which means neither an old-style "money doesn't matter" Keynesian nor an old-style "replace the Fed with a computer program" Monetarist (of which few remain -- even Milton Friedman has kind words for inflation targeting these days).
[…] a June New York Times article noted Bernanke’s belief that the gold standard made the Great Depression worse. Plus, in a 2002 speech, he lauded the ability of the government to use the printing press to “generate higher spending and hence positive inflation.”
Bernanke’s belief about the gold standard is, sad to say, the modern orthodoxy; for a dissenting view see Richard Timberlake in the current Econ Journal Watch. Alan Greenspan has always had kind words to say about the gold standard, but he hasn’t moved us any closer to it. Bernanke “lauded” the government’s ability to inflate in the sense that he thinks deflation is bad – but so does Tamny! They should both read up on George Selgin’s case for a falling price level in a growing economy.
By the way, my dinner companions and I happened to stop into an Indian restaurant in DC on Sunday night, and who was at the next table but … Ben Bernanke. Honestly. I didn’t talk to him, but I can reveal that he was drinking Perrier and eating gulab jamun for desert. Further details are off the record.
August 12, 2005
Who said it?
"It may well be that we shall find that the only effective way of exercising this supervision is to require all corporations engaged in inter-State commerce, to produce proof satisfactory, say, to the Department of Commerce, that they are not parties to any contract or combination or engaged in any monopoly in inter-State trade in violation of the anti-trust law, and that their conduct on certain other specified points is proper; and, moreover, that these corporations shall agree, with a penalty of forfeiture of their right to engage in such commerce, to furnish any evidence of any kind as to their trade between the States whenever so required by the Department of Commerce."Sounds like a recipe for heavy regulation of commerce - perhaps prohibitively intrusive? Is the rhetoric from today's or yesterday's anti-big-business crowd?
It wasn't offered by Cynthia McKinney or Henry Waxman. Rather, this was part of a speech given by Teddy Roosevelt on August 11, 1905, in Chautauqua, New York. Because there was no radio or television, the NY Times report was thirty percent reporting and seventy percent replication of the speech, which is somewhat refreshing in itself. Early in the story it is reported that "...at the request of the President, "Dixie" was sung amid immense enthusiasm." Oh, how times have changed.
Also on the front page from that day, a brief story about a lynching in Sulphur Springs, Texas, about 100 miles from Arlington. That's a bit sobering, to say the least.
Other headlines on the front page: "Trusts must submit to law - Roosevelt" (antitrust law and Monroe Doctrine), "Hurt in Park Runaway" (Horses startled by an automobile), "Girl From a Cab Shot in Riverside Drive" (woman from Syracuse shot and dying), "No indemity, Witte's Answer" (concerning the peace terms between Russia and Japan), "President Acts on Boycott" (concerning China's threatened boycott of U.S. goods), "Chaeffeur goes to prison" (vehicular homicide in Philadelphia).
It all sounds too familiar, but will be an interesting way to learn more history.
Adam Smith, 1723-1790
August 11, 2005
New fronteiras in bank robbery
Over the weekend, in a Mission-Impossible-style heist,
A GANG in Brazil has pulled off one of history’s biggest bank robberies after tunnelling into the vault of a central bank building and making off with an estimated £38m.
The haul was 156 million Brazilian reais, or US$68m. Detailed news account here.
Unlike December’s £26m heist at the Northern Bank in Belfast previously noted here and here, after which the private Northern Bank effectively cancelled its own unissued banknotes that had been stolen, the Central Bank of Brazil faces a tough task recovering the loot:
The money taken had been withdrawn from circulation for testing and the bank planned to destroy notes in poor condition and put the rest back into circulation. Made up of used, non- sequential and commonly accepted banknotes, the robbers’ haul is virtually untraceable.
Today two individuals were apprehended, but
It was not clear whether they had any involvement in the robbery or just transported the cars [which had been purchased with stolen cash].
Russia to issue pumped-up currency notes
The Russian government has announced plans to introduce a new higher denomination banknote, 5000 roubles, next year. According to news agency ITAR-TASS, a government minister immediately denied that the need for a new larger note was due to a rising inflation rate:
“I don’t think that the issuing of such a banknote makes it possible to judge about the inflation rate,” German Gref, the Russian minister of economic development, told reporters. He said the difference in the inflation rate of 9 and 11 per cent is “meagre.”
Strictly speaking, Gref is telling the truth – it isn’t a higher inflation rate that calls for a larger-denomination banknote, it’s a higher price level. Russia actually has a rule that indexes the largest banknote denomination to nominal wages:
Georgy Luntovsky, the first deputy chairman of the Bank of Russia, […] noted that under the rules of the monetary circulation, the banknote with the highest denomination must be equal to half of the average wage. The average monthly wage in Russia is 8,000 roubles, and, according to the forecasts of the Ministry of Economic Development, this index may reach 10,000 roubles by the end of 2005, so “there exist objective reasons for issuing the new banknote,” Luntovsky said.
The unstated motive here is seigniorage, the profit the Russian government makes from issuing currency notes. At today’s exchange rate, the largest of the current rouble notes, RUB1000, is worth only about US$35. Russia is a cash-intensive economy where the US$100 bill is popular. Carrying RUB1000 notes is three times as bulky as carrying US$100 bills, putting the rouble at a disadvantage in competing with the US dollar for seigniorage.
Ben, Ben, Ben...
From the August 9 press conference that Al Hubbard and Ben Bernanke held in Crawford Texas comes this quote:
CHAIRMAN BERNANKE: Well, I mean, I'm an economist, I talk in statistics.
I winced when I read that statement and I am an emprical economist. We should, as a field, be talking more economics and less statistics - especially when the average person is listening.
Sadly, This Is No Surprise
"The federal government used hurricane aid money to pay funeral expenses for at least 203 Floridians whose deaths were not caused by last year's storms, the state's coroners have concluded.
The deaths include a Palm Beach Gardens millionaire recovering from heart surgery who died two days before Hurricane Frances; a Miami baby not yet born when the storm arrived; and a Port Charlotte man who died of cirrhosis and heart failure five months after Hurricane Charley."
Full story here.
August 10, 2005
When in doubt, please ask?
Don't know where this is from (perhaps not suitable for work), but it's funny.
Tort Reform Saves Lives
That's the finding of a new paper by Paul Rubin and Joanna Shepherd. The abstract:
Theory suggests that tort reform could have either of two impacts on accidents. First, reforms could increase accidents as tortfeasors internalize less of the costs of externalities, and thus, have less incentive to reduce the risk of accidents. Second, tort reforms could decrease accidents as lower expected liability costs result in lower prices, enabling consumers to buy more risk-reducing products such as medicines, safety equipment, and medical services. We test which effect dominates by examining the effect of tort reforms on non-motor vehicle accidental death rates, using panel data techniques. We find that caps on noneconomic damages, caps on punitive damages, a higher evidence standard for punitive damages, product liability reform, and prejudgment interest reform lead to fewer accidental deaths, while reforms to the collateral source rule lead to increased deaths. Overall, the tort reforms in the states between 1981-2000 have led to an estimated 14,222 fewer accidental deaths.
A good question for Paul Krugman
If, as you assert in your column, the French earn less than Americans because they want to, can't it also be true that women might earn less than men because of an innate preference?
Hat tip: Tim Worstall.
The Kamehameha Schools case
May a private, nonsectarian, commercially operated school, which receives no federal funds, purposefully exclude a student qualified for admission solely because he is not of pure or part aboriginal blood?
So asked Judge Bybee in his majority opinion in Doe v. Kamehameha Schools. In a 2-1 decision handed down last week, a panel of the 9th Circuit Court of Appeals said no, the school may not exclude students on grounds of ancestry. The schools are appealing the decision. The Kamehameha Schools were established with a bequest from the Hawaiian Princess Bernice Pauahi Paki Bishop (1831-1884).
Some 15,000 Hawaiians took to the streets of Honolulu on Saturday to protest the decision. Governor Linda Lingle was among the speakers denouncing the court decision.
I personally don’t like the idea of race- or ancestry-based admissions, no matter which way the preferences cut, but hey, it’s not my school. Seems to me that admission policy should be totally at the discretion of the owners or trustees of any privately funded school.
I hope some of the bright lawyers at the Volokh Conspiracy will weigh in on the legal issues involved in this case.
An interesting sidenote I haven’t seen mentioned elsewhere: the founding trust documents for the Kamehameha Schools – the wills and codicils of Bernice Pauahi Paki Bishop -- are available online. The will does not specify admissions preference for students of Hawaiian ancestry. But it does specify that school faculty must be Protestants:
I also direct that the teachers of said schools shall forever be persons of the Protestant religion, but I do not intend that the choice should be restricted to persons of any particular sect of Protestants.
I can’t find any information on the schools' site as to whether the trustees still carry out or defend that preference.
Comments are open.
Grumbling in Hollywood
Here in the States, Hollywood has been grumbling because of the flat or falling year-over-year earnings at the boxoffice. There are plenty of excuses for why people aren't going to the movies as much as they once did, including DVDs, pirating, video games, and alternative uses of scarce time. Such concerns were also voiced about television and radio. From what I have seen, not too many people have admitted that remaking Herbie, the Bad News Bears, and the Longest Yard is not likely to set everybody agog.
Here's a quick and dirty picture of year-over-year percentage changes in the top 12 grossing movies domestically. Perhaps this is caused by piracy and DVDs but I bet it has much more to do with the quality of the movies relative to the quality of alternative uses of time.
This story suggests that the movie industry is taking it in the shorts in Asia as well. Some blame piracy, but still others admitted two things. First, the quality of the movies is down. Second, comparing to 2004 is misleading because 2004 was a big year in the movies.
What is in common between the market for movies in Asia and the U.S.? Piracy and the quality of movies. Which is more likely to be causing the dramatic drops in revenue?
Stunning statistic of the day?
So far this year, China's top boxoffice earner is "Sith," which by July 10 had earned 75.23 million yuan ($9.09 million) nationally. However, the current "blackout" of foreign releases through to the end of August could affect overall 2005 results.Perhaps government regulation might keep the revenue at an artificially low level, but $9 million? For the entire country?! Can anybody offer the going price in yuan for a movie in Beijing?
Flat Tax/Fair Tax
Although I'm not as hostile to a national sales tax as Bruce Bartlett (the sales tax would be imperfect but--here's the "compared to what" criterion--it's better than our current highly flawed system), I favor the flat tax over a retail sales tax.
Unions' Anti-Wal-Mart Stunts
In today's WSJ, Alan Murray writes on two unions anti-Wal-Mart publicity stunts.
My favorite part:
"To date, there is no sign this strategy is hurting Wal-Mart's sales. Wake-Up Wal-Mart boasts 68,000 registered members -- roughly the same number of people who walk into a Wal-Mart every five minutes."
Lots of people voting with their feet and their wallets.
August 09, 2005
President Olusegun Obasanjo of Nigeria has given a stirring speech against corruption, addressing a new anti-corruption commission. He noted that the “bastions of corruption” in Nigeria have been the “revenue generating parastatals and agencies”. In the effort to clean those up, he should consider that open competition is the best disinfectant against abuse of monoply power, and that revenue-generating agencies (like the National Provident Fund) are especially good candidates for privatization (not to be pursued, of course, by inside sale to cronies) and competition.
After noting that some judges and policemen have also been corrupt, he added:
The private sector has not been left out. In fact, in many instances, the private sector until very recently was the main culprit because in the struggle for contracts, it corrupts public officials. They bring in contrabands and bribe the Customs to bring the banned goods into the country. They manipulate rules and regulations to win an edge over the system in the pursuit of their selfish objectives. They will not pay taxes, electricity bills or telephone bills but try to manipulate and corrupt the officials to pay reduced costs or nothing at all.
Here’s a simple tip on minimizing bribes from the private sector: give the private sector as little as possible to bribe about. Eliminate the bans and import quotas that create trade in contraband. Minimize rules and regulations. Make taxes lower, simpler, and more transparent. Privatize the provision of electricity and telephone services, so the bill-collectors have to answer to bosses who have to answer to shareholders.
New econ blog
I want to join those welcoming The Austrian Economists to the blogosphere. (Aside to blogmaster Lawson: can we add it to our blogroll?) The bloggers are the perspicacious Pete Boettke of GMU and his former students Chris Coyne and Peter Leeson, who used to have a blog called Common Knowledge. The new blog will be offering solid and insightful commentary on economic issues and the economics profession. When you click over to check it out, don’t fail to scroll all the way down to read the very first post …
Smile, You're On Candid Camera!
These are words you don't want to hear when the Israelis use their new point and shoot camera. Picture here The camera on the end of a grenade sends pictures back to a laptop. Unfortunately, it is a disposable camera that can be used only once.
Grunts just fire the disposable "ballistic cameras" from "standard-issue M203 grenade launchers attached to M16 or other assault rifles," and then wait for the pictures to come back, 8 seconds and 600 meters later.
Also see DefenseUpdate
August 08, 2005
Japan Post privatization voted down
The ruling Liberal Democratic Party's valiant attempt to privatize the world’s largest financial institution has been voted down in the upper house of Japan’s parliament. Bloomberg reports on the political fallout here. Reuters has commentaries here. My previous comments on the privatization effort here and here.
Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence
I caught the virus. Here is the message.
My daughter and I were sitting in the Detroit airport lobby waiting for my son to arrive when two Arabic speaking young males walked up to the set of seats next to us and tossed a large piece of luggage in one of the seats. They then turned and briskly walked away, leaving the bag unattended. My first thought was to get my daughter out of the terminal. I walked her to the nearest exit and then proceeded to notify security about the unattended bag. I told them that two men speaking Arabic (ethnic profiling?) had left a bag unattended inside the terminal. Security wanted to know the age of the men (age and gender profiling?) and what they were wearing (clothing style profiling?). Airport guards immediately surrounded the bag. I could see that they were anxious about approaching this rather large unattended bag. Fortunately, the two young Arabic males soon returned. They were apparently innocent. Security questioned them, searched their luggage and then released them.
Was I engaging in ethnic profiling? It is against the rules to leave your baggage unattended at the airport. But, would I have reported the bag to the authorities if it had been left by a little old lady or a blond haired European? I don’t know. However, the fact that these were young Arab males certainly increased my concern.
The costs imposed on the profilers are almost always ignored in discussions of ethnic or racial profiling. As an American, I like to think of all people as being equal. It disturbs me that I might be suspicious of some individuals simply because of their race, nationality or religion. It bothers me that I had subjected these individuals to the inconvenience and embarrassment of an airport search simply because of who they are. I don’t regret having done it. This could have been a dry run testing airport security. I do regret having had to of done it.
Economists vs. Historians
The Western Economic Association held its 2005 meetings in San Francisco last month. I was scheduled to present but unfortunately had to pull out. We were there a couple of years ago for the Westerns and had a good time.
In today's Chronicle of Higher Education (reg req'd) is more evidence that economists as a group see things a bit differently than many other disciplines:
The American Political Science Association has announced that it will relocate its 2006 meeting to Philadelphia to avoid a labor dispute affecting hotels in San Francisco....The American Educational Research Association, meanwhile, announced on Thursday that it would keep its 2006 annual meeting in San Francisco but with a change of venue and dates. ...The Organization of American Historians moved its annual conference from San Francisco to San Jose, Calif., this past spring...And last fall the American Anthropological Association moved its annual meeting from San Francisco to Atlanta.
To show their solidarity with the hotel workers trying to increase the cost of staying in San Francisco, these academic organizations (or their organizers) are willing to relocate their annual meetings. Take that - dirty, capitalist pig-dog hotel owner!! Take that - low income hotel worker who won't receive any tips from visiting political scientists or historians!! At least economists show up - we just don't tip very well as a group (or so the joke goes).
Moving from SF to Philadelphia or Atlanta isn't really that bad, although when the ASSAs were in Atlanta a few years ago it was a bit of a disappointment - after all, there is little to do in the financial district of downtown Atlanta in early January. However, moving from SF to Oakland seems masochistic - kinda like the Southern Econ meetings a few years ago in Crystal City in Washington D.C.
While these types of boycotts are intended to change management's behavior they are more likely to simply reduce the disposable income of those with which the well-paid academics are so sympathetic. Moreover, boycotts such as these reduce the utility of the academics (and their families) denied the chance to enjoy the city and its attractions.
Ah, principles - aren't they grand.
While visiting NC last week with Pee Wee, we took a couple of day trips to the Norfolk/Va Beach area. The Virginia Zoo was pretty standard (though Pee Wee got his first glimpse of elephants etc.), and the Virginia Marine Science aquarium was fairly good. But the real treat was lunch at Doumar's--a restaurant started by the family of the ice cream cone's inventor. Doumar's barbeque is ok, though not nearly as good as Tarheel Barbeque in the boondocks of Gates County NC (you weren't expecting a link here were you?) But Doumar's ice cream and cones (still made on premises!) are the highlight. Doumar's has the ambiance of a 1950s diner, including curb service. I'm told (but haven't been able to verify) that early in his career the legendary DJ Wolfman Jack used to broadcast from Doumar's.
Peter Jennings Memories
I have no strong opinion about Peter Jennings; I'm not a fan but I do hold him a bit above Dan Rather. Although I rarely watched ABC News, I have two favorite Jennings moments. One was the 1996 election coverage when he was paired with David Brinkley. By midnight Brinkley had turned into a grumpy old man and proceeded to call Bill Clinton a "bore" and predicted four more years of "goddamned nonsense." Jennings responded by saying, "You can't say that on the air, Mr. Brinkley."
My other Jennings (perhaps faulty) memory followed the crash of TWA 800. Jennings was taking calls from "eyewitnesses" and a fellow somehow bluffed his way through the call screener and got to speak live with Jennings. The caller then spouted some nonsense about having seen O.J. Simpson shoot down the plane. Jennings calm handling of this prank (while no doubt seething inside) is consistent with his colleagues' accounts of his being calm under pressure and a master at ad-libbing.
Stadium Size and Season Ticket Sales
Phil Miller of The Sports Economist had an interesting post on the Oakland A's decision to build a smaller ballpark to increase their season ticket sales.
Apparently the notion that smaller stadia increase season ticket sales also has some support in professional football. From a recent George Will column:
A glutton for punishment, Ford is vice chairman of another struggling entertainment entity, the Detroit Lions, who have had just three winning seasons in the last decade. Gesturing out the window of his 12th-floor office, toward the Lions' practice facility just a mile away, he notes that when the team reduced the seating at the Ford Field in downtown Detroit from 80,000 to 65,000, sales of season tickets shot up: ``Scarcity is not a bad thing.''
"Economics is All About Money"
Don Boudreaux's recent post on his father and grandfather reminded me of a student's question at my IHS seminar earlier this summer. I'm paraphrasing, but the student opined that economics is unseemly because it all about money (hence the title of the post). The student had phrased the statement as a complaint to be discussed during the final session of the seminar. At least two other faculty had already responded to the student's question but I decided to add my two cents worth. I began my response by recounting a bit of family history--a quick biography of my great-grandfather (for whom I am named). He was born into a large family in Northampton County NC and, at about age 18, moved to Hertford Co. to establish a farm. He then spent his entire adulthood farming in sweltering North Carolina summers, farming that was a far cry to from our highly mechanized version. To the best of anyone's knowledge, he never traveled further from home than Norfolk Va (about 60 miles) though his wife did once take a long train trip to visit a son in the army. His life was probably pretty decent for his time but, because of the economic growth of the past century, I enjoy a better life. I have traveled to many states and countries (though not as many as co-bloggers Bob and Larry), I have sufficient leisure time and income to allow me to spend time biking or reading (or blogging!), etc. So it's not all about money (after all, few us cash our paychecks just massage ourselves with $100 bills)--it's about improving the human condition as we define it for ourselves. And, if by chance, someone thinks my great-grandfather's lifestyle was superior, he or she is free to choose to live that way. Other than the Amish few of us do so.
August 07, 2005
Scandal rocks Central Bank of Kenya
It seems to be central bank scandal week. The Nation (Nairobi) reports (as reprinted by registration-not-required allAfrica.com) on questionable subcontracting practices by the central bank of Kenya:
Last week, MPs questioned the Government's renewal of the Sh2 billion note printing contract to De La Rue without competitive bidding. They wanted to be told why Mr Mwiraria [the Finance Minister, who says he acted on advice from the central bank] renewed the contract to the company through single sourcing, against procurement regulations.
Contracting out for the printing of banknotes is common practice for small countries. But there is no good reason not to allow competitive bidding for the contract.
From a recent USA Today:
"Austrians, Germans and other Europeans for decades have been crossing the former Iron Curtain to get their teeth fixed, often at jaw-droppingly low prices. Now, a small but growing number of Americans, prompted by soaring medical costs and dwindling insurance benefits at home, are following suit. They're contributing to the rising popularity of "tooth tourism," a relatively young trend here, but part of a fast-growing global phenomenon in which travelers, typically from wealthier countries, visit less-developed nations for medical care mixed with vacation — all at cut-rate prices. Cosmetic surgery, in particular, is reshaping the face of medical tourism.
Want a nose job? Combine it with a safari in South Africa. Face lift? Go to Mexico and lollygag at the pool while you recover. Or, get bigger breasts in Bangkok and tummy tucks in Argentina. Although it's buyer beware, most Web-based medical tourism companies boast state-of-the-art facilities and highly trained medical staff.
In Hungary and other Eastern European countries, dental tourism is putting a twist into the trend. Here in Mosonmagyarovar (moshon-mag-yah-RO-var), brass plaques and molar-shaped signs bearing easy-to-grasp names like "Eurodent" and "Happy Dent" line the streets along a central shopping district. Some clinics take up a full block; smaller practices are tucked inside hotels, above gift shops or beside casinos."
Assuming the pattern of procedures (tummy tucks in Argentina etc.) reflects comparative advantage, I'm curious about why comparative advantage in medical procedures would follow such a pattern.
QUEENS, NY (CBS4 News) A teenager was caught smuggling drugs in an unusual way: in a hairpiece! And investigators say the 19-year-old acting strangely and wearing a bad toupee tipped them off to more than $100-thousand worth of heroin hidden underneath!
Financial laissez-faire: Hedgebay
Need to sell a portion of a hedge fund that has grown too large in your portfolio? Want to rebalance your portfolio by acquiring a share of a closed hedge fund? Check out Hedgebay, the leading offshore (incorporated in the Bahamas) online marketplace for non-US-based hedge funds. Says the Hedgebay brochure:
Hedgebay has been successful in sourcing, executing and settling hundreds of millions of dollars worth of secondary market transactions in non-US hedge funds.
And it’s all outside the reach of US regulators. According to the Economist (print edition of 6 August 2005),
Hedgebay oversees their transaction, handles the tricky paperwork and takes a cut of 1% or less. … Hedgebay is, in effect, marketing liquidity. Sellers who use the site avoid the lock-up periods during which they cannot sell their shares – which can be three years or more and are enforced by redemption fees.
By the way, I’m assuming you’re a big investor: the average transactions size is US$3-5 m.
Maybe before long there will be an online marketplace for small bank certificates of deposit that holders want to unload before maturity?
August 06, 2005
Scandal rocks Bank of Italy head
Antonio Fazio, governor of the Bank of Italy, is in trouble up to his eyebrows.
Fazio has been accused of blocking takeovers of weak Italian banks by non-Italian European banks, and unfairly favoring bids by Italian banks. Now he’s been caught on tapped telephone calls promising an Italian banker friend that he’ll put the fix in with regulators to allow his bank (BPI) to acquire one of the target banks instead – despite BPI being undercapitalized.
The Bank of Italy head, unlike most central bankers, has a lifetime appointment. Central bank independence can have a downside, it seems.
UPDATE: More on the affair from the Financial Times.
Florida State Wombats?
A little news item for your "political correctness" file:
Are they going to stop the FSU fans from doing the warchant too? I'd like to see the NCAA try that.
Bollywood summer movies
Best Bollywood movie I’ve seen so far this summer: D.
Still looking forward to seeing: Sarkar, The Warrior, and The Rising.
Read More »
D is a pretty good Mafia drama, very much in the style of Company.
Sarkar is directed by the industry’s most creative director, Ram Gopal Varma (fan site here), who did amazing work in Company and Bhoot. The story is said to be inspired by Coppolla’s The Godfather, transposed onto an Indian politician (said to be loosely based on Shiv Sena chief Bal Thackery) and his son. The “godfather” is played by Bollywood’s greatest actor, Amitabh Bachchan, who was great in “Black”. The son is played by Abhishek Bachchan, Amitabh’s actual son, the first time they’ve played father and son on screen. It’s gotten good reviews.
The Warrior is in Hindi, but isn’t technically Bollywood because the production company is British (it won the 2003 BAFTA for best British picture, but is only now being released in the US). It’s the story of a mercenary in ancient Rajasthan. It stars Irfan Khan, who was great in 2004’s best Bollywood picture (in my view), the Macbeth-based mafia flick Maqbool.
The Rising is the first film in four years for Aamir Khan, star of the popular and Oscar-nominated Lagaan. It’s the historical tale of Mangal Pandey, who led the failed Indian uprising against British rule in the 19th century. Last week I was in the Indian shopping district in Jackson Heights, Queens (enjoyed the buffet at the Jackson Diner, as always), and posters for The Rising (Hindi title: Mangal Pandey) were everywhere. Official site here.
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August 05, 2005
Whip Inflation Now: Argentina
As the CPI inflation rate in Argentina rises above 10% per annum, Bloomberg reports, Economy Minister Roberto Lavagna promises that the government will use "all instruments'' to combat inflation. Meaning: not just the method that actually works, restraining money growth. Earlier this year, Argentine president Nestor Kirchner
urged Argentines to boycott Royal Dutch Shell Group after the company raised gasoline prices 3.4 percent.
More recently, Kirchner
increased taxes on dairy exports last week after prices of cheese and milk shot up 5 percent in a single day. He said this week he may do the same to beef, poultry and wheat producers.
Boycotting or taxing price-hiking firms to hold down inflation, while continuing to expand the money supply, is of course like pinching a balloon to reduce its expansion, while continuing to pump in air.
Selective price controls are also being tried, with predictable consequences:
The government has also kept prices frozen on electric and telecommunications utilities since January 2002 in a bid to contain inflation, prompting companies such as France Telecom to pull out of the country.
With inflationary expectations rising, Kirchner has done exactly the opposite of making a credible commitment to lowering the inflation rate. He has acted to make inflation less painful for the government:
The surge in inflation prompted the government this week to halt sales of inflation-linked bonds. As the inflation rate rose, so did the cost of servicing the bonds.
What’s driving the inflation? Monetary expansion, as usual. The Miami Herald reported last month that the central bank expanded Argentina's monetary base 24 percent in the previous 12 months (June 2004 – June 2005). Its current target short-term interest rate, Bloomberg notes, “remains about 5 percentage points below the annual inflation rate.”
August 04, 2005
My internet connection has been spotty at the house I'm staying at so my blogging may not be as easy as I'd hoped. A few initial reactions:
Great city. Of course. Like NYC but older with nicer people.
Expensive. OMG. The exchange rate is about 2:1 (that is, 2 dollars equals 1 pound) but prices are about 1:1. So the purchasing power from the dollar point of view is horrible. (This is probably why I see so many Brits at Disney World.) Predictably, the prices are most high for things with a large service component (like eating out) but not so bad for goods. We're eating in the house for dinners and even packing our lunches out so it's not so bad.
Here's a pic of Big Ben with the London Eye in the background (just to prove that we're here.)
Most Powerful Women
Forbes has just published the list of the 100 most powerful women. It should be no surprise that Condoleezza Rice tops the list. But, have you ever heard of number two, Wu Yi? She is a member of the Communist Chinese Party Central Committee. She has been against trade quotas, politicizing economic issues and pegging the yuan to the dollar. Not bad for someone of either gender.
August 03, 2005
Who polices the mall police?
A shocking revelation from the Bridgeport mall in West Virginia, reported by WBOY:
A former mall security chief is free on bond, charged with pocketing more than $120-thousand dollars in coins. […]
Wow. Who knew coin-op kiddie rides were so lucrative?
How did he spend or convert $20,000 in quarters per year? Wouldn’t your bank be suspicious if, wearing your mall security guard outfit, you brought in $400 in quarters every week?
The latest Econ Journal Watch
The August 2005 issue of Econ Journal Watch is now online. It includes my former colleague Richard Timberlake on the “golden fetters” theory of the Great Depression, my former student Kurt Schuler on how US economists misunderstood Argentina’s monetary system, Ignacio Briones and Hugh Rockoff on the historical evidence about free banking, yours truly on the Fed’s influence in monetary economics research, plus another round of exchanges between Donald Wittman and Bryan Caplan.
August 02, 2005
Some comments on Rafael Palmeiro
So Raffy (as he was called here in Arlington, and I assume in Baltimore) has been suspended for testing positive for steroids. The baseball world is in shock because Raffy had adamantly denied in Congressional hearings that he had ever used steroids, notwithstanding Jose Canseco's claims.
While it might be true that Raffy tested positive for steroid, it would be a monumental lapse of judgement if he decided to take it for kicks or to ensure that he would hit his 3000th hit. Here are some of my initial explanations (in no particular order):
I don't think he is an incurable addict. He has always been level-headed and he has not blown up like Bonds, McGuire, Sosa, and others. This doesn't guarantee that he isn't using - there are forms of steroids that do not entail massive bulk.
The false positive is a possibility, however my understanding of drug testing is that if the first sample tests positive then the default is to test the second sample. Perhaps two false positives can occur on the two samples, but the odds are against it.
It would seem pointless (and indeed ridiculous) to intentionally take steroids after his Congressional testimony. After the categorical denial that he gave he must have known that he would be one of the "randomly" tested ballplayers. Even if he thought he needed a little boost to get over the top in terms of the 3000th hit, if he only just now started taking steroids there wouldn't have been enough time for them to really help (as far as I can tell about such things).
The two most likely explanations would seem to be one of the last two options. Either Raffy ingested a steroid or something that tests like a steroid (remember the poppy seed anecdote) in the process of some other medical procedure. Word has it that B-12 Cortezone shots will test like steroids, and perhaps Viagra (one of his promotional deals)? Upshot is that a doc or his wife, or anyone, might have innocently led him to test positive.
The final option is the conspiracy theory - the sting. Who knows if there is someone that is out to get Raffy, spikes his soda, laces his aftershave, whatever. We have seen such antics directed towards teachers, rival lovers, etc. If Raffy sufficiently pissed off the wrong person/people is it inconceivable that he could have ingested steroids without knowing, even if he is careful about what is introduced to his blood stream?
If he is unable to retract the accusation, it is likely that he will unfortunately be grouped with the other players we know are/were doping. Does it mean that he is not Hall of Fame material, I am not one to put an asterick beside an entire career, but others are likely to.
My policy prescription? Make everyone take steroids. If they choose not to take steroids they do so at their own risk. Folks like to see the ball fly far, and perhaps steroids helps that along. Instead of trying to police all ball players, perhaps it is more efficient for everyone if we assume that the players are taking steroids and leave it at that. Okay, j/k.
A letter to the Belfast Telegraph
To the editors:
Because of heavy backing requirements, most of the revenue from the issue of local banknotes in Northern Ireland and Scotland already goes to HM Treasury. Gordon Brown proposes to make the backing requirements even heavier, taking even more revenue for HM Treasury, and leaving what appears to be zero note-issuing revenue to the banks. This is to be regretted. Should Brown have his way, bank shareholders would suffer. Perhaps more importantly, bank customers would also suffer. The banks would likely be compelled to impose fees for using cash dispensers, as they do in other countries where commercial banks derive no revenue from note-issue.
Letter-writer T W Ferres (August 2) deprecates local notes and calls for complete nationalization of note-issue. He seems to overlook the fact that he already has the option to refuse the local notes – they aren’t legal tender – and to use only Bank of England notes.
Those who enjoy getting notes with a local flavor – and getting them from cash dispensers without fees – should speak up to stop Gordon Brown from riding roughshod over the tradition of local notes.
Dr. Lawrence H. White
August 01, 2005
Watch Your Click
In his lawsuit, Gene Epstein of Wrightstown, Pa., claims that Jason Shepherd of Ballston Lake, N.Y., entered a "buy-it-now" bid of $245,000 for the vehicle.
Worrisome google maps hack #2
This one displays the blast radius of user-defined and user-placed nuclear bombs. I would wage this hack will be forced down pretty quick.
It is an interesting exercise seeing as the Federal, state, and local governments have done absolutely nothing to prepare us for a major terrorist event. I have it on good authority by the folks I know who work in local governments that there are plans in place, however they can't share them with us. My comment was that the plans likely require us (the citizenry) to cooperate instead of going apesh*t.
I went to elementary school after the "duck and cover" days and we didn't talk about nuclear strikes - I suppose the assumption was that the city-killers the Russians were going to throw at us wouldn't leave too much behind.
It is unlikely that Al Qaeda or someone else would be able to get ahold of a 10,000 kiloton nuke - which is what seems to be required to get a fifteen mile blast radius of reasonable destruction (about the distance from Arlington to Fort Worth) but not enough to destroy the entire Metroplex. Things, of course, are much different in the concentrated cities.
If there is no threat, then a lack of civil defense preparation is probably okay. If there is a threat, isn't there a need for civil defense preparation? Perhaps hacks such as this one will motivate someone?
The smartest thing I have heard out of Washington in some time
Comes from page 3 of a bill introduced by Sens. Ensign and McCain proposing to bar local and state governments from providing public-good style wifi networks. I can see the benefits of providing wifi as a public good but the downside seems to be considerable. Most of the public sector operates using years-old or decades-old computers, which would be a disaster if such behavior was transferred to the wifi sector.
Nevertheless it will prove interesting to see the digital-dividers line up in opposition - something akin to we all have a right to free internet access and especially the low-income folks.
Here's the satatement that caught my eye:
The 1's and 0's of the digital age are not constrained by State lines or national boundries, therefore, a patch work quilt of State and local regulations will only stifle growth and impose undue costs and burdens on consumers.
If they can only remember this statement when the states start to tax e-commerce and the U.N. decides to regulate the entire internet.
I haven't read my way through the entire legislation, therefore it is likely that there will be one or more statements that will completely undermine this one.
The Benefits and Costs of Passenger Searches
Has anyone attempted to calculate the benefits and costs of searching all passengers on the NYC subway system? Let's just assume some numbers and come up with a rough estimate. Suppose you need three individuals at each searching station and with fringe benefits they average about $25 each. It would then cost about $75 to set up a search station for an hour. If it takes about 1/2 a minute to conduct a quick hand bag search, then they could search 120 passengers in an hour. The cost per search is therefore 63 cents. In 2003 there were 1,384.1 million riders on the NYC subway system. Consequently, the cost of searching every rider is $865 million. This, of course, does not include the cost of delay imposed on the passengers. It also does not include the additional cost that would be incurred if bus riders were also searched.
We have not had any terrorist bombers on the NYC subway system. Suppose, however, there were one per year. It appears that an average of about 15 individuals were killed by each of the successful bombers in London. The EPA values a life saved at about $6.1 million. Therefore, the value of lives saved by preventing one bomber is about $91.5 million. This doesn't include property damage and other costs imposed on the transportation system from the disruption. It also does not include the cost of injuries and medical care to those who did not die in the explosion. For the benefits to exceed the costs of the searches, these other costs would have to be more than 8 times the value of lives saved.
Random searches, instead of universal searches, will not change the benefit to cost ratio unless they deter potential bombers. However, since death by explosion seems much worse than getting caught, it is not likely to have a deterrence effect when the probability of getting caught is small. Suppose instead the authorities engaged in profiled searches in which they searched 10 percent of the riders. Suppose also that the likelihood that they would stop the bomber given profiled searches was more than 10 percent. It then follows that profiled searches will reduce the cost/benefit ratio. Let's assume that the profiled searches result in only half the terrorists being apprehended or deterred. Then the cost/benefit ratio is reduced from $9.45 for random searches to $1.89 with profiled searches. Thus, profiled searches may be preferred over random searches if we apply a short-run cost/benefit analysis.
I don't have much faith in the numbers I used in these calculations. Most don't have a solid foundation in fact. But at least the benefit cost model provides a starting point for judging the efficiency of passenger searches. This is something that both Democrats and Republicans have failed to address. If terrorist attacks can be more effectively reduced by spending these dollars on going after terrorists in their home country, then spending them on passenger searches is sacrificing lives.
If you can provide more reliable values for the variables in this model, we might be able to come up with a better cost analysis The comments are open. Be kind, this is a rush job meant to stimulate discussion.
Free money isn't free?
According to a "survey" from an on-line scholarship clearinghouse, fully 25% of respondents indicated that they would not apply for a scholarship worth less than $5,000. On the other hand, 30% indicated they would apply for a $100 scholarship. (story here)
I am not sure I am buying this as a general finding, there is likely a severe selection bias in the poll's findings.
Is it likely that the marginal cost of filling out an application is sufficiently high, and the odds of receiving a scholarship sufficiently low, that it only makes sense to apply for big-dollar scholarships? I doubt it, but then I haven't filled out a scholarship application in twenty years. Perhaps this is another example of how undergraduates often mistakenly overvalue their own time or their opportunity costs?
Must Have Been the Little Blue Pill
In remarks prepared for a conference call Monday, Palmeiro said he had accepted his punishment and could not explain how the steroids got into his body.
"I have never intentionally used steroids. Never. Ever. Period," he said. "Ultimately, although I never intentionally put a banned substance into my body, the independent arbitrator ruled that I had to be suspended under the terms of the program."
Lorax Reading Tip
Jonathan Adler blogs on a property rights interpretation of The Lorax.
In the Fall 2000 Journal of Private Enterprise ("Lessons from The Lorax"; sorry, no link), my colleague Wilson Mixon (along with Mike Hammock, a former Berry student, and Mike Patrono, a former Berry faculty member now at Kennesaw State) argues that lefty environmentalists misinterpret The Lorax and that the story should properly be understood as a commentary on property rights and institutions.
Hat tip: Todd Zywicki of VC.
NB: I'll be away from the blog for the next week or so. While Pee Wee and I are visiting family in northeastern North Carolina, we'll be on the lookout for the PETA animal killers:
"Two employees of People for the Ethical Treatment of Animals were arrested on animal cruelty charges in Ahoskie, N.C., after investigators saw dead dogs being thrown into a grocery store garbage container Wednesday, according to the Ahoskie Police Department.
Ahoskie police conducting surveillance as part of a monthlong investigation reported finding 18 dead dogs in the container and 13 animal carcasses in a van registered to PETA and seized by authorities."
Hmmm ... I wonder if we'll see Pamela Anderson in PETA promos with dead kittens.
NYT, Krugman, and France
A la Don Boudreaux, I fashioned my post on Krugman's comparison of the U.S. and France into a letter to the editor. Not surprisingly it wasn't published, but check out this piece of dopiness that did:
"Social security and health insurance cover the entire family from birth to death. The long vacations created a tourism business that did not exist 40 years ago, attracting people from all over Europe who travel in comfortable high-speed trains at reasonable cost.
All these benefits are paid with high taxation, but no one complains since it is really based on income rather than on no tax for the wealthy."
No tax for the wealthy? How much wine has the French writer of this nonsense consumed?
There were some better responses (same link as above), including,
"Yet as a French scholar in the United States, I am slightly amused by his wide-eyed idealization of the French choice.
The trade-off is far from perfect, even beyond the obvious high unemployment: unequal access to education, lack of investment in the future, and racial discrimination are also daily realities in France."
"When France was hit with a horrible heat wave two summers ago, 15,000 people died because the social and hospital systems couldn't care for them. Most were elderly, and many died because their families failed to interrupt their paid vacations to check on Grandmère and Grandpère.
So much for family values."
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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