Division of Labour: November 2005 Archives
November 30, 2005
Katrina relocations

From an interesting site called ePodunk, which looks to be somewhat legit, is a graph depicting the pattern of relocation/flight from hurricane Katrina.

What? No one fled to North Dakota? The picture is based upon a selected set of data, but nevertheless might be fairly representative of where people went to get away from the storm and its aftermath.

Posted by Craig Depken at 10:25 PM in Economics  ·  TrackBack (0)

Turkey prices c. 1905

Nov. 30, 1905 was Thanksgiving. The day's NYT notes that the formal holiday of Thanksgiving was created during the Lincoln administration during the Civil War - a period during which the country had little to be thankful for.

The article describes the same basic holiday we have today - food, visiting with family, watching football, playing golf, oh, and more food. There are voluntary organizations providing dinners to the poor and homeless. It is all comfortably familiar.

The last paragraph, however, mentions that turkeys were selling for between 23 and 28 cents per pound and "there was no dearth of supply." I bet there wasn't. According to the folks at eh.net, $0.23 in 1905 would be:

$4.77 using the Consumer Price Index
$3.85 using the GDP deflator
$22.04 using the unskilled wage
$27.83 using the GDP per capita
$90.31 using the relative share of GDP

The loss-leading turkeys at the grocery store during the Thanksgiving/Christmas period sell for about $0.40-$0.60 per pound, putting the nominal price of these turkeys not much higher than a hundred years ago. However, this article points out that (in 2005):

Sendik's on W. Blue Mound Road in Brookfield was taking orders for Amish free-range turkeys from Wisconsin for $1.49 a pound, while Jacobson's, the butcher shop in Brennan's in Brookfield, offered free-range turkeys from northern Minnesota for $1.99 a pound.

At the end of the turkey spectrum are heritage turkeys, breeds that were nearly extinct a few years ago, according to Tricia Riley, general manager at Fields Best in East Troy. ..The fresh heritage birds have been selling for up to $13.69 a pound on the Internet, Riley said. Fields offered them for $3.35 a pound this year.

For some turkeys (or turkey-marketing techniques) the nominal price hasn't changed in a hundred years - isn't that impressive. For the high-end, fancy turkeys the real price hasn't changed in a hundred years - that, too, is impressive (perhaps moreso). If the demand for turkeys was static, this would suggest no change in the technology of raising turkeys. However, the demand for turkeys has likely increased with the increase in population, income, and the number of households with deep-friers, therefore the technology for raising turkeys must have improved and reduced real costs (even for free-range turkeys!) in order to keep real prices constant.

Yet more evidence of the power of markets.

Posted by Craig Depken at 12:48 PM in Economics  ·  TrackBack (0)

The price of gold

The spot price of gold yesterday “burst” (the verb used by the normally sober Financial Times) through the $500-per-troy-ounce “barrier” (a term used in 236 news stories, by Google News’s count) for the first time since 1987. What does it mean? Nothing special. It mostly means that the dollar isn’t worth what it used to be. The Consumer Price Index (1982-84 = 100) that stood at 113.6 in 1987 stands at 199.2 today. So $500 today has a purchasing power equivalent to only $285 [$500*(113.6/199.2)] in 1987 dollars. In real terms, the price of gold has now just about returned to where it was in 1935, when the nominal price was $35 per ounce and the CPI was 13.8: $35*(199.2/13.8) = $505.

Posted by Lawrence H. White at 12:13 PM in Economics  ·  TrackBack (0)

FIRE lobbies Phi Beta Kappa

The Foundation for Individual Rights in Education (FIRE) is lobbying Phi Beta Kappa with this letter to enlist its support in fighting against campus speech codes.

Uh. Good luck with that.

In related news at my shop:

Today, John Lott (of More Guns, Less Crime fame) is speaking at the Capital University Law School and on the main campus. Rather than engage in a debate about his ideas, there is in fact a concerted effort to organize a boycott among faculty and students of the event. Fair enough I guess but hardly in the spirit of open engagement that universities are supposed to be about.

There have been some rumblings that one of the flyers used to publicize the event is "offensive to Catholics". (I think it's funny!) To my knowlege there has been no complaint filed using our speech code, but this illustrates exactly the type of chilling effect (to use a term that used to be popular with the left) that such speech codes can engender.

Posted by Robert Lawson at 10:51 AM in Politics  ·  TrackBack (0)

Don’t $#@! with my cable TV

The AP reports on FCC Chairman Kevin Martin's statement yesterday to the Senate Commerce Committee hearing on cable and satellite TV "indecency":

If providers don't find a way to police smut on television, Martin said, federal decency standards should be considered.

``You can always turn the television off and of course block the channels you don't want,'' he said, ``but why should you have to?''

One rhetorical question, so many answers. How about: You should have to because you’re a free individual who subscribed to cable or satellite TV in the first place -- it isn't beamed onto your TV screen without your permission. You should have to because it follows from respecting your adult neighbors’ liberty to choose the TV channels they want. You should have to because if you don’t, some cluster of politicians of bureaucrats will treat you and your neighbors like children.

Senator Inouye (D-Hawaii) told the cable and satellite executives at the hearing: “If you don’t come up with an answer, we will.” The power of dictating what TV other adults should watch is never so dangerous as in the hands of those who presume themselves qualified to exercise it.

Posted by Lawrence H. White at 10:12 AM in Politics  ·  TrackBack (0)

November 29, 2005
Negative externality?

Forget smoking and loud stereos, how about 12 satellite dishes on your neighbor's front porch?

Evidently he can dial in 5,000 channels, which puts channel surfing in a new perspective. On the other hand, he probably got to watch the Georgia-Georgia Tech game last Saturday - we got stuck with ND-Stanford (even though the ND-Stanford game was exciting, and the GA-GT game wasn't).

Posted by Craig Depken at 09:31 PM in Culture  ·  TrackBack (0)

Happy birthday pong

How far we have come since November 29, 1971. Ah, the good old days of Pong. The simple game didn't elicit Congressional investigations and parental ratings. Did pong cause a lot of sleepless nights? Were there bleary-eyed sophomores stumbling into class the next day? .

Posted by Craig Depken at 08:32 PM in Culture  ·  TrackBack (0)

But the Union says it's bad!

Who knew international trade could help domestic businesses?
For those who don't know, Shreveport has a large number (if my classes are representative) of trade protectionists, people who are more than eager to challenge me when I try to argue the benefits of free international trade, outsourcing, etc.

So, it was great to see this story in our local dog trainer today.

For those without patience, "Bell Machine Co. Inc., a Shreveport manufacturer, will announce hundreds of new jobs for skilled workers this morning. The jobs are the result of an international trade contract and extend beyond the 150 positions the company announced a few weeks ago."

The last line: "I think it goes back to supply and demand and the fact that Bell Machine has a reputation for quality. The company is well-run, and that was realized by this company that's coming."

Doesn't it all go back to supply and demand?

Posted by Tim Shaughnessy at 12:59 PM in Economics  ·  TrackBack (0)

Congratulations Gary

My colleague Gary Roseman has been selected for a Fulbright. A well-deserved honor for an outstanding teacher.

Posted by E. Frank Stephenson at 10:58 AM in Economics  ·  TrackBack (0)

Once More on Wal-Mart

1. Two weeks ago, I blogged on the anti-Wal-Mart propaganda film "The High Cost of Low Price" and it's false portrayal of a hardware store closing in Middlefield OH. (Of course, Wal-Mart doesn't drive anyone out of business--customers do.) After that posting I got an email from someone familiar with the Middlefield area. He tells me that it is much more likely that a successful local hardware chain drove H&H out of business than did Wal-Mart. (This makes sense since Wal-Mart has only modest overlap--some paint and lawn/garden merchandise--with typical hardware stores.) The writer (who asked that I not quote him directly or post his name) indicates that one of the local chain's stores is located close to Wal-Mart and H&H and that the local chain seems to have suffered no harm from Wal-Mart's opening nearby.

2. From a recent AJC story:

Just before Labor Day, Noviello hangs a "help wanted" sign in his Struthers store window. He must replace salesclerk Anna Allgood, 49, who is leaving for Wal-Mart Stores Inc., where she can get medical insurance. Her pay will be $6.95 an hour.

Noviello says he'll start his new hire at $5.75 because he can't afford more. "I don't make any money," he said.

So much for Wal-Mart's low pay and lousy medical insurance.

3. Yesterday's WaPo had a must-read article defending Wal-Mart from a "progressive" perspective.

Posted by E. Frank Stephenson at 10:46 AM in Economics  ·  TrackBack (0)

Transportation Costs

In a lecture on international trade the other day I made note of the fact that our largest trading partners are Canada, China, Mexico and Japan. Canada and Mexico of course make sense because of their proximity. China and Japan are actually close "economicially" even if they are distant "geographically" because all that separates us is the ocean, and shipping by sea is vastly cheaper than by land.

One of my students was able to get me some shipping data from his father's logging business. Here are the data he gave me:

(1) To get a shipment of logs from the source 90 miles to Columbus, OH by truck costs $250. $2.78 per mile.

(2) To get a shipment of logs from Columbus to San Francisco (2110 miles) by rail costs about $925 (he quoted me $750-1100 so I take the midpoint here). $0.44 per mile.

(3) To get a shipment from San Francisco to Shanghai (7270 miles) by ship costs about $1700. $0.23 per mile.

Posted by Robert Lawson at 09:41 AM  ·  TrackBack (0)

Time to Hit the Treadmill

A news item:

CHICAGO (Reuters) - Fatter rear ends are causing many drug injections to miss their mark, requiring longer needles to reach buttock muscle, researchers said on Monday.

Standard-sized needles failed to reach the buttock muscle in 23 out of 25 women whose rears were examined after what was supposed to be an intramuscular injection of a drug.

Two-thirds of the 50 patients in the study did not receive the full dosage of the drug, which instead lodged in the fat tissue of their buttocks, researchers from The Adelaide and Meath Hospital in Dublin said in a presentation to the annual meeting of the Radiological Society of North America.

Posted by E. Frank Stephenson at 09:39 AM in Misc.  ·  TrackBack (0)

November 28, 2005
Umm Ali or O'Malley?

On my recent trip to Oman, I had a middle eastern dessert called Umm Ali which means "Ali's Mother". It's a sort of middle eastern bread pudding, sweet with nuts and raisins; it is much tastier than the bland Northern European version.

Anyway, my host told me the dish originated with an Irish woman named O'Malley who lived in the region in the past. I tried to find some verification of this but couldn't come up with much except what I found on this page.

Anyway, if true, this would be a great example of Tyler Cowen's basic view of how trade occurs between cultures.

Posted by Robert Lawson at 06:32 PM in Culture  ·  TrackBack (0)

APEE Essay Contest Deadline, Dec. 1

Professors and others: Please remind your students that December 1 is the deadline for the Association of Private Enterprise Education essay contest on free market economies! Urge them to submit their essays! Remember -- first prize is $2500, second is $2000, third is $1500, and honorable mentions are $250. Complete instructions can be found at here.

Posted by Robert Lawson at 04:26 PM in Economics  ·  TrackBack (0)

More on college football reform c. 1905

The Nov. 28, 1905 NYT has an article in which one Charles F. Thwing, then president of Western Reserve University, provided his reasons for disliking college football:

Among the evils of football as now played are danger to life and exposure to injury; temptation to fraud in making up teams; temptation to betting; temptation to brutality; enthusiasm becoming so great as to become a form of hysteria; disadvantages to the scholarship of some scholars; to great frequency of games; inability of athletic associations to handle properly large sums of money; the public exhibition of young men who are primarily students; reports in newspapers giving false interpretation and false impressions of college value.
Gee, that doesn't sound much different from today's anti-sports crowd. I guess the point is that mixing big-time athletics with the pursuit of knowledge was, is, and will likely continue to be, a difficult chore.

The story then goes on to list President Thwing's suggestions for saving the game:

Let the sport be idealized, the ideal to be not victory, but love of the sport itself; wise administrative bodies in charge of the teams; competent medical supervision of players; players to be required to maintain reasonable standing in studies; officials in sufficient number and power on the field to instantly check unduly rough playing; fewer games and fewer hard games; permitting every student in college to play football, if agreeable to parents and the student is physically fit.

Except for the first and the last point, Dr. Thwing's vision has basically been implemented over the past hundred years - even if imperfectly.

Posted by Craig Depken at 03:25 PM in Sports  ·  TrackBack (0)

Arab Economic Freedom Index

The Fraser Institute has published the Economic Freedom of the Arab World report that measures economic freedom in 16 Arab nations. The methodology is similar, but not identical, to that of the Economic Freedom of the World report which includes only 10 Arab nations.

On Monday of last week, the Omanis put on an amazing gala dinner to make awards to the countries that scored best in the various categories and overall.

Posted by Robert Lawson at 11:07 AM in Economics  ·  TrackBack (0)

BCS system not out of the woods yet?

Our local fishwrap has an interesting article outlining how bad things can get for the BCS system if either Texas or USC happens to lose this coming weekend. I don't see either happening, but I am notorious for bad predictions in college football.

Posted by Craig Depken at 10:05 AM in Sports  ·  TrackBack (0)

Abortion and Crime Revisited

Two Boston Fed economists are challenging the Levitt/Donohue abortion-crime link. Some excerpts from a WSJ article:

But now economists at the Federal Reserve Bank of Boston are taking aim at the statistics behind one of Mr. Levitt's most controversial chapters. Mr. Levitt asserts there is a link between the legalization of abortion in the early 1970s and the drop in crime rates in the 1990s. Christopher Foote, a senior economist at the Boston Fed, and Christopher Goetz, a research assistant, say the research behind that conclusion is faulty.

The Boston Fed's Mr. Foote says he spotted a missing formula in the programming of Mr. Levitt's original research. He argues the programming oversight made it difficult to pick up other factors that might have influenced crime rates during the 1980s and 1990s, like the crack wave that waxed and waned during that period. He also argues that in producing the research, Mr. Levitt should have counted arrests on a per-capita basis. Instead, he counted overall arrests. After he adjusted for both factors, Mr. Foote says, the abortion effect disappeared.

"There are no statistical grounds for believing that the hypothetical youths who were aborted as fetuses would have been more likely to commit crimes had they reached maturity than the actual youths who developed from fetuses and carried to term," the authors assert in the report. Their work doesn't represent an official view of the Fed.

Edward Glaeser, a Harvard professor who helped referee Mr. Levitt's original abortion submission to the Quarterly Journal of Economics, said the Foote critique isn't damning, though it does suggest the impact of abortion on crime has not been as strong as Mr. Levitt has argued. "These guys have put the [data] through the wringer," Mr. Glaeser says of Mr. Foote and his research assistant. "There is no question that the results get smaller and weaker, but there still seems to be something there."

BTW, I still think it might be interesting to test the abortion-crime link using variation in state funding of abortions for low-income mothers.

Posted by E. Frank Stephenson at 09:06 AM in Economics  ·  TrackBack (0)

November 27, 2005
Public admiration of Congress c. 1905

Today we are concerned that people show their "admiration" for members of Congress by providing gifts/cash/contributions in return for "assistance" in certain matters, such as Casino licenses and so forth. Such "admiration" is not new, nor is it really practical to try to stop it in all of its forms. A radical idea that is almost guaranteed to work (and is therefore almost guaranteed not to be implemented) would be to remove the motivation for such "admiration," that is, deny the federal government (read: Representatives and Senators) the ability to distribute rents to the chosen/connected. The inability to distribute rents would dramatically reduce the number of people who offer their "admiration."

In light of recent events, the Nov. 27, 1905 NYT presents a problem that today might not seem bad:

Two years ago, after Speaker Cannon was sworn in, an attempt was made to bring in large floral pieces and place them upon the desks of members, but the Speaker issued positive orders to stop the proceeding...A standing resolution of the Senate was adopted during the last session of Congress barring flowers from the Senate chamber...Rivalry of admirers of members of the two houses reached a stage where half the desks were buried in flowers, and the persons they were meant to compliment were completely hidden. This condition led to the ban on them.

House and Senate members being hidden/buried in flowers? That might be an improvement over the ways they seek attention nowadays.

Posted by Craig Depken at 04:34 PM in Politics  ·  TrackBack (0)

Football reform c. 1905

As we head into the last few weeks of the regular season in college football - and the anticipation of bowl season grows - there is a lot of rumbling about reforming the BCS system. For the past few years, complaining about the BCS has become an annual sport in and of itself. However, if it weren't for the Ivy League in 1905 there might not be a BCS to complain about because college football might not exist (at least in its current format).

In 1906, the entity that will become the NCAA will be created to regulate/reform college football. Reading the 1905 NYT has been interesting in this particular area - in 1905 there were numerous deaths, severe injuries, riots, and overall bad behavior, in college football. In the same year, attendance figures reached all-time highs and the schools are discovering that there is a lot of money in big-time college football.

The Nov. 27, 1905 NYT has a story about football reform, with the following opening paragraph:

Following the suggestion of President Roosevelt for uniform eligibility rules in college athletics and for the elimination of unnecessary roughness, brutality, and foul play in the American game of football, the University of Pennsylvania has taken the initiative for the suggested reforms, and has addressed a circular letter on the subject to the heads of all universities, colleges, private schools, and other institutions in the United States interested in athletics.

The story includes the sent to the university presidents. In essence, it describes the major areas the NCAA will eventually codify:

Prof. Hollis of Harvard has expressed the same thought. In his opinion the backbone of college regulation of athletics rests in three rules.

1. A definition of professionalism.
2. A rule which should require all members of athletic teams to be genuine students of the college which they represent, and to be satisfactory in their studies.
3. A rule to prevent the procurement of good players from other colleges by social or money inducements.

As amazing as it sounds, the Byzantine rules and regulations that the NCAA has passed over the years focus on these three basic issues. In a flash of naivete, however, the folks at Penn asked for voluntary adoption of the regulations they propose:
It [the committee] believes that they [the enclosed rules] will provide for all the exigencies which have hitherto arisen or that may arise, and if interpreted and accepted in the broad spirit by which was appropriately described by President Roosevelt as a "gentleman's agreement" will do away with the evils which have undoubtedly menaced inter-collegiate athletics, and will promote the best interests of clean, gentlemanly amateur sport.
The voluntary adoption of these rules proved difficult to enforce, requiring the NCAA to put some teeth in their enforcement efforts in the late 1940s and into the early 1950s.

Nevertheless, without Penn and other Ivy League schools, there is a high probability that college football could have been banned in the early 1900s and we wouldn't have the BCS to gripe about. While the Ivy League was relegated to Division I-AA status in 1981, fans of college football owe a nod of thanks to these schools for saving the game in its first series of crises.

Posted by Craig Depken at 04:24 PM in Sports  ·  TrackBack (0)

November 25, 2005
Football in poetry c. 1905

As we head into the last of the civil-war Saturdays (last week, Auburn-Alabama; last night, WV-Pitt; today, TX-Texas A&M, Arizona-ASU) including GA-Ga Tech (Go DAWGS) , Oklahoma-Ok. State, Ole Miss-Miss. State, Florida-Florida State, and don't forget Rice-Houston, a bit of the higher arts for the football fan. From the Nov. 25, 1905 NYT:

JUST BEFORE THE BATTLE

Just before the battle, mother,
I am buckling on my splint,
While the surgeon on the side lines
Fixes arnica and lint.
On my head's a helmet, mother;
On my shoulder is a pad;
Rubber bandages and nose guard
Shield from ill your six-foot lad.

Just before the battle, mother,
I am thinking some of you,
Still I can't forget the full back
Whom I've sworn an oath to do.
I am going to paste him, mother -
I shall put him in a trance.
See -- e'en now at my suggestion
They have brought the ambulance.

REFRAIN
Farewell, mother, you may never
Recognize me any more.
But that full back will be missing
When the battle cries are o'er


Posted by Craig Depken at 09:08 AM in Sports  ·  TrackBack (0)

November 24, 2005
The next big thing c. 1905

In the early 20th century, automobiles are a luxury (and an extreme danger) and the majority of long-haul travel is by railroad. Earlier in November, the 1905 NYT reported that the annual freight tonnage and passenger travel on the nation's railroads had reached an all-time high, revenues, profits, and dividends were also at all time highs, and that state government's were trying to figure out how to extract more tax revenue from those railroads that operated in their states (any of this sound familiar?).

The Nov. 24, 1905 NYT reports on a test of an electric locomotive that reached fifty miles per hour in a test run:

General Superintendent Bent of the Baltimore and Ohio Railroad and Superintendent Gibbs of the Pennsylvania Railroad were among railway officials who went on a short trip out of Philadelphia to-day to test a new electrical locomotive designed to replace the ordinary steam locomotive, especially on branches and spur lines.

The new engine is capable of making fifty miles an hour...The equipments consist of an eighty-horse power gasoline engine connected to a fifty-kilowat Westinghouse generator, supplying a storage battery of 103 cells of two and one-half volts each.


This story is interesting in a few respects. First, why are the railroads trying to innovate on the venerable steam locomotive? After all, in 1905 there are few cars, no interstates, no airplanes, no semi-trucks. The railroads, as an oligopoly, are the sole providers of long-haul travel for freight and people - and as such, it is often argued, there should be little innovation in such an industry. However, economists have long argued that innovation is necessary in a dynamic world. Railroads are no different, in this respect, than automobile, computer, or digital camera manufacturers. All of these industries are comprised of companies who are consistently trying to lower costs while at the same time ensure that their customers are willing to pay for their services. In retrospect, it is evident that the railway industry will face considerable pressure over the next fifty years, and it is likely that long-range planners in the railway industry saw this as well.

Second, the railway industry of 1905 received considerable flack for being dangerous (1905 was the deadliest year, to date, for railway accidents), noisy, dirty, and, while many would grudgingly admit that the industry provided a valuable service, there were many who demanded reform and government intervention in the market. Today's automobile industry faces many of the same accusations. Perhaps the semi-private companies that comprised the railway industry in 1905 were innovating to stave off further regulation? Note that the story does not suggest that the railway industry had asked for tax breaks for introducing what in essence could be considered a hybrid train engine (although there might have been).

Finally, there is an interesting technological parallel here. While today's automobile manufacturers (and the greens) whine that they do not have enough tax breaks to fully implement the hybrid technology for automobiles, it seems that the hybrid idea has been around - gasp - for a hundred years (in the end, the diesel-electric locomotives of today are similar in concept if not scale as the hybrid automobile). Such innovations can be made better over time, but it seems that we haven't come all that far in the idea of the hybrid. Did railroads lobby for tax breaks to introduce the cleaner, quieter, and likely more cost efficient, hybrid? Perhaps, but then today's lobbying on the part of the automobile manufacturers would be no different - alas.

A final thought strikes me. Although reading the paper from 100 years ago makes ex post analysis most convenient, there are still lessons to be learned. If the story told us of a compressed air engine that could make 50 mph, and in the end the compressed air engine was not brought on-line, then we would know that the story was not important. In this case, we know that the hybrid locomotive will eventually make it big - of course, therefore, the story is of interest.

However, my point would be to consider this. The next big thing is not immediately clear - to you, me, the government, or anyone else for that matter. Private enterprise ultimately provided the diesel-locomotive, affordable automobiles, and the rest of the products that we see in our times. Which story describes the "next big thing?" We won't know until, perhaps, a hundred years hence, but the important lesson is that such stories can and should be written. More specifically, one of the best aspects of the private-enterprise based economy is that such stories are written every day - and eventually the next big thing is created - almost always without government involvement.

Posted by Craig Depken at 03:35 PM in Economics  ·  TrackBack (0)

November 23, 2005
Link Wray, RIP

Last night on Letterman, the band played guitarist Link Wray’s song “Rumble” as the show went to a commercial break. This morning I discovered the sad reason why (hat tip to Jeff A. Taylor at Reason Hit & Run): Link Wray passed away earlier this month and was buried on Friday. He was 76. Here is the official Link Wray site; here is a fan tribute site; Rolling Stone has an obit here.

You’ve heard his menacing instrumentals even if you don’t know the songs by name. Among other placements, two of his songs play in the background of the Jack Rabbit Slim’s scene in Pulp Fiction. He was a huge influence on the surf instro music of the 1960s (Dick Dale et al.) through to today’s post-Pulp Fiction bands.

I saw Link play in Atlanta seven years ago, and in St. Louis in April this year. Both times in small clubs. This April's was an unpolished show, since it was early in a tour with a pick-up drummer and bass player who didn’t know the material yet. But the guitar-playing was timeless. I hope I’m as cheerful and energetic at 76 as Link was.

Posted by Lawrence H. White at 11:12 AM in Culture  ·  TrackBack (0)

Koch Buying Georgia Pacific

Koch Industries is buying Georgia-Pacific. So what? Check out this description of Koch's management style:

There's nothing like a dose of Austrian economics to juice up the getting-to-know-you process.

Georgia-Pacific, meet Charles Koch, a Midwesterner on a mission to take some of corporate America's longest-held principles and turn them upside down.

Part philosopher, large part tycoon, Koch has wasted no time introducing himself to the new recruits at Georgia-Pacific. Just two days after privately held Koch Industries announced its eye-popping plans to acquire the Atlanta Fortune 500 company, there was the professorial chairman, at the head of a class, schooling 70 Georgia-Pacific executives in the ways of his Wichita, Kan.-based empire.

Let other companies have their Six Sigma and one-minute managers. Koch Industries is sticking to a homegrown style that's grounded in the free-market principles espoused by economists Ludwig von Mises and Friedrich von Hayek.

Add a little psychology and science to the mix and you've got what Charles Koch calls "Market Based Management," a trademarked set of business principles that he credits with making Koch Industries the $60 billion private powerhouse it is today.

Boiled down to the simplest terms, Koch's philosophy pushes people to think like entrepreneurs, to constantly question themselves and each other.

Forget the old top-down, command-and-control stuff. Koch contends his company is more like a free nation, where the native language is spoken in terms of "comparative advantage" and "spontaneous order."

Another story here.

Posted by E. Frank Stephenson at 10:20 AM in Economics  ·  TrackBack (0)

November 22, 2005
Currency and the Constitution

Townhall.com reports:

The atheist who is fighting to take the phrase "under God" out of the Pledge of Allegiance filed a lawsuit late Thursday seeking to prevent the U.S. government from printing the national motto -- "In God We Trust" -- on any future coins or paper money.

In the suit filed with the U.S. District Court in Sacramento, Calif., Michael Newdow claims that the present use of the phrase "violates the Establishment and Free Exercise Clauses of the United States Constitution," and he seeks to stop the government from using it on mint coins and print currency, as well as in "any act or law."

Newdow’s suit fails to challenge what’s really unconstitutional about our present currency notes and coins, namely that the US government is not empowered to issue fiat money. Article I, Section 8 grants Congress the power to “coin money”, but not to print money. Article I, Section 10 forbids any state to "coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts". No section empowers the Congress to emit bills of credit (paper money) or to declare anything but gold and silver coin a legal tender. For a serious discussion of the Constitution’s monetary provisions – and how the courts have made a hash of them – see Richard H. Timberlake’s Cato Journal article on “The Government’s License to Create Money”.

Posted by Lawrence H. White at 09:48 PM in Economics  ·  TrackBack (0)

Great Reporting from Matt Welch

Reason Associate Editor Matt Welch does some great reporting on eminent domain in the LASD. He finds ample space nearby a proposed eminent domain taking. The school district says it wants space farther away from the freeway than the land for sale. How much farther away are the homes slated for demolition? One-tenth of a mile.

Posted by Joshua Hall at 08:03 PM in Law

Homer Simpson: Prudent Dove?

From tonight's Simpson repeat:

[Bart has just been expelled from Springfield Elementary].

Marge: Bart, I love you, but sometimes I don’t love your choices. (sigh) Now we have to find another school for you.

Homer: Yeah, and if you get kicked out of that one you’re going straight in the army where you’ll be sent straight to America’s latest military quagmire. Where will it be? North Korea? Iran? Anything’s possible with Commander Cuckoo-Bananas in charge.

Posted by Joshua Hall at 07:54 PM in Funny Stuff

Would It Matter?

Dan Drezner is upset that he cannot find a single Republican congressman who wants what he wants. Would it matter if he did? After all, whatever your theory of how policy gets made (median voter, Leviathan, etc.), the role of a single politician is of no importance, unless he or she is the decisive voter.

The real problem is not that there are no politicians who believe what Drezner believes, or what I believe, or what you believe. The real problem is that we permit politicians to make collective decisions in areas where individual decisions would be superior.

The real shame is not that government is filled with people we disagree with. It is that so many people are more concerned with who is in power, rather than what power they have.

Posted by Joshua Hall at 07:50 PM

Follow up on $100 laptops

Evidently the $100 laptop prototype exists in someone else's imagination and likely will be funded out of our pockets.

Here's a Quicktime movie (8 minutes) at the prototype's unveiling. It's pretty neat, but very ambitious.

Posted by Craig Depken at 05:04 PM in Economics  ·  TrackBack (0)

This [blank] for sale

From Advertising Age:

The 2005 Time Person of the Year is brought to you by ... Chrysler.

The automaker has signed a seven-figure deal that latches it to the year-end cover-story franchise, ensuring, at least for the next four weeks, nearly every Person of the Year mention will be accompanied by a Chrysler spot, banner, button or bumper.

I want to sell sponsorship of my exams (as well as sponsorships for hints), but somehow I think that is not allowed.

Does Chrysler already know the person of the year? What if it were Osama or some other non-desirable (at least among Chrysler's target consumers)? Oh, the article states that the "finalists" have been determined to be: "Steve Jobs, Bono, the Google Guys, Valerie Plame, Lance Armstrong and rumored front-runner Mother Nature.'" Okay, this time it doesn't look like such a bad bet - and the value of the Time Person of the Year is arguably higher when there are fewer "wildcards" in the list (Plame is not really an issue of such magnitude is it?).

Likely no future "Adolf Hitler" will be a (sponsored) person of the year...

Virtual Tiebout model and spam

The Nigerian emailers received the Ignobel for literature last month. Perhaps the sunshine this provided has made the spammers scurry to other countries. More likely a sufficient number of spam filters have been set to filter out the word "Nigeria" and other African countries where hidden loot can be released upon the signature of a single U.S. citizen.

As far as markets go, I am not sure where this falls - virtual Tiebout? - but in my email box I just received another promise of instant riches, this time from the U.K. (heads up?)

Hello,

Do accept my sincere apologies if my mail does not meet your personal Ethics. I introduce myself as Liam Johnson a staff in the accounts management Section of a well-known bank here in the United Kingdom.

One of our accounts with holding balance of 15,000,000 pounds (Fifteen Million British Pounds) has been dormant and last operated in the past 3 years. From my investigations and confirmations, the owner of this account is a Foreigner by name Gerald Stone died on the 4th of January 2002 on a plane crash in Birmingham here in UK

The usual litinany of explanations and assurances follows. There is actually a confidentiality disclaimer at the end, making it look somewhat legit, but now I have to readjust my spam filter.

Posted by Craig Depken at 03:51 PM in Culture  ·  TrackBack (0)

Frivolous law suits c. 1905

Tort reform becomes a political issue every now and then, usually with a couple of extreme examples of people suing for lots of money for seemingly little damages. Over at The Club for Growth's blog Andrew Roth posts about a new coffee-burn lawsuit against Dunkin' Donuts (for a measly $10m). Sounds a little high, but heck, let a jury decide (personally, I favor arbitration in these cases - if the arbitrator feels there is gross negligence on the part of DD then perhaps it goes to the courts? This previous post suggests instantaneous arbitration might not be so good.).

The Nov. 22, 1905 NYT reports on what I think is an even better suit (not giving anyone ideas, mind you):

DES MOINES, Nov. 21 - Miss Ella Hamilton thinks the kiss she alleges that Hayden Marquis, a wealthy young man, stole from her is worth $10,000. That is the amount of damages she demands in a suit filed to-day in the District Court. The suit will come to trial at the January term.

I have a suspicion we won't see any more references to this case. However, from EH.net, the $10,000 in 1905 would be worth:

$207,607.55 using the Consumer Price Index
$167,450.44 using the GDP deflator
$958,117.58 using the unskilled wage
$1,210,103.71 using the GDP per capita
$3,926,695.46 using the relative share of GDP

Ouch. However, this does support my working practice of never kissing women who have not offerred to be kissed (hence no stealing).

Tort reform? Perhaps it is a problem that is a hundred years old and needs to be resolved. Do frivalous lawsuits such as this, and coffee burns, increase when the economy is up or when the economy is down?

(HT: Darren Grant asks how do you prove the kiss? CD's comeback - how do you prove possession of stolen goods? Mike Ward asks if it's truly frivolous - virtue was important back then.)

Posted by Craig Depken at 01:03 PM in Law  ·  TrackBack (0)

The Game c. 1905

"The Game" is not Auburn-Alabama, nor Georgia-Florida, but Yale-Harvard. The 2005 version was played last weekend - Harvard pulling it out in triple overtime 30-24. Today, the two teams are non-scholarship Division I-AA teams that don't draw a lot of attention. However, in 1905 the teams were two of the best in the country.

The Nov. 22, 1905 NYT actually reports that the officials for The Game had been decided by the two teams:

It was announced to-night (Nov. 21) that Yale and Harvard had agreed upon officials for Saturday's game. They will be Paul Dashiel of Annapolis, umpire; Matthew A. McClung of Lehigh, referee; Mr. Whitting of Cornell, head linesman. The selection of the umpire was not made until to-night (Nov. 22).

What's the big deal? In 1905 the rules for American Football were still in flux, with considerable violence on and off the field during the games. Unlike today games, in which the rules are standardized and "professional" if not "proficient" referees are selected by the conferences and assigned to games, in 1905 it is likely that a bit of agreement about the arbitrary nature in which rules were to be interpreted and enforced was necessary.

This year there have been several Division IA games that seem to have been affected by poor officiating. In 1905, it is almost guaranteed that the outcomes could be affected by arbitrary officiating. Hence, an additional transaction between the two teams had to be incurred before the game could be played - a small benefit from having conferences/leagues handle the assignment of officials.

Posted by Craig Depken at 12:47 PM in Sports  ·  TrackBack (0)

NASCAR Romance Novels

Talk about markets in everything (with a nod to MR):

TORONTO and DAYTONA BEACH, FL, Nov. 2 /PRNewswire/ - Harlequin Enterprises Limited (www.eHarlequin.com), one of the world's leading publishers of women's fiction and the global leader of series romance and NASCAR, the largest sanctioning body of motorsports in the United States, today announced a new licensing agreement.

Under the agreement, Harlequin will publish a variety of women's fiction titles that will be included in the NASCAR Library Collection, which provides a high level of authentication and quality to NASCAR-licensed books. The novels, by some of Harlequin's bestselling authors, will have plotlines centering on NASCAR and will bear the NASCAR brand on their covers. Harlequin will also be the first publisher of women's fiction for NASCAR.

The debut title in the new program, IN THE GROOVE by award-winning author Pamela Britton, will be published on January 31, 2006 to coincide with the Daytona 500. IN THE GROOVE will be the first fiction title ever published as part of the NASCAR Library Collection.

I wonder if this former driver is the NASCAR version of Fabio.

Posted by E. Frank Stephenson at 10:37 AM in Sports  ·  TrackBack (0)

Lies, #$%! Lies, and Misleading Wal-Mart Statistics

From the St. Louis Post-Dispatch:

About half the children of Wal-Mart employees are either uninsured or covered by government-subsidized insurance such as Medicaid. Nationally, about one-third of all workers' children are uninsured or covered by government-subsidized programs.

Nothing like a good old fashioned apples-to-oranges comparison. On one hand we have Wal-Mart workers (avg wage roughly ten bucks, avg educational attainment probably a high school diploma) and on the other hand the entire national labor force which is surely better paid and more highly educated.

For more on Wal-Mart and health insurance for workers' children see this previous post.

Posted by E. Frank Stephenson at 10:06 AM in Economics  ·  TrackBack (0)

Welcome Ed Lopez

I'm pleased to welcome Ed Lopez of San Jose State University's economics department to our merry band of bloggers. Ed is a George Mason Ph.D. who has written on term limits and other public choice topics. Ed was formerly on the faculty at the University of North Texas before moving to SJSU this year. His UNT webpage is here, including links to his research page and publications.

Posted by E. Frank Stephenson at 09:28 AM in Economics  ·  TrackBack (0)

November 21, 2005
Big money in college sports c. 1905

There is a common complaint that money has corrupted big-time college athletics, especially men's basketball and men's football. There is a perception that the amount of money available to big-time college football programs has increased over the past few decades, especially since the anti-trust case against the NCAA's television contracts back in 1984.

From the Nov. 21, 1905 NYT is a little story about Yale football - who at the time was one of the biggest football programs in the country:


Yale will receive $63,700 from the Princeton and Harvard games. Of this amount $29.700 comes from the Princeton and it is expected $34,000 will come from the Harvard game. This is the largest receipts from the two big games in Yale football history, and is an average income of $6,370 a week during the season.

I still haven't figured out which of the real measures I like the best, but from the EH.net folks, the $63,700 could be considered any of the following in real terms:
In 2003, $63,700.00 from 1905 is worth:
$1,322,460.08 using the Consumer Price Index
$1,066,659.30 using the GDP deflator
$6,103,208.98 using the unskilled wage
$7,708,360.62 using the GDP per capita
$25,013,050.06 using the relative share of GDP

The CPI measure isn't too far off from what a Division IA school might expect to receive from a home game today. Using the relative share of GDP, the revenue to Yale from these two games would equal the season total revenues of one of the higher revenue teams in Division IA.

What's the upshot? Perhaps the revenues to the biggest programs in college football may not be much higher today than they were in the past - at least in real terms.

Posted by Craig Depken at 09:22 PM in Economics ~ in Sports  ·  TrackBack (0)

Why the windfall profits tax?

There is still a residual murmur that Big Oil somehow unfairly gained during the recent run-up in crude/gasoline prices over the past two quarters. Although prices are now "dangerously" close to $2.00 per gallon, the desire to "do something" seems too tempting for the politicos in D.C.

The Tax Foundation released a story earlier this month (I'm sorry I missed it originally) investigating, among other issues pertaining to the domestic oil industry, the impacts of the windfall tax imposed in 1980. In yet another example of stupidity or obstinance on the part of government economists/accountants, the projected revenues from the windfall profit tax (at least the way it was set up) were significantly less than actual revenues - which is not surprising to economists but seems to be a mystery to politicians.


Do the good folks in Washington want the windfall tax because any policy is better than no policy? Do the folks in fly-over country buy into the fact that if the federal government taxes Exxon somehow we are made better off?

My bet: "Affirmative" on the former and a distinct "Maybe" on the second. The former speaks to the politics of the situation and the latter to economic illiteracy.

Posted by Craig Depken at 04:40 PM in Economics  ·  TrackBack (0)

Books Bound in Human Skin

My former student Dan Alban has a nifty--assuming there can actually be such a thing--article on books bound in human skin. The article is well written and (perhaps too) thoroughly researched.

Posted by E. Frank Stephenson at 12:45 PM in Misc.  ·  TrackBack (0)

Incentives Matter: Metro Commuters Edition

From the AJC:

Atlanta drivers may not believe it. It may not seem possible, given their sluggish, endless commutes. But it's true, according to a new study.

Drivers here are driving less.

Every year from 1998 to 2003, the years included in a new report on Atlanta traffic and transit trends, the average distance each person drives per day has fallen. The average distance per licensed driver has plummeted, from 47.2 miles per day to 38.3. That's about 19 percent.

The study's authors at the Georgia Regional Transportation Authority caution that they didn't ask why. But for them and planners across the board, one possibility seemed obvious: that in the face of unbearable traffic congestion, a decade or more of promoting live-work centers and mixed-use developments may be paying off. And metro Atlantans, famously stubborn in their commitment to cars, may be changing their behavior.

Imagine that--people respond to the increasing time cost of a commute by finding shorter commuting patterns. Almost as if moved by an invisible hand ... though the planners will no doubt crow about their promotion of live-work centers.

Posted by E. Frank Stephenson at 11:27 AM in Economics  ·  TrackBack (0)

That Pesky Downward Sloping Demand Curve

NJ has hiked its minimum wage. The result:

SALEM -- Several senior citizens working in non-profit and public organizations in Salem, Cumberland and Gloucester counties will face layoffs in December.

Chris Davenport, executive director of Salem Main Street program, said the federally funded non-profit company Experience Works, which assists low-income senior citizens with job training and placement, has been forced to lay off seniors due to the increase in minimum wage.

He said Experience Works over hired and did not plan for the increase in minimum wage from $5.15 per hour to $6.15 per hour.

From NJ's governor's proposal for the minimum wage hike:

The purchasing power of minimum wage is at an historic low. Coupled with the relatively high cost of living in New Jersey, the state's lower income workers are being pushed to the brink. Acting Governor Codey believes all New Jerseyans deserve the fair proposition that an honest day's work should garner a living wage. Moreover, there is strong evidence that increasing the minimum wage also significantly improves quality of life – reducing hunger and increasing healthcare.

Evidently Gov. Codey thinks zero--i.e., unemployment--is a living wage. I'd like to hear about how laying people off reduces their hunger--that would be a pretty amazing feat.

HT: WSJ's Best of the Web Today

Posted by E. Frank Stephenson at 11:23 AM in Economics  ·  TrackBack (0)

Pension guarantee reform: Why not privatization?

Back when deposit insurance looked like a free lunch, Congress created the federal Pension Benefit Guarantee Corporation to guarantee private defined-benefit pensions. The PBCG announced last week that it is on its way to needing a taxpayer bailout: its expected payouts exceed its expected resources by $22.8 billion.

It’s a replay of the FSLIC fiasco of the 1980s, complete with moral hazard due to the mispricing of federal guarantees. Just as deposit insurance encouraged thrift institutions and banks to hold riskier portfolios, because it made risky institutions look perfectly safe to customers and didn’t offse the lack of depositor scrutiny by charging more in insurance premiums, the PBGC has encouraged companies to overpromise and underfund their pensions.

In a seeming replay of the FDIC Improvement Act of 1991, which belatedly introduced measures to risk-adjust deposit insurance premiums and to limit regulatory forbearance toward failing banks, the US Senate has now passed a “pension guarantee reform” bill. But the Financial Times says that the so-called Pension Security and Transparency Act is a sham, cobbled together by “an unholy alliance of business and labour groups.”

In fact, today's pension obligations are being shifted to tomorrow's taxpayers who may be asked to bail out the PBGC at a cost some forecast could top $100bn (£58.3bn).

Among its most dangerous features, the bill relaxes the pressure on companies most likely to become insolvent and dump their underfunded pension schemes into the PBGC. Their credit rating would have to be downgraded twice before they were required to begin topping up their pension funds. Another provision continues the actuarial delusion that liabilities can be discounted by the expected rate of return on investments, a conjuring trick that can make a deficit disappear in a jiffy.

Perhaps its most dangerous clause is the special treatment offered to airlines. While other companies have seven years to make good their shortfalls, they get 20 years. They are also allowed to choose the discount rate for their liabilities when calculating the amount they need to provide.

The FT understandably urges that Bush should veto the bill and “insist that Congress pass legislation next year that would avert the need for a taxpayer bail-out of the PBGC, by bringing real security and transparency to pensions.”

An even sharper analysis has been offered by Steve Forbes:

Why should Uncle Sam stay in the pension insurance business, where it has been since the mid-1970s? Private companies insure municipal bonds. Why not let similar outfits do the same thing with pensions? … The PBGC should be closed to new customers, and current ones should be given a choice--stay in and pay realistic premiums, or pull out. Then once the agency is shored up, it should be privatized.

Ultimately, defined-benefit pension plans should wither away and be replaced by defined-contribution plans such as 401(k)s.


Posted by Lawrence H. White at 11:12 AM in Economics  ·  TrackBack (0)

November 18, 2005
Incentives matter, cont.

The Senate passed a bill that, among other things, extends the time that government will take less of our capital gains and dividends until 2010 (originally set to expire in 2008). I thought this line was hilarious:
Critics of the provision argue the investment tax break primarily benefits upper-income taxpayers.

So the critics dislike the provision not because it harms some, but because it benefits some. "I support laws that harm people who have broken no laws."
The author of the story, one Jeanne Sahadi, CNNMoney.com senior writer, apparently didn't need to know anything about the Laffer curve to get her job:
The extension for the rates...would come at a time when lawmakers want to reduce the deficit.

On a semi-related note, an Atlanta Fed publication reports on the surge of film and TV production occurring within Louisiana. Why?
Under the revised plan, tax credits are granted equal to 25 percent of a production company’s Louisiana production spending. An employment tax credit of up to 20 percent is available.
Result?
Without the state rebate, Schott figures, 98 percent of the films, including all the larger productions, would have shot elsewhere.

And, for dessert, a story for the Luddites out there.

Posted by Tim Shaughnessy at 01:18 PM  ·  TrackBack (0)

November 17, 2005
What if we all won the lottery?

Standard economic theory predicts that an individual's work effort will decline if he/she is given unearned income. Lottery winners certainly work less after winning than before. I wonder what would happen if an entire country won the lottery? Would the whole country work less? The answer, at least if you look at some oil-rich Arabian nations who are sitting on billions of barrels of oil, is yes.

Some facts from the country of Oman:

Population: 3 million
Foreign nationals: 600,000
Omani nationals: 2.4 million
Labor Force: 920,000
Labor Force participation rate: 31%
[Source: CIA Factbook]

This source says that foreigners account for 2/3 of the labor force. This implies a labor force participation among foreigners of nearly 100%. Among Omani nationals, this implies a labor force participation rate of just 13%! Wow.

[I'm going to Oman this week for the annual Economic Freedom Network meeting.]

Posted by Robert Lawson at 02:12 PM in Economics  ·  TrackBack (0)

Do as I say...

In today's campus newspaper an alumnus complains about the newspaper's writing and editing,

I see less spelling errors and grammar mistakes in blogs.

Really? I see fewer.

Posted by Robert Lawson at 11:08 AM in Funny Stuff  ·  TrackBack (0)

November 16, 2005
Evidence for unintelligent design

Exercise: try to square the notion of "intelligent design" with the maladaptation of the modern kidney:

"The kidneys do an incredible job of holding on to sodium, which was important to the survival of our early ancestors who lived in a salt-poor world, but today there's so much salt in the food we eat that the kidneys end up holding onto too much sodium," and that can lead to high blood pressure, researcher Dr. Howard Pratt said in a prepared statement.
Posted by Lawrence H. White at 05:29 PM in Science  ·  TrackBack (0)

Wal-Mart Roundup

The anti-Wal-Mart film "The High Cost of Low Price" is getting lots of attention. Most has been from the amen corner of Wal-Mart haters, but not so last night's "Special Report with Brit Hume." Hume's guest was National Review's Byron York who has been doing some digging on the film. He reported (sorry no link but I'll try to add one later) that a small hardware store in rural Ohio that the film depicts as a Wal-Mart casualty had actually closed before Wal-Mart arrived. Perhaps the store closed in anticipation of Wal-Mart's arrival, but York quoted the hardware store's owner as saying that Wal-Mart had nothing to do with his store's closure. Of course, I have no qualms if the perennial gales of creative destruction did replace a hardware store with a Wal-Mart.

UPDATE (11/16 10:15PM): The store in question was H&H Hardware of Middlefield, OH. The store closed nearly three months before a Wal-Mart opened nearby (and has reopened since Wal-Mart's arrival). From the original story in the Cleveland Plain-Dealer:

"I think Wal-Mart hurts a lot of small businesses," said Don Hunter, who started H&H in 1962 and is featured in the soon-to-be-released documentary. "But it's not the reason we closed. Absolutely not."

See also Ryan Sager in the NY Post (registration required). (A superstore-sized HT to Steve Horwitz for the links.) END OF UPDATE

Now there's a pro-Wal-Mart film "Why Wal-Mart Works & Why That Makes Some People Crazy" (view trailer here; the producer has a blog here). Good for him--I might just buy a copy of the film out of moral support. Even better--the producer's blog claims he got no funding from Wal-Mart.

While we're on the Wal-Mart soapbox, here's another example of how Wal-Mart benefits consumers--Business Week reports that Wal-Mart is attacking the business model of Best Buy and Circuit City by offering lower-cost extended warranties.

Business Week also reports on a new study warning of a slide [in the standard of living] for the U.S. as the share of lower achievers grows. To the extent this is true--and it may well be incorrect since educational attainment is difficult to meaningfully measure--an ample supply of folks who develop no skills probably has more to do with Wal-Mart's wages than any "unfair labor practices."

Posted by E. Frank Stephenson at 02:39 PM in Economics  ·  TrackBack (0)

Albert Pujols relieved himself here

Busch Stadium in St. Louis is being demolished to make way for a new baseball stadium. This week the Cardinals are auctioning off various odds and ends from the old stadium. Don’t miss your chance to bid on a player-used urinal! Or maybe you’d prefer to own a genuine on-deck circle?

Posted by Lawrence H. White at 02:18 PM in Sports  ·  TrackBack (0)

No Bridges to Nowhere?

From a Sierra Club press release (with HT to Drudge):

The Senate Appropriations Committee removed earmarks for two controversial "bridges to nowhere" in Alaska: the Gravina bridge, which would connect Ketchikan to an island of 50 people, and the Knik Arm bridge, which would link Anchorage to a sparsely populated area. The projects have been the subject of strong criticism because of the general backlog of existing roads and bridges in desperate need of repair, especially those affected by Hurricanes Katrina and Rita....

The issue has been particularly controversial for Senator Lisa Murkowski (R-AK) who has served as a strong advocate for the Gravina bridge despite the fact that her family owns 33-acres of undeveloped land 3/4 of a mile from the point where the bridge would touch down. Since the State would now decide how the money would be spent, her father, Governor Frank Murkowski, would now face the same ethical scrutiny.

What a stinky little bit of self-dealing--for some reason I had missed this angle in previous reports on the infamous bridges.

Posted by E. Frank Stephenson at 01:49 PM in Politics  ·  TrackBack (0)

Cool Paper on Institutions

From the Sept AER:

History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India
Abhijit Banerjee and Lakshmi Iyer

Abstract: We analyze the colonial land revenue institutions set up by the British in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes. Areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post-independence period than areas in which these rights were given to the cultivators. These areas also have significantly lower investments in health and education. These differences are not driven by omitted variables or endogeneity problems; they probably arise because differences in historical institutions lead to very different policy choices.

Here's a link to an earlier version of the paper.

Posted by E. Frank Stephenson at 01:05 PM in Economics  ·  TrackBack (0)

Price System Sighting--Wilmington Convention Center Edition

Excerpted from the Wilmington Star (with a HT to The Locker Room):

Wilmington’s downtown convention center and Marriott hotel complex will be “less than our dreams,” the chairman of the Mayor’s Convention Center Task Force’s facility design committee said Tuesday.

The latest project design loses more than 10,000 square feet of meeting space because of cost restraints. The latest design was unveiled Tuesday by architects and developers in separate meetings of the Task Force and City Council.

Architects and developers said they redesigned the facility over the past week and a half after cost estimates came in over the city’s $50 million budget, mainly because of increased construction and material costs blamed on rebuilding after hurricanes and a nationwide construction boom.

Mr. Weld said he recognized the costs are beyond the control of the city and developers.

Another instance in which incentives matter--in this case prices create an incentive to economize on the use of building materials.

Of course the taxpayers of Wilmington would be better off not having the critter in the first place, but that's a different topic.

Posted by E. Frank Stephenson at 11:56 AM in Economics  ·  TrackBack (0)

How long did this last?

In the Nov. 16, 1905 NYT is a little story about how the cotton farmers of the South planned a coordinated effort to take 3,000,000 bales of cotton off the market in an attempt to raise the price from $0.10 to $0.15 per pound. A bale of cotton is somewhere around 500 pounds, so this "cartel" aimed to tie up a lot of cotton.

How was the collusion to be facilitated?

The Southern Cotton Association to-day perfected plans for taking off the market 3,000,000 bales of cotton by means of a series of pledges which the farmers will sign. The cotton held is not to be sold for less than 15 cents a pound.

Right - pledges. Except for the pressure a cotton farmer might receive from his neighbors, it seems there was little incentive for the farmers to hold out until $0.15 per pound.

Posted by Craig Depken at 10:41 AM in Economics  ·  TrackBack (0)

Laptops as foreign aid?

MIT Labs has been working on a $100 laptop that will help the lesser developed world gain access to the internet. This, in turn, is expected to help these countries to leap into the twenty first century and spur economic growth.

I have my doubts. Not that access to the computer isn't useful, but the "laptops from heaven" approach sounds too much like the cult-classic 'The Gods Must Be Crazy."

Nevertheless, MIT Labs is evidently close to releasing their first version of the $100 laptop in a few days, to be available "in volume" by late 2006 (pictured below):

If MIT labs can make the laptops for 100, well good for them. I have a feeling that after the U.S. and the other western governments have spent a few billion dollars to purchase a couple hundred thousand laptops, the laptops have been delivered to the school kids and families in the third world, and the laptops have been hooked up to the web, the first thing we will see is $100 laptops for sale on e-bay.

The $100 laptop sounds like a great deal, heck I might pay $200 for one.

I am sure the folks at MIT Labs have their "heart" in the right place, but the market price of a working/rugged laptop is greater than $100. How long until arbitrage and resales completely undermine the $100 laptop initiative? The program has been advertised as a new form of international aid. Indeed, it will be a new form of international aid, just not in the manner intended.

Update: here's another image of a prototype. I looked around for "rugged laptops" and there are quite a few on the market, although most websites do not offer prices (what's up with that?). However, this rugged laptop came in around $4500 - that presents a pretty wide arbitrage window, even allowing for the limited capabilities of the $100 laptop.

Evidently, the $100 laptop is not just for the third world. From the CS Monitor:

Massachusetts Gov. Mitt Romney has proposed a $54 million program to equip each of his state's 500,000 middle- and high-schoolers with the laptops, which the students would be allowed to keep. Other states may follow suit.

What a great "Newt Gingrich" idea - wasn't he panned for the same idea about ten years ago? The state gives each student a $100 laptop, but when said student breaks his/her laptop does the state replace it? Indeed, would it be worth repairing? One positive outcome of Taxachussets getting into the $100 laptop game is that $100 laptops will be on e-bay much faster.

It gets better. At the official MIT Laptop project homepage is the following:

Please note that the $100 laptops—not yet in production—will not be available for sale. The laptops will only be distributed to schools directly through large government initiatives.
Are the laptops being made available through government initiatives that are large or initiatives by large governments? Are the folks at MIT naive enough to really think the computers will not be available for sale? Please. Although the MIT project is non profit, so they will not sell the computers, there is nothing stopping those who receieve a laptop from turning around and reselling - indeed, that will likely be the immediate reaction by many people in the poorer sections of the world.

Will we see television commercials with some over-the-dam actor/actress suggesting that kids could surf the internet, download pornography, instant message their over-age boyfriend, and all sorts of other good things, for only a dollar a day?

Posted by Craig Depken at 10:15 AM in Economics  ·  TrackBack (0)

President Bush gets it right,

or at least his speechwriter does:

As South Korea began opening itself up to world markets, it found that economic freedom fed the just demands of its citizens for greater political freedom. The economic wealth that South Korea created at home helped nurture a thriving middle class that eventually demanded free elections and a democratic government that would be accountable to the people.
[full text]

I am often asked about what I call the "Singapore" problem. How can a country score so high on "economic freedom" yet score so low on "political freedom"? It is odd. There is a pretty solid positive correlation between the "two freedoms". But there are outliers like Singapore.

My standard reply echoes the President's above. Economic freedom creates weath, and in the long run (and the long run can take a long time to develop) this wealth will generate a demand for greater political freedom. I usually cite South Korea, Taiwan and Chile as examples. I'm still waiting for Singapore (and eventually and hopefully China) to follow the same pattern.

I remain skeptical about the ability to go the other way. That is, there isn't a lot of evidence that political freedom will lead to economic freedom. India is trying but the jury's still out.

Posted by Robert Lawson at 09:16 AM in Economics ~ in Politics  ·  TrackBack (0)

November 15, 2005
Bernanke pledges “continuity” with Greenspan’s strategy

Bloomberg reports:

“With respect to monetary policy, I will make continuity with the policies and policy strategies of the Greenspan Fed a top priority,'' Bernanke told the Senate Banking Committee at his confirmation hearing in Washington yesterday.

Great! Now if only we knew what Greenspan’s policy strategy was!

Posted by Lawrence H. White at 10:10 PM in Economics  ·  TrackBack (0)

Adulterated products c. 1905

Adulteration of products is nothing new. Today, we have government agencies who "stamp" their approval on products and certify that the products are what they claim they are. Libertarians and free-market economists often bristle at these agencies, suggesting that they might introduce inefficiencies in the market (think FDA drug approval) or that they create unneccessary barriers to entry, thereby restricting output, increasing prices and profits, and reducing consumer benefits. In the absence of clear negative externalities or gross violations of property rights, the free market might be expected to "push out" the bad products and retain only the good products.

On the other hand, there might be a Gresham's Law effect in which the bad, adulterated products push out the good products, thereby causing a reduction in consumer satisfaction but also any profit potential for those firms that produce legitimate products. Is the proper role of government to ensure that products on the shelf, labeled Product X, are actually Product X?

An interesting and, perhaps to-date, unsolved question.

The Nov. 15, 1905 NYT has a short story in which it is indicated that the federal government has actively pursued the adulterated French Wine and Olive Oil industries. Evidently, adulterated French wines were a problem (although for how many people the story doesn't indicate). The adulterated olive oil was evidently American cottonseed oil exported, relabeled, and reimported.

One might think this issue is only one that existed in the past, but I think Moldova has recently voiced concern that Bulgaria imports Moldavan wines, relabels them as Bulgarian and ships them out (or perhaps its vice-versa, my recollection of an article years ago in the WSJ is sketchy).

Nevertheless, the NYT article states that the government claims success on the wine and olive oil and "satisfactory" progress in stamping out adulterated canned vegetables.

There is no indication that the adulterated wines/oil/vegetables posed serious health risks, although they may have existed. However, in 1905 there was no income tax, and the government raised significant revenue through import duties. Perhaps French winemakers had threatened to withhold export to the U.S. because of adulterated wines, after which the federal government would lose import taxes? Would this be an example of the government's pursuit of tax revenue providing a positive externality to consumers?

Posted by Craig Depken at 03:52 PM in Economics  ·  TrackBack (0)

Cato's Doug Bandow to talk at OSU

“Should a Free Society Draft its Citizens?”
November 17, 2005
7:30 p.m., Faculty Club Main Dining Room
RSVP to: 614-688-3206, ext. 4 or nov17@jgippm.ohio-state.edu

A debate featuring Lt. General Josiah Bunting, President of the Harry Frank Guggenheim Foundation and Doug Bandow of the CATO Institute. Moderated by William H. Woods, Esq.

Co-sponsored by the Speech and Debate Team at the Ohio State University and the Intercollegiate Studies Institute

Posted by Robert Lawson at 10:20 AM in Politics  ·  TrackBack (0)

November 14, 2005
On Happiness and Economic Freedom

A year ago, I examined the correlation between economic freedom and happiness levels for a small sample of countries and found a 0.79 correlation between freedom and happiness. (Details here in original post.)

Here's the abstract of a more systematic study:

This paper empirically analyzes the question whether government involvement in the economy is conducive or detrimental to life satisfaction in a cross-section of 74 countries. This provides a test of a longstanding dispute between standard neoclassical economic theory, which predicts that government plays an unambiguously positive role for individuals' quality of life, and public choice theory, that was developed to understand why governments often choose excessive involvement and regulation, thereby harming voters' quality of life. Our results show that life satisfaction decreases with higher government spending. This negative impact of the government is stronger in countries with a leftwing median voter. It is alleviated by government effectiveness - but only in countries where the state sector is already small.

HT: Juan Non-Volokh

Posted by E. Frank Stephenson at 01:21 PM in Economics  ·  TrackBack (0)

Is the Fed Overfed?

The St. Louis Post-Dispatch today ran a version of Dean Baker’s op-ed piece “Is the Fed Overfed?”. Although I’ve disagreed with Baker (and his sometimes co-author Paul Krugman) over Social Security privatization (he's adamantly against it), we have common cause in lightening the Fed’s burden on taxpayers. Imagine – a liberal willing to consider that a federal program might be over-funded! Nonetheless I have some quibbles with the op-ed piece.

After explaining how the Fed sets its own budget, without explicit Congressional approval of the amount, Baker comments:

As may be expected, the cost of the Fed has been rising.

Actually, the Fed’s budget constraint has always been soft. So we should expect a large budget, not a rising budget. Small detail. Baker continues:

The agency projects that it will spend $288 million in 2006. This compares with a budget of $156 million in 1994. Adjusting for inflation, this is still an increase of more than 45 percent. While the Fed's budget is not a big item in the context of the whole federal budget, Congress has had major battles over smaller sums.

Baker apparently got these budget figures from the line “Total Operating Revenues” on the Fed’s annual report, overlooking that the line represents only the budget of the Board of Governors. It doesn’t include the 12 reserve banks, whose research expenditures Baker later criticizes for lack of Congressional scrutiny (see below).

The Fed’s total operating expenses, including the reserve banks, were $3.425 billion in 2004 (p. 317 of the report). To be fair to the Fed, about $1.3b of its revenue came from providing priced services to banks, so that share of its budget was not funded by taxpayers. The Fed’s net expense to taxpayers was about $2.1b – more than seven times the figure Baker cites.

Read More »

Posted by Lawrence H. White at 11:19 AM in Economics  ·  TrackBack (0)

November 13, 2005
English is the new Latin

South Korea’s central bank is introducing new banknotes that, as one report puts it, “use English in its serial numbers instead of Korean.” The move has been criticized by Korean nationalists as a betrayal of Korean culture.

In response, the central bank said it has decided to use English as it is a global trend to use such letters in bank notes.

"Countries such as Japan, China, Taiwan and Hong Kong also use English letters in their bank notes," said Kim Yong-hyun, an official at the bank's currency issuance department. "South Korea, which has transformed itself into the world's 11th-largest economy, should be following such a global trend."

Technically, folks, there are no such things as specifically English letters. English uses the Latin alphabet, aka the Roman alphabet, as do many other western languages.

And also, technically, Hong Kong -- where the private banknotes sport entire English words -- is not a country. I was reminded of that by some visiting Chinese government officials whom I was lecturing on Wednesday about monetary policy. When I said that not every country has a central bank, and cited Hong Kong as an example, they immediately corrected my implication that Hong Kong is a country.

Posted by Lawrence H. White at 09:14 PM in Economics  ·  TrackBack (0)

November 12, 2005
Incentives Matter: Iowa Corn Crop Edition

Some excerpts from the NYT:

Soaring more than 60 feet high and spreading a football field wide, the mound of corn behind the headquarters of West Central Cooperative here resembles a little yellow ski hill. "There is no engineering class that teaches you how to cover a pile like this," Mr. Fray, the company's executive vice president for grain marketing, said from the adjacent road. "This is country creativity."

At 2.7 million bushels, the giant pile illustrates the explosive growth in corn production by American farmers in recent years, which this year is estimated to reach a nationwide total of at least 10.9 billion bushels, second only to last year's 11.8 billion bushels.

But this season's bumper crop is too much of a good thing, underscoring what critics call a paradox at the heart of the government farm subsidy program: America's efficient farmers may be encouraged to produce far more than the country can use, depressing prices and raising subsidy payments. In other words, because the government wants to help America's farmers, it essentially ends up paying them both when they produce too much and when their crop prices are too low.

"We are still in a condition of grossly overproducing for what the market can pay, at least what the market can pay that is acceptable to our corn producers," said Ken Cook, president of the Environmental Working Group, an environmental research group based in Washington that has been critical of farm subsidies. "We can't make up the difference in the export market, and the taxpayers are on the hook."

The government spent $41.9 billion on corn subsidies from 1995 to 2004, according to the Environmental Working Group.

Government incentives to produce flat-out have also helped make the large corn harvests possible. Farmers are hardly shy about exploiting the government safety net provided by guaranteed loan-deficiency payments. "Everybody leans on the L.D.P.'s as much as they can," said Ash Kading, a farmer in western Iowa who was harvesting his last few rows of corn late last week. "It is like opening up the federal Treasury. There were quite a few people this year that wish corn prices would go to zero because they would have a bigger L.D.P."

While farmers and grain merchants like Mr. Fray expect even more corn to be planted next year, some traders believe that higher natural gas prices will cause farmers to grow less corn - natural gas is used to make fertilizer, pesticides and herbicides. "With higher energy costs you will see more wheat acres and soybean acres," Mr. Bruce said.

This year grain piles are everywhere across Iowa and parts of Illinois, the two biggest corn-producing states. In Iowa, the amount of grain being stored on the ground for lack of storage is averaging more than 19 percent, its highest level in at least 25 years, Mr. Fray said, citing private industry data.

Lately the giant piles have become the butt of jokes in farm country. They were spoofed in a fake picture, widely e-mailed, that showed a skier airborne atop West Central's biggest pile, with the caption that said "one thing you can do with a 3-million-bushel pile of harvested corn: Ski Iowa."

Posted by E. Frank Stephenson at 12:17 AM in Economics  ·  TrackBack (0)

November 11, 2005
Price System Sighting: New Orleans Labor Market Edition

From today's NYT (via Mike DeBow):

BATON ROUGE, Nov. 4 - Burger King is offering a $6,000 signing bonus to anyone who agrees to work for a year at one of its New Orleans outlets. Rally's, a local restaurant chain, has nearly doubled its pay for new employees to $10 an hour.

On any given day, contractors and business owners pass out fliers in downtown New Orleans promising $17 to $20 an hour, plus benefits, for people willing to swing a sledgehammer or cart away stinking debris from homes and businesses devastated by Hurricane Katrina. Canal Street, once a crowded boulevard of commerce, now resembles a sparsely populated open-air job fair.

Ten weeks after Katrina, government officials and business leaders worry that a scarcity of able-bodied workers is hampering the area's recovery. In their desperation, they are using a variety of tactics to attract workers.

"I'd say I'm paying two to three times as much as I would in normal circumstances," said Iggie Perrin, the president of Southern Electronics, a supplier in New Orleans, who has offered as much as $30 an hour when seeking salvage workers on Canal Street.

This excerpt was especially interesting:

"This region is going to be going through a huge boom for the next three to five years rebuilding the coast," Mr. Bollinger said. "That's very good news for those who want work and really worrisome news for employers who have to compete with everyone else for labor."

For Mr. Bollinger, welders are just one of his labor headaches. His company pays welders $16 to $17 an hour. "When Sheetrock layers start paying $25 an hour," he said, "I'm either going to match it or I'm out of luck."

You mean workers don't need "living wage" laws to protect them from slimy employers?

Posted by E. Frank Stephenson at 11:25 PM in Economics  ·  TrackBack (0)

Is ESPN Ruining Sports Reporting?

This Weekly Standard column thinks so. An interesting idea, but I'm not sure I buy it.

HT: Southern Appeal

Posted by E. Frank Stephenson at 11:14 PM in Sports  ·  TrackBack (0)

Jon Sanders, Masochist

Jon Sanders performs a public service by eviscerating some internet nonsense about egg farming and gas prices. Somebody in Raleigh should buy Jon a good cold beverage of his choice for slogging through the garbage.

Posted by E. Frank Stephenson at 02:53 PM in Economics  ·  TrackBack (0)

Congestion Pricing Coming to NY?

An excerpt from the NYT:

It is an idea that has been successful in London, and is now being whispered in the ears of City Hall officials after months of behind-the-scenes work by the Partnership for New York City, the city's major business association: congestion pricing.

The idea is to charge drivers for entering the most heavily trafficked parts of Manhattan at the busiest times of the day. By creating a financial incentive to carpool or use mass transit, congestion pricing could smooth the flow of traffic, reduce delays, improve air quality and raise the speed of crawling buses.

Congestion pricing is the focus of a nine-month study by the Partnership, a group with great influence at City Hall, and participants have provided the first rough outlines of how such a plan might work.

The 840,000 cars that enter Manhattan south of 60th Street on an average weekday could be subject to a $7 charge during peak hours. Vehicles starting and ending their trips within that zone might pay a $4 charge. Several roadways would remain free, like the West Side Highway and the Franklin D. Roosevelt Drive on the East Side, according to people with knowledge of the study.

Posted by E. Frank Stephenson at 02:00 PM in Economics  ·  TrackBack (0)

That time of the year again

Black Friday Ads will start making the headlines on your local television news.

Some interesting prices from the Walmart ad:

12 cup Coffeemaker: $4.24
2 qt. Slow Cooker : $4.24
Assorted DVD Movies (Minority Report, Entrapment, more) : $3.44

Normally, Tom Cruise might not be surprised that his DVD sells for less than a coffeemaker. However, in this case...

Posted by Craig Depken at 12:03 AM in Economics  ·  TrackBack (0)

November 10, 2005
Convoluted Krueger

The Bush tax reform panel recommends eliminating the deduction for state and local taxes. Alan Krueger thinks otherwise:

Additionally, because people are geographically mobile, states and cities lose residents if they set taxes too high. The state and local deduction reduces this distortion.

Why rely on the federal tax code to reduce the distortion of high state and local taxes? Here's a better way--don't set taxes so high to begin with.

For the record, I still think the best thing to a broad base/low rate tax system that we'll get out of the DC dunces is the AMT. I say repeal the income tax system and leave the AMT.

Posted by E. Frank Stephenson at 08:53 PM in Economics  ·  TrackBack (0)

Oil Profit Idiocy comes to Scarborough Country

Not to be outdone by Fox’s oil-price alarmist Bill O’Reilly, the normally sensible MSNBC yakmeister Joe Scarborough has declared a “campaign against out-of-control oil prices”. An excerpt from last night’s show:

JOE SCARBOROUGH: This is just one of those issues that really resonates with Americans. They don't understand why they're paying more at the pump than ever before and why oil companies are making a bigger profit than ever before, -- $9 billion this quarter for one oil company.

But Joe, you aren’t helping Americans understand, even though it’s really rather simple. They’re paying more at the pump (or were – prices are now back down to about where they were in April) because of reductions in supply. The world price of crude oil has risen, and the refining of crude into gasoline was interrupted by a couple of hurricanes you might have read about. The higher price reflects greater scarcity, and is the only efficient way of coping with that scarcity. Marvelously, without decreeing to anyone how much he must cut back, the high price gets the least urgent users of gasoline to scale back their use until there’s just enough to go around.

Scarborough’s politico guests weren’t much help, either.

SEN. KEN SALAZAR (D), COLORADO: You know, that's just incredulous [sic] to me that the big oil companies are making these huge profits while all of America is hurting from the farmland to consumers in the cities. We see more pain at the pump than we ever have before.

Senator, if a high gasoline price didn’t cause “pain,” it wouldn’t get anyone to economize on their use of gasoline, would it?

The huge profits are also rather simple to understand. Big oil companies have big oil and gas inventories. When prices rise, they record profits.

What is a profit? It’s the difference between input prices and output prices. A firm that earns a profit has had the foresight to buy low-valued resources that can be turned into high-valued resources. Good for them. Oil companies in the last quarter profited mostly on their inventories. It’s good for consumers that oil companies have an incentive to hold inventories.

Salazar again:

What we're going to do (Wednesday) in the Energy Committee, with about 30 to 40 senators attending, is try to get to the root of the problem. One of the things that's happening, I believe, is that there is price gouging that is going on and that we don't have effective national or state laws to deal with price gouging. When you have companies that are making profits of over 100 percent from where they were a year ago, something has gone awry. And I believe that what we need to do is have a price gouging law. I think the people of America deserve better than what we're getting today.

Senator, if you were trying to get to the root of the “problem”, you’d be talking to economists and industry analysts, not oil company executives. I suspect that what the 30 or 40 senators are going to do is to look for scapegoats. Of course, I could be wrong.

There is no such thing as “price gouging” in a competitive market like the gasoline market. No oil company has the discretion to charge whatever it likes – the competition won’t allow that.

“Profits of over 100 percent from where they were a year ago” means next to nothing: it would be describe a case where profits went from 1% last year to 2% this year. Pricing behavior hasn’t changed. Nothing has gone awry. Inventories have simply appreciated a lot more this year than they did last year.

Posted by Lawrence H. White at 03:32 PM in Economics  ·  TrackBack (0)

Gas c. 1905

Notwithstanding my lengthy entry below, there is more from 1905 that seems eerily similar to things afoot today. How about this article titled "Gas Officials Called Before Light Board"?

The problem? The "price, quality, and pressure of gas supplied to consumers in New York City...Officials of these companies are notified to appear, with books and papers, before the State commission in the Council Chamber of the City hall on Monday morning, November 20, at 10:30 o'clock."

A New York law created the State Lighting Commission, charged with "investigating questions of quality, pressure, and purity." However, the commission could not unilaterally investigate issues of price without being so directed by the city Mayor.

The upshot is that two complainants suggest fixing the price of gas!- one complaint suggests $0.75 per thousand cubic feet. The other complaint hedges and suggests fixing the price "as may be warranted by the evidence brought out."

Bad ideas simply never die, they only take new forms. Yesterday citizens demanded price fixing on natural gas, today price fixes on refined petroleum (gasoline). If binding, price fixing, whether in 1905 or 2005, will cause shortages and reduced incentives for investment and innovation (although if the latter allows firms to avoid price restrictions, innovation might actually increase?).

Posted by Craig Depken at 03:07 PM in Economics  ·  TrackBack (0)

Incentives Matter: Appalachian Oil Drilling Edition

Excerpt from a news article:

The Appalachian mountains are buzzing with the sounds of oil drilling.

Most of the 900 or so wells drilled in Kentucky this year won't produce more than a barrel or two of oil a day. But with prices around 60 dollars a barrel, those little wells are pulling in big profits, especially when they also pump natural gas.

Posted by E. Frank Stephenson at 02:25 PM in Economics  ·  TrackBack (0)

Elections c. 1905

Around this time in 1905 there are a few interesting things afoot. The Yellow Fever scare in the South, centered around New Orleans, but also a concern in Louisiana, Mississippi, Alabama, Texas, and Arkansas, and as far north as Ohio and east towards Georgia, is beginning to die down. Similar to the recent discussions about Avian Flu, local quarantines were set up at train stations and river stops to keep the epidemic from spreading. Pres. Teddy Roosevelt visited New Orleans, to the dismay of many, although there was evidently little chance that he would catch the disease.

Around this time in Russia, the 1905 Revolution is afoot. There have been riots and mass killings, especially of the Jewish population, in Odessa and Moscow, and throughout the country. These uprisings make the current French situation look relatively tame, however the seeds of the November 1917 revolution are being sown. At this time in 1917, the streets of Petersburg, Moscow, and other cities are literally running red - both with banners and with blood. Ex post analysis is relatively easy in the case of Russia - the Czar attempted "democratic reforms" by creating the Duma and allowing for more local autonomy, but in the end the political freedoms were not enough to stave off the coming demise of the monarchy.

Here in the United States, Nov. 6 1905 was election day. In general, the headlines pronounce that Republicans made significant gains in local elections throughout the North and Midwest. In New York state, there are significant controversies in New York City about election returns. Interestingly, the main problems seem to be centered on how the ballot was printed, and how an individual would indicate voting for the party line or would split their vote across parties and individuals.

The paper had provided an example of the ballot, and while it isn't as confusing as the famous Butterfly ballot circa Florida 2000, there evidently was enough confusion to put things into a holding pattern.

Why does it all matter? Those running for office, and their supporters, obviously hope that the original vote outcomes stand. Those who claim the vote tallies are incorrect are anxious for the courts to step in and order recounts, etc. While patronage, and the machine, are still operating in the big cities, their ability to hand out huge amounts of rents seem to be less than it is today (but that is probably temporal bias).

The Nov. 10, 1905 NYT has a story with the following headline: "All Bets on Mayoralty Results are Held Up: Stakeholders may retain the Money until Jan. 1" with the follow-up sub-headlines: "Wagers on Plurality Paid" and "Jerome backers also get their money in most cases - Some post-election betting."

Huh?! The headline is a eye-grabber and the article is fascinating. Here's the scoop. Evidently at the time it was "legal" or at least acceptable for bars/taverns/houses to take wagers on the outcome of elections - with various proposition bets also offered. The first paragraph of the article reads:

Not a single election bet on the result of the Mayoralty contest was paid yesterday. Acting unanimously, the stakeholders ruled that until the courts have decided the contest which W.R. Hearst promises to bring they would retain the money intrusted to them.

The article goes on to suggest that a few bets on other, smaller, local races were paid out and that bets such as "Hearst would receive more than 175,000 votes" or "Hearst would receive more than 200,000 votes" were paid off, although they were very few in number. Also paid off were votes dealing with other pluralities, such as "Mayor McClelland would receive 25,000 votes or more."

Charles Mahony, manager of the Hoffman House bar, and probably the largest individual stakeholder in the city...[said] "Nearly all of the bets in my hands are as to the outcome of the battles for Mayor and District Attorney. I did not pay off a single bet yesterday, and I will hold all wagers until the situation is clarified one way or the other.

The story goes on to describe other bets and other house "managers" describing their withholding of bets and the anxiety this has created amongst many wagerers. At the end of one paragraph is an interesting sentence:

Rumors are plentiful as to the amount of money tied up by the hitch in reaching a decision regarding the Mayoralty and District Attorneyship. The estimates ranged from $500,000 to $1,500,00 [only $10m to $31m in CPI adjusted 2003 dollars, but a staggering $196m to $590m as a share of gdp!].

Here is one of the benefits of reading the paper from 100 years ago - lots of history can be learned that doesn't seem to make it into the history books. There is, perhaps, an economics lesson here as well.

In 1905, the "wagering market" for election outcomes was at the local tavern and bookmaker. Today, you can "wager" on election outcomes using the various futures markets (e.g., the Iowa Electronic Markets, Intrade.com, and Trade Sports). One lesson is that today's futures markets are not as innovative as they seem - they just use a new technology.

A couple of additional thoughts come to mind, and if I have time I will try to dig these numbers up. Last week (in 1905), two articles of interest reported the population numbers for NYC and the budget for NYC. From this it would be possible to determine the real dollars per capita spent in local government. If it is considerably higher today, suggesting more rents available through patronage which can be accessed through political contributions/volunteering, perhaps the "wagers" today are less in the futures/betting markets and more in campaign finance/volunteering. In essence, the amount of rents available to you if your candidate wins might be more than could be earned in the relatively thin on-line futures markets.

If it is technically illegal to bet on election outcomes with the bookie but you are "betting" through your contributions, then campaign finance issues (and prohibitions on betting) seem less a matter of principle and more a matter of rent distribution, which would not be surprising to this cynic.

Additionally, could the futures markets of today be used hedge against political contributions to individuals or parties (although the futures markets might not be thick enough)? And a final corollary, if the rents distributed through government largesse were to decline would we see political contributions decline and futures bets increase?

In the spirit of fair use, I link to the original story here.

Update: I meant to turn comments on - they are so now - to see if anyone has more insights.

Posted by Craig Depken at 12:32 PM in Economics  ·  TrackBack (0)

Wal-Mart

Alan Reynolds critiques the Neumark Wal-Mart study. Some excerpts:

"The High Cost of Low Prices" is the revealing title of a polemical documentary in which some of Wal-Mart's disgruntled former employees (rather than current employees) and competitors (rather than customers) vent paranoid complaints and expose their ignorance. The absurdity of the title gives away the plot. Would anyone pay to see a movie about "The Low Cost of High Prices"?

Wal-Mart recently sponsored a Washington, D.C., conference about the firm's "economic impact." Public relations stunts that rely on groveling and capitulating invariably backfire, and this was no exception. The press unfairly dismissed favorable evidence as something bought and paid for, then promptly zeroed-in on a critical paper by David Neumark and/or two of his research associates at the Public Policy Institute of California.

As for the Neumark study, Wal-Mart Watch quotes the part that says: "The representative Wal-Mart presence (about eight years) reduces employment by 2 to 4 percent. There is some evidence that payrolls per worker also decline, by about 3.5 percent, but this conclusion is less robust." It's all "less robust," actually.

Neumark's study is here. Judge for yourself.

Posted by E. Frank Stephenson at 10:29 AM in Economics  ·  TrackBack (0)

Fowl Play?

One of two full-size Chick-fil-A cows has been swiped off a 50-foot-high billboard overlooking Interstate 464 in northern Chesapeake [Virginia].

Workers for Adams Outdoor Advertising noticed the 500-pound fiberglass cow missing Tuesday. It’s the first time Chick-fil-A has lost a local cow, but about a dozen have been heisted elsewhere. Ransom demands and mysterious “moo ” phone calls have sometimes followed. So far, there’s been no word of such activity here.

“It’s kind of funny,” said Chick-fil-A’s Mark Baldwin, “but it’s still a crime.”

The black-and-white cows cost $3,200 – which makes stealing them a felony. The law has been notified and will be on the trail. A reward is being offered for the cow’s safe return – a year’s worth of free chicken sandwiches. Tipsters are asked to call (757) 382-6161.

Story here.

Posted by E. Frank Stephenson at 12:04 AM in Misc.  ·  TrackBack (0)

November 09, 2005
Incentives Matter: Chilean Bus Driver Edition

Part of the abstract of a new NBER Working Paper:

Two systems of bus driver compensation exist in Santiago, Chile. Most drivers are paid per passenger transported, while a second system compensates other drivers with a fixed wage. Compared with fixed-wage drivers, per-passenger drivers have incentives to engage in "La Guerra por el Boleto" ("The War for the Fare"), in which drivers change their driving patterns to compete for passengers. This paper takes advantage of a natural experiment provided by the coexistence of these two compensation schemes on similar routes in the same city. Using data on intervals between bus arrivals, we find that the fixed-wage contract leads to more bunching of buses, and hence longer average passenger wait times. The per-passenger drivers are assisted by a group of independent information intermediaries called "sapos" who earn their living by standing at bus stops, recording arrival times, and selling the information to subsequent drivers who drive past. We find that a typical bus passenger in Santiago waits roughly 10% longer for a bus on a fixed-wage route relative to an incentive-contract route. However, the incentives also lead drivers to drive noticeably more aggressively, causing approximately 67% more accidents per kilometer driven.

Note, too, that unintended consequences also matter.

Posted by E. Frank Stephenson at 11:43 PM in Economics  ·  TrackBack (0)

Big Oil getting grilled?

C-Span 3 online is showing the Senate hearings on big oil's profits.

It has been a bit painful but interesting nonetheless.

Posted by Craig Depken at 11:55 AM in Economics  ·  TrackBack (0)

November 08, 2005
Mario Monti receives Hayek prize

Mario Monti, the former European Union commissioner for antitrust policy, on Sunday received the Friedrich August von Hayek International prize for 2005. The Hayek Publishing prize was awarded to Karen Horn, a German journalist. The prizes are awarded every two years by the Friedrich-August-von-Hayek-Stiftung [Hayek Foundation] of Freiburg, Germany.

The choice of Monti is a bit surprising considering that, in his role as a trust-busting bureaucrat last year, Monti famously “levied a 497 million euro ($596 million) fine [against Microsoft] after ruling that the company had unfairly wielded its market power against rivals.” He also worked to block a merger between GE and Honeywell. One commentator at the time (Joel Bucher) tellingly contrasted Monti’s antitrust policies with the more enlightened views of -- Friedrich A. Hayek.

ADDENDUM: See also this BBC story about "Super" Mario's "high-profile attacks on what Mr Monti considers to be flagrant corporate greed." On his watch the EU Competition Commission also "launched a probe into 11 European Union governments - including the UK - which it claimed were offering anti-competitive tax breaks."

Maybe the choice of Monti isn't so surprising, given that the 2003 winner was Otmar Issing, who explicitly rejects Hayek's views on the denationalization of money.

Posted by Lawrence H. White at 07:09 PM in Economics  ·  TrackBack (0)

November 07, 2005
French Film Star Le Pew Injured in Paris Cat Riots

Iowahawk spoofs the French riots; an excerpt:

PARIS - Former French matinee idol Pepe Le Pew was among the hundreds injured last night amid violent feline rioting in the impoverished Parisian suburb of Dans-le-Crappeur. Le Pew, 58, a former Warner Brothers studio actor turned Chirac government spokes-skunk, sustained severe scratches and concussions in the melee before nose-pin equipped EMT rescue squads could drag him to safety. He is expected to make a full recovery.

Last night's rioting marked the eighth consecutive night of violence in the Paris suburbs, as thousands of immigrant feline youths continue to rampage to protest a lack of jobs and cuts in French government tuna programs. Dans-le-Crappeur, home to tens of thousands of unemployed first-hundred generation immigrant cats, has been particularly hard hit.

If this isn't politically incorrect enough for your tastes, see also Iowahawk's Hawkeye Hoosegow Honey of the Week.

Posted by E. Frank Stephenson at 04:04 PM in Funny Stuff  ·  TrackBack (0)

Cloudland Canyon

Georgia has had a beautiful, albeit a bit too dry, fall, and this past weekend was exceptionally pleasant. Trying to strike one more of those "we should have done this sooner" items off the list of north Georgia attractions, the Stephensons spent part of yesterday leaf-peeping and hiking at Cloudland Canyon park. The views and color were spectacular; an early fall photo and general park info are available here. The only drawback--the dry fall has reduced the park's two waterfalls to mere trickles (photo here; scroll down).

Posted by E. Frank Stephenson at 01:55 PM in Misc.  ·  TrackBack (0)

Selling Land on the Moon

A Chinese company has had its license suspended after it tried to make money by selling land on the moon.

The Beijing Lunar Village Aeronautics Science and Technology Co. managed to sell large swathes of pristine lunar property before being shut down, the state -owned Xinhua news agency reported on Monday.

Talk about markets in everything (though perhaps scams in everything would be more appropriate). Complete story here.

HT: Drudge

Posted by E. Frank Stephenson at 01:39 PM in Misc.  ·  TrackBack (0)

Call the election police!

Today's Funky Winkerbean (I don't know if the link will work for you or not) comic shows a lawn sign that reads "Vote for Issue 1".

I demand an immediate investigation into this clearly illegal, corrupt, immoral influence peddling! Our democracy cannot stand for this kind of corrupting discourse.

Read More »

Posted by Robert Lawson at 09:23 AM  ·  TrackBack (0)

November 06, 2005
A testable hypothesis?

State Farm Insurance claims Pennsylvania is the worst for deer-car interactions. I wonder if there is an inverse relationship between the length of the deer hunting season and the number of car-deer collisions.

Posted by Craig Depken at 10:54 PM in Economics  ·  TrackBack (0)

Deepa Mehta’s Water opens (in Canada) to mixed reviews

Deepa Mehta’s Earth (1998) is the best movie ever made on the India-Pakistan partition of 1947, so I’ve been looking forward to her long-delayed Water. It’s the third in an "elements trilogy" (the stories are unrelated) that began with Fire (1996). The first attempt at filming Water in India was shut down by Hindu fundamentalists in 2000. The new version, with a new cast, was filmed secretly in Sri Lanka. Water is the story of several widows living in an ashram in 1938, confined by Hindu religious customs that gave them few other options. It stars Lisa Ray, who was surprisingly good (given what I’d seen of her in the Telugu cowboy film Takkari Donga) in Mehta’s comedy Bollywood/Hollywood. Seema Biswas, who played the title role in Shekhar Kapur’s Bandit Queen (1994), and Indian-male-model-turned-Bollywood actor John Abraham also star.

Water has played a few film festivals in Canada (Mehta lives in Toronto) and New York, and opened commercially in Canada on Friday. For some reason it won’t play in the US until April 2006. (How long before bootlegs become available in Indian video stores in the US? I give it two weeks.) Reviews seem to be mixed: some find the film uncompelling or heavy-handed, but one reviewer calls it “an exquisite drama brimming with life and laughter and great tenderness and wrenching tragedy.”

Posted by Lawrence H. White at 03:36 PM in Culture  ·  TrackBack (0)

Is the Alito nomination part of a "Constitution in Exile" movement?

In the New York Times, John M. Broder links the Alito nomination to a supposed wider movement to return to pre-FDR jurisprudence, aka the “Constitution in Exile”:

Conservative activists and scholars have expressed the hope that Justice Roberts and Judge Alito, if confirmed, will bring back what they call the authentic Constitution from the exile to which it has been consigned by justices appointed by presidents from Franklin Roosevelt to Bill Clinton.

Really? Which conserative activists and scholars would that be? Broder continues:

For some liberal legal scholars, that prospect is a fear, not a hope. "Nothing is certain," said Bruce Ackerman, a professor at Yale Law School, "but the confirmation of Samuel Alito carries a clear and present danger of a constitutional revolution on a very broad front, well beyond Roe v. Wade."

Broder fails to mention it, but Randy Barnett, author of Restoring the Lost Constitution, has vigorously protested (in a debate with left-of-center legal scholar Cass Sunstein) that the existence of a “Constitution in Exile” movement is a myth, a bogeyman conjured up by liberals for rhetorical purposes. How curious that Broder doesn’t quote or even name any "conservative activist or scholar" making the “exile” argument he attributes to them; he only quotes a liberal opponent. (Barnett, by the way, is a libertarian, not a conservative.)

I’m beginning to think that Barnett has a legitimate beef.

Posted by Lawrence H. White at 11:18 AM in Politics  ·  TrackBack (0)

Nightwine Award!

A yesterday's end-of-season banquet for the Ohio Village Muffins, the 1860 rules vintage base ball team that I play on, I won the coveted Nightwine Award

for a normally good player who has an exceptionally bad game

On July 16 we had a game scheduled against the Cincinnati Buckeyes. I was playing left field. In the first couple of innings, I missed about 4 hard-hit but otherwise routine fly balls. (Remember now we play bare handed, but still these were balls I would normally catch.) As a result we quickly found ourselves down 22-7. In the fifth inninng, rain and lightning drove us from the field and we eventually canceled the remainder of the game. This is when I said something really stupid. I said, "Whew, I was on pace for a Nightwine Award but the rain saved me." My teammates who heard that apparently thought, "oh yeah?"

muffy.jpg

Posted by Robert Lawson at 09:01 AM in Sports  ·  TrackBack (0)

Rent Seeker Sighting

From Saturday's Rome News-Tribune:

A federal proposal to end tax deductions on mortgage interest will hurt the middle class, the economy and the housing market, a Rome accountant said.

“That would kill a lot of real estate and hurt a lot of first-time buyers,” said Joe Lake, managing partner at the Read, Martin & Slickman CPA firm.

The mortgage interest deduction that has helped millions buy homes could vanish if President Bush and Congress follow the recommendations of his tax advisory board.

The National Association of Realtors estimated that housing prices could decline 15 percent, bad news for owners who have seen the value of their homes increase.

“You’re going to be taking away from Middle America,” said David Lereah, the association’s chief economist. “Everyone, whether you use the mortgage interest deduction or not, the value goes down. You’ve just reduced the retirement nest egg for everyone.”

Dan Owens, owner of Owens & Bowen CPAs in Rome, estimated that his average client would see their tax liability increase by 13 percent.

“For the average person, I think it’s going to hurt them,” he said. “(The government is) trying to encourage people to pay down their debt and prepare for retirement, which is a good thing, but it’s a costly thing right now.”

I'm dubious on all counts--that the proposed changes in the mortgage interest deduction would significantly hurt homeownership, drop house prices by 15%, or hike tax bills by 13%. The last is especially dubious since the reform is, alas, supposed to be revenue neutral. Of course, these arguments are just camouflage served up by folks who would lose from a simplified tax code. Eliminating the AMT and reducing the number of lines in the 1040 by half or more would likely reduce the number of folks who pay for tax prep services.

Posted by E. Frank Stephenson at 12:21 AM in Economics  ·  TrackBack (0)

November 04, 2005
New research

I can't get blogger to work, so DOL get's the scoop on two new Depkenomics working papers, both "finished" this week. They are available here. I appreciate any/all comments DoL readers have to offer. The Reserve Clause paper will be presented at the upcoming Southern meetings in D.C.

1. "Agency Costs, Executive Compensation and External Monitoring: A Stochastic Frontier Approach," with Giao Nguyen and Salil Sarkar (abstract below)

2. "The Introduction of the Reserve Clause in Major League Baseball: Evidence of its Impact on Select Player Salaries During the 1880s," with Jennifer K. Ashcraft (abstract below)

Read More »

Posted by Craig Depken at 05:48 PM in Economics  ·  TrackBack (0)

Classroom Tyranny

Levitt & Dubner's blog posts an email from a student who got kicked out of class for citing the research on abortion and crime.

Coincidentally, my law and econ students and I were discussing the same topic in class yesterday. (I use the paper in class and had just returned an exam with an abortion and crime question.) We were wondering aloud if one could further test the abortion-crime connection by looking at the public funding of abortion. Federal funding is generally prohibited by the Hyde Amendment, but, although I don't have precise details, I think there is (or used to be) public funding via Medicaid and that the funding varies by state and over time. Since the people who receive funding might well be folks who, in the absence of public funding, were the most likely to have "unwanted kids," it seems that examing the effect of eliminating public funding has on abortion rates and subsequent crime rates might be an especially useful way of testing the abortion-crime connection.

BTW, nothing in the previous paragraph should be taken I am pro-abortion or that I favor public funding of abortion. Doing so would be wrong on both counts.

ADDENDUM: For a different flavor of classroom tyranny, check out some of the exam questions that Jon Sanders has posted here (and the links contained therein).

Posted by E. Frank Stephenson at 10:52 AM in Misc.  ·  TrackBack (0)

Your Tax Dollars at Work

There's been a recent flurry of govt waste in the news (of course, the surprise isn't the waste, but rather the news stories reporting the waste):

1. Post 9/11 SBA loans went to all sorts of businesses having nothing to do with terrorism and being located nowhere near New York or DC. Examples include a motorcycle shop in UT, a Subway shop in OH, an Atlanta hotel, a Maine broccoli farm, and a Texas computer store. Not surprisingly, more than 20% of the loans are in default. Stories here and here.

2. Today's WSJ (sorry, no link) reports that a company is being paid $720 per worker per day to keep 79 workers standing by in the New Orleans area to recover bodies of Katrina victims. The number of bodies found last week? Six, at a cost of more than $65k per body. Oh yeah, the company's contract also allows it to bill for expenses--so far it has billed for a DVD player and movies and nine model cars and glue to assemble them. Keep this one in mind next time someone bleats about not enough spending to recover from Katrina.

3. Then we have to story of 3 evacuees using FEMA funds for crack. An excerpt:

Claude, Sanson and Leonard [the evacuees], said police, shared room 136. They noticed the men while investigating an unrelated shooting, Moloney said.

As they talked to the men, investigators quickly determined that the three hadn't used government and Red Cross help in the intended manner, Moloney said. When police arrested him, Sanson had about $600 — Red Cross aid, he told investigators.

The Red Cross has handled more than 33,000 Katrina cases in metro Atlanta, disbursing as much as $1,500 to some families, said Fell. She could not confirm whether Claude, Leonard or Sanson had received aid.

Sanson also had a fraudulent ID card that he said he'd used to rent rooms at government expense. Hotel clerks, seeing the New Orleans address on the card, simply billed FEMA for the room, police said.

Contrast the government's cluelessness about how taxpayer funds are being spent to the following excerpt from a story about AFLAC detecting insurance fraud:

10 city of Atlanta employees who were accused Thursday of filing bogus insurance claims worth up to $60,000 each.

Their schemes apparently fizzled because the sewer workers didn't think up enough cover stories to explain the injuries they had listed on their insurance claims.

In fact, they could come up with only two, said state Insurance Commissioner John Oxendine. "They all said they were hit by a baseball bat, apparently watching a ballgame," Oxendine said. "And the other was that they had fallen, generally on stairs."

This was enough to raise suspicions among the folks at the American Family Life Assurance Co., the Columbus-based insurance giant better known as AFLAC.

AFLAC said it monitors for fraud attempts but doesn't believe such incidents are pervasive. "We actively pursue anything that looks fraudulent," said spokeswoman Laura Kane said. "We have a department that stays on top of any suspicious looking claims to make sure that it does not become a problem."

4. Finally, Tim Chapman reports that the Alaskan porkers have struck again--this time using Katrina as a vehicle for more Medicaid funds. Story here; HT Club for Growth blog.

Posted by E. Frank Stephenson at 10:14 AM in Economics  ·  TrackBack (0)

November 03, 2005
Brad Smith was right!

Last year my friend and colleague Brad Smith, then chairman of the Federal Election Commission, took a lot of heat for raising alarm bells about the prospect that bloggers would be subject to campaign finance regulations.

Well he was right:

Democrats on Wednesday managed to defeat a bill aimed at amending U.S. election laws to immunize bloggers from hundreds of pages of federal regulations.
Posted by Robert Lawson at 02:23 PM in Politics  ·  TrackBack (0)

Rent seeking in Florida

From this story:

The Pinellas County Board of County Commissioners selected Pepsi Bottling Group for the official pouring rights to all Pinellas County facilities, parks and beach access points.

Front Row Marketing Services handled the negotiations for the county.

The value of the deal is expected to be $3.2 million over the 10-year term, the county said in a release.

Let's see. Pepsi pays $320,000 per year for the monopoly rights to sell soda at the beaches and local baseball fields. Do we think Pepsi expects to loose a considerable amount of money in the deal?

If we think the negotiators for the county extracted all of the monopoly rents from Pepsi, then the pouring rights is just a vieled tax on soda drinkers, with accompanying dead weight loss. If the negotiators failed to extract all of the rents (which is likely), then the pouring rights include a tax, a dead weight loss, plus additional profit for Pepsi.

As a wise man once said: The only good monopoly is the one you have.

Pouring rights are becoming more common across the country. They should not be heralded as "discovered" money for the local governments but should be condemned for (a) promoting legal monopolies, (b) increasing prices for local consumers, and (c) providing perverse rent-seeking incentives.

Posted by Craig Depken at 12:48 PM in Economics  ·  TrackBack (0)

Touche

Alan Reynolds tears into windbag O'Reilly--an excerpt:

O'Reilly's spin zone had to spin a new theory. He now argues that while prices rose because of some inexplicable hurricane of greed, they subsequently fell because "the oil companies have been scared into lowering prices of oil." He claims to know "the worldwide demand for oil is the same today as it was eight weeks ago. But oil prices are declining -- so what gives? Fear. That's what gives. Millions of Americans are angry with big oil and are buying less fuel."

Excuse me? If millions of Americans are "buying less fuel," how could demand be the same? Trying to spin his way out of that paradox, O'Reilly differentiated "worldwide" demand. But worldwide demand must be entirely irrelevant unless domestic prices of oil and gasoline are set by supply and demand in worldwide markets, rather than by corporate caprice.

Posted by E. Frank Stephenson at 10:48 AM in Economics  ·  TrackBack (0)

Extended Fall Break at UGA

From today's AJC:

ATHENS — Some University of Georgia students might have gotten an extra day in the sun last week, but it's the university's administrators who are burning over faculty decisions to cancel classes the day before fall break.

UGA Provost Arnett Mace sent out a firm edict this week to university deans to canvass their faculty and see how many called off Wednesday classes in anticipation of the two-day break and the annual Georgia-Florida football game in Jacksonville last weekend.

Some couldn't resist poking fun at the issue. In an e-mail to faculty members asking whether they had canceled classes, one dean compared Mace to Dean Wormer, the malevolent presence at the fictitious Faber College in the movie "Animal House."

"There is something in his request that has that 'Animal House' flavor," the dean wrote, knowing that faculty would bristle at the directive. "Remember, Dean Wormer?"

Hmmm ... I bet that dean is now on double secret probation.

Posted by E. Frank Stephenson at 09:38 AM in Misc.  ·  TrackBack (0)

November 02, 2005
Man Kills Buck With Bare Hands in Bedroom

BENTONVILLE, Ark. — For 40 exhausting minutes, Wayne Goldsberry battled a buck with his bare hands in his daughter's bedroom.

Goldsberry finally subdued the five-point whitetail deer that crashed through a bedroom window at his daughter's home Friday. When it was over, blood splattered the walls and the deer lay dead on the bedroom floor, its neck broken.

Full story here.

Posted by E. Frank Stephenson at 09:32 PM in Misc.  ·  TrackBack (0)

Bummer

Colorado residents have voted to suspend their Taxpayer's Bill of Rights, the strictest government spending limit in the nation, and give up more than $3 billion in tax refunds to help the state bounce back from a recession.

The approval of the Colorado referendum allows the state to keep an estimated $3.7 billion over five years that otherwise would have been refunded to taxpayers.

A second statewide ballot measure meant to let the state borrow up to $2.1 billion for roads, school maintenance, pensions and other projects narrowly lost.

Full story here. Colorado's suspension of TABOR probably makes it more difficult for other states, including GA, to enact tax and expenditure limitations.

Posted by E. Frank Stephenson at 12:46 PM in Politics  ·  TrackBack (0)

More on the risks of running

Among the more serious reasons to not run a marathon cited by economist Art De Vany was the possible elevated risk of cancer.

Marathon running elevates markers of cancer. S100beta is one of these markers. Tumor necrosis factor, TNF-alpha, is another.

A recent article in Runner's World summarizes the research.

In late 2002, the Journal of Nutrition published a review of 170 epidemiological studies on the relationship between physical activity and cancer. Here is some of what the researchers found. Colon cancer: Forty-three of 51 studies produced positive results (more exercise was associated with fewer cancers), with an average risk reduction of 40 to 70 percent. Breast cancer: Thirty-two of 44 studies produced positive results, with an average risk reduction of 30 to 40 percent. Prostate cancer: Fifteen of 30 studies produced a positive result, with an average risk reduction of 10 to 30 percent, particularly of the most aggressive forms. Endometrial cancer: Nine of 13 studies produced positive results, with an average risk reduction of 30 to 40 percent. Lung cancer: Eight of 11 studies produced positive results with an average risk reduction of 30 to 40 percent.

While I admit to not being a huge fan of these so-called meta-analysis studies that lump disparate studies (with different samples, methodologies and varying degrees of quality) together, this looks like running isn't so bad. And the evidence on total mortality is very clear according the the article.

Epidemiologist Steven Blair, the president and CEO of the Cooper Institute in Dallas, Texas, is one of the world-leading experts on exercise and longevity. While he notes that the book is still open on cancer rates among serious exercisers, he says, "In our most relevant work on this topic, we do not see any higher cancer risk in the most fit or most highly active individuals. In fact, the highest activity or fitness groups consistently had the lowest mortality rates."

UPDATE: Trent McBride, M.D. has a very nice post about this over at catallarchy.net. ATSRTWT

Posted by Robert Lawson at 10:16 AM in Science ~ in Sports  ·  TrackBack (0)

November 01, 2005
Incentive compatibility

A veteran of the First World War, now 109 years old, remembers:

As mechanics, we had to keep the aircraft flying using anything we could. The pilots liked to take their mechanics up in the plane with them, because that way they knew the mechanics would service the plane properly. I used to sit behind the pilot and drop out bombs.

The WWI vets' reminiscences in their entirety are haunting. (Hat tip: Mark Brady at Liberty and Power.)

On the subject of WWI, I recommend the French film A Very Long Engagement (2004), now available on DVD. Part of the plot turns on another strategic issue: how the French army dealt with soldiers who shot themselves (or invited the enemy to shoot them) in the hand in an attempt to get sent home.

Posted by Lawrence H. White at 04:12 PM in Misc.  ·  TrackBack (0)

It should be...

Singapore not ashamed of low rank for press freedom

SINGAPORE (Reuters) - Singapore should not be embarrassed by its lowly ranking on the international press freedom index because it has achieved top ratings for economic freedom and prosperity, its senior minister said.

Posted by Robert Lawson at 01:29 PM in Economics  ·  TrackBack (0)

Interesting funding proposal

From this article about slot-machine licenses to be awarded in the state of Pennsylvania :

Among those vying for the license are the NHL's Pittsburgh Penguins, who want slots money to build a new arena, and Forest City Enterprises, which owns Station Square in Pittsburgh and wants to put a casino in the retail/dining complex.

Hmmm. Slot machines to pay for a stadium? A new arena might cost $300 million, which would represent a lot of pulls on the one-armed bandit. On the one hand, slot machines are a voluntary tax which is better than foisting the cost of an arena on the entire Pittsburgh population (who have a willingness to pay of around $5, if I remember the paper correctly - I will have to look it up and add a link to it). On the other hand, many will claim that one-armed bandits represent regressive taxation, only the poor play slots but the poor don't go to Penguins games.

If the applications come with rent-seeking activities, how much will the Penguins spend to get their hands on a slot-machine license?

Posted by Craig Depken at 01:14 PM in Economics  ·  TrackBack (0)

View Tax

In New Hampshire, state officials are coming up with new bases to tax (if anyone says that the public sector is not innovative, think about the prolific R&D that goes into devising new taxes.) The city claims that the "view factor" has always been a part of property tax assessment, but that since "views have become so valuable in some towns...assessors are giving them a separate line on appraisal records." Hat tip to Boortz.

I think my dissertation discussed the concept of hedonic pricing, so the fact that a nice view increases a home's value and thus its property tax isn't alarming. The uproar seems to be that homeowners now see where their taxes are going.

Random thoughts--
1) It's refreshing to see taxpayers in an uproar when they finally realize the amount of taxes they pay. Would Senators and others be criticizing gas prices and companies if people knew how much of their $3 per gallon is tax?

2) "State officials say there is no such thing as a 'view tax' - it is a 'view factor.'" I was on a radio program some months back with state representatives discussing Social Security reform, and one of them made the suggestion of taking a portion of people's paychecks and putting it into a personal account. He kept stressing "don't call it a tax." If I keep calling myself tall it doesn't change the fact that I'm 5'6". A rose by any other name...

3) I had the thought reading through the column, but the ending summed it up:
Retired engineer John Chandler objected when a revaluation doubled the value of his property in Hill because of its view of the White Mountains in the distance. Chandler noted that he does not own the view and cannot control it, and said it is increasingly obscured by air pollution.
Besides, he is legally blind.

4) According to public finance, when is a tax most efficient? When it is directly tied to consumption of a public good or service. What government service is being provided that homeowners are consuming, and that the view tax would conceivably fund?

Posted by Tim Shaughnessy at 01:10 PM in Economics  ·  TrackBack (0)

Tax Reform Day

The president's tax reform commission will unveil its proposals today. One target will be the mortgage interest deduction; today's WSJ has an article on what the commission will propose to limit this deduction. Even a rather modest trimming of the deduction faces an uphill fight from the rent seekers.

Posted by E. Frank Stephenson at 09:55 AM in Economics  ·  TrackBack (0)

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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