For that special lady in your life...

More here. HT: The Filter.

As Alan Greenspan leaves office to a flurry of media praise, it is well to recall his adeptness as subtly managing the press, as revealed in this Columbia Journalism Review piece from the middle of his tenure. One wonders whether Greenspan has tutored Ben Bernanke in this aspect of the art of central banking. Bonus revelation in the piece: how it wasn’t an accident that Alan Blinder’s remark embracing a Phillips Curve tradeoff became infamous.

It will be interesting to see whether Greenspan, the erstwhile gold standard advocate, becomes more openly skeptical of central banking once no longer at the helm. If you think that’s implausible, consider that Paul Volcker in 1990 wrote: “And if you say a central bank is essential to a market economy, I have to ask you about Hong Kong, which has no central bank at all in the absolute epitome of a free market economy. Yet it does quite well in terms of economic growth and stability.” (No link available; Volcker, “The Role of Central Banks,” in Central Banking Issues in Emerging Market-Oriented Economies (Federal Reserve Bank of Kansas City, 1990), p. 3.)

Fans of Team America: World Police will remember the scene (profanity-laced video clip here) in which the weapons inspector Hans Blix threatens to write a stern letter to him if Kim Jong-Il won’t allow Blix to inspect Kim’s palace for weapons of mass destruction. Apparently the real Hans Blix found it funny too: in the video clip from a news conference linked here, he comments on the scene (even quoting KJI’s use of the f-word).

Hat tip: Reason Hit & Run

Do you set your watch ahead, on purpose?

You are the enemy. Here's why.

The nominal price of copper reached a record high of $2.23 a pound last week, having risen 57 percent over the past year. Result: your old (pre-1982) pennies are worth more melted down than as coins. The Pittsburgh Tribune-Review has the numbers, and a comment on the arbitrage possibility:

Today's pennies are copper-plated and mostly zinc. But from 1864 to mid-1982, the coin was 95 percent copper and weighed 3.1 grams. With copper selling for $2.23 a pound, a pre-1982 [US] penny actually is worth about 1.45 cents -- 45 percent above face value -- based on its copper content. […] But good luck finding a willing smelter.

Sure, it doesn’t pay you or me to find a smelter for a single jar of pennies. But what about Coinstar? At what price of copper do they melt down the pennies they collect rather than return them to circulation?

This could have been far worse. Who brings a loaded Glock to a safety training session? I sure hope this is some sort of hoax.

For those of you who don't (or can't) click through, the video depicts a student training session on gun safety. Shortly after saying that he is the only one professional enough to handle a gun, the officer accidentaly shoots himself in the leg.

Kudos to co-blogger Craig for his blurbs in this weekends WSJ article on the economic impact to cities hosting the Super Bowl. (The article requires a subscription, but there's a lengthy excerpt on The Sports Economist.)

PS: My blogging has been light for the past month and will likely be so for the next month because of my involvement in a search in my department and the Berry presidential search.

Brad DeLong kindly quotes my recent entry questioning press descriptions of Randy Kroszner’s monetary policy thinking as “mainstream,” and comments:

Randy Kroszner is, as I said, eminently well-qualified to be on the Board of Governors. But, as I have also said, only one of him! Most Federal Reserve Governors should be "mainstream" in monetary policy. All don't have to be.

I certainly agree with DeLong's first and last sentences. And to be clear, I never meant to suggest that it’s a negative for monetary policy thinking to be “non-mainstream” (as most would consider my own!). On the contrary, I consider it a great credit to Kroszner’s scholarship that he’s been willing to explore monetary policy ideas outside the usual parameters (optimizing within the status quo institutional framework).

As for DeLong’s middle two sentences: I personally think we could stand more than one thinker on the Board of Governors who is more deregulatory and “hard-money” than the mainstream. Even leaving aside the possibility of reforming the monetary regime, the time-consistency literature has taught us that we can all benefit from having monetary policy set by a central banker who is more hawkish on inflation than the median citizen.

In Joseph Heller's remarkable world:

"That's all he has to do to be grounded?"
"That's all. Let him ask me."
"And then you can ground him?" Yossarian asked.
"No. Then I can't ground him."
"You mean there's a catch?"
"Sure there's a catch," Doc Daneeka replied. "Catch-22. Anyone who wants to get out of combat duty isn't really crazy."
There was only one catch and that was Catch-22, which specified that a concern for one's own safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn't, but if he was sane he had to fly them. If he flew them he was crazy and didn't have to; but if he didn't want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.
"That's some catch, that Catch-22," he observed.
"It's the best there is," Doc Daneeka agreed.

In our own remarkable world:

WASHINGTON (Reuters) - The U.S. Army has forced about 50,000 soldiers to continue serving after their voluntary stints ended under a policy called "stop-loss," but while some dispute its fairness, court challenges have fallen flat.

...

"As the war in Iraq drags on, the Army is accumulating a collection of problems that cumulatively could call into question the viability of an all-volunteer force," said defense analyst Loren Thompson of the Lexington Institute think tank. "When a service has to repeatedly resort to compelling the retention of people who want to leave, you're edging away from the whole notion of volunteerism."

Story here.

From the Jan. 29, 1906 NYT:

Amzi L. Barber denied unequivocally...that the new independent asphalt association is a trust.

"It is nothing of the sort," he said. "It was organized simply to improve the quality of the work, and in order to do that it was necessary to increase the price somewhat. The prices at which work had been done were so unremunerative that the work was necessarily not of the class to stand wear, and the result was damage to the business of asphalt paving."

How crafty. Sub-standard pavers win contracts by low bidding, but, alas, there is a winner's curse. So, the answer is to join together to increase prices (but not as a cartel) and this will a) protect the "honest" pavers who could do good work if only they were paid enough, and b) ensure that the overall reputation of the industry is upheld.

Evidently spin didn't begin in the 1990s.

Maybe not a big deal, but Texas A&M is protecting its "12th Man" turf.

Athletics director Bill Byrne said this week he's received e-mails from A&M supporters complaining about the Seahawks' "brazen use of the 12th Man theme at their home playoff games."

Byrne said A&M has contacted the Seahawks about the issue. He said he wrote the Chicago Bears and Buffalo Bills in the past about halting their 12th man themes once the university made them aware of the trademark registrations.

Byrne said Seattle, though, "has been slow-rolling us."

Story on ESPN.com.

It is a commonplace to hear people complain that prices always increase. However, over time the price of many (most?) consumer products actually drop, especially when controlling for quality. Sure, a car costs $23,000 today but it is safer, more fuel efficient, and perhaps more "fun," all of which translates into a lower cost per mile driven than cars from twenty years ago.

From the Jan. 28, 1906 NYT is an advertisement for the Washington and Southern Railway:

MARDI GRAS - NEW YORK TO NEW ORLEANS AND RETURN - $37.75.

Tickets on sale February 21 to 27, good returning until March 3, 1906. Extension of limit March 16th can be had by depositing ticket and paying 50 cents at New Orleans.

I don't know how long it would have taken to get from the Big Apple to the Big Easy on a train, but I would figure two days or so. The folks over at EH.net estimate the following 2004 values for the $37 round trip:

In 2004, $37.75 from 1906 is worth:
$789.69 using the Consumer Price Index
$628.95 using the GDP deflator
$3,459.73 using the unskilled wage
$4,577.43 using the GDP per capita
$14,789.21 using the relative share of GDP

Ouch. As a relative share of GDP, the train trip was extremely expensive. However, it wasn't too cheap using the CPI adjusted figure. Today's cost of flying from NYC Laguardia to New Orleans? Travelocity has reasonably timed flights for around $160. Travel time from NYC to NO is about 2.5 hours.

Wow.

Despite my warning (weren’t they listening?) that the confirmation process could be quite interesting, the White House announced today that one of its nominees to fill the two vacancies on the Federal Reserve Board of Governors is Randy Kroszner. (The other is Kevin Warsh; both had been widely identified in recent weeks as being on the “short list”.) Reuters had this to say about Kroszner:

While his monetary policy views are not well known, economists said he would likely be in the mainstream. One University of Chicago colleague has said Kroszner would be a "sound money guy."

I’m starting to wonder whether anyone besides me has actually read Kroszner’s monetary writings (as of today!). I've been the intellectual target of some of Kroszner’s monetary writings ("Scottish Banking Before 1845: A Model for Laissez-Faire?" Journal of Money, Credit, and Banking, May 1989, 221-31, with Tyler Cowen (reprinted in Lawrence H. White, ed., Free Banking (Aldershot, UK: Elgar 1993)), and the reviewer of others (Journal of Institutional and Theoretical Economics 152, June 1996, 419-22). But really, just look at the title of his book with Tyler Cowen, Explorations in the New Monetary Economics (Cambridge: Basil Blackwell, 1994): does that sound “mainstream” to you?

Student athletes all too often get a bad rap in our society. I bet the experience of others is similar to mine: student athletes are often very good students, especially after controlling for the amount of time they dedicate to their sport. While there are some "bad" students who are good athletes, there are also a lot of "bad" students who are not athletes.

Today, The Chronicle of Higher Education released its estimation of graduation rates for 2005. The news is pretty good, and even the Chronicle has a hard time coming up with a negative spin. However, there is evidently a two year negative trend in African-American male basketball players and all women basketball players. I do not subscriber to the "two observations is a trend" school of thought, but alright.

I grabbed the 2005 data and threw it into STATA. Here's a picture of overall athlete grad rates versus student grad rates:

There is a positive correlation between the graduation rates of the overall student body and for the athletes on a given campus. Simple regression results of the relationship are:

. reg athleterate studentrate


      Source |       SS       df       MS              Number of obs =     315

-------------+------------------------------           F(  1,   313) =  296.84

       Model |  2.94129942     1  2.94129942           Prob > F      =  0.0000

    Residual |  3.10144223   313  .009908761           R-squared     =  0.4867

-------------+------------------------------           Adj R-squared =  0.4851

       Total |  6.04274165   314    .0192444           Root MSE      =  .09954

------------------------------------------------------------------------------

 athleterate |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]

-------------+----------------------------------------------------------------

 studentrate |   .5320662    .030882    17.23   0.000     .4713036    .5928288

       _cons |   .3115148    .018301    17.02   0.000     .2755062    .3475233

------------------------------------------------------------------------------

If we restrict the constant to zero, we get :

. reg athleterate studentrate,nocons


      Source |       SS       df       MS              Number of obs =     315

-------------+------------------------------           F(  1,   314) = 6199.51

       Model |  117.917099     1  117.917099           Prob > F      =  0.0000

    Residual |  5.97240012   314  .019020383           R-squared     =  0.9518

-------------+------------------------------           Adj R-squared =  0.9516

       Total |    123.8895   315  .393299999           Root MSE      =  .13791

------------------------------------------------------------------------------

 athleterate |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]

-------------+----------------------------------------------------------------

 studentrate |   1.032438   .0131125    78.74   0.000     1.006638    1.058237

------------------------------------------------------------------------------

While the slope coefficient is statistically different from one, the economic/behavioral difference is not significant.

In other words, as the general student body goes, so goes the student athletes. What? Student athletes are similar to non-student students? I know this flies contrary to general opinion, but in my experience this is more often the case than not. What I haven't figured out, either personally nor from the literature, is whether this is in spite of or because of the tutoring/acadmic advising infrastructure dedicated to student athletes on many campuses around the country.

Perhaps stories about student athletes are sexy and "socially responsible," especially on campus where many look down their nose at sports in general and the expenditure of dollars on athletics specifically. However, in my mind the correlation is very reassuring (and not surprising) - it is likely that the vast majority of student athletes are much more like their non-athlete counterparts than is generally believed.

(STATA data file)

From AdAge Daily:

The Federal Trade Commission today reached a $15 million settlement with ChoicePoint for failing to properly protect consumers’ financial data nearly a year after the data aggregator revealed a security breach of its system.

Where's my share of the $15 million? Oh yeah, it went into the highway bill or some other earmarked project.

Selling the name of a stadium is big business nowadays. Here in Arlington, the Rangers sold the name of the "Ballpark in Arlington" to Ameriquest mortgage company - changing the name to "Ameriquest Field in Arlington." The powers-that-be insist that Arlington is supposed to be kept in the name, and it does show up in print occasionally, but for the most part people just call it Ameriquest Field. (more Ameriquest sponsorships here)

I remember a working paper by Michael Leeds (and a couple of coauthors) that investigated the long-run returns to companies that purchase naming rights and found them to be negative. Perhaps buying naming rights is a bad decision in general, or it is a bad signal that a company is out of marketing ideas and plasters their name on a stadium in a last gasp?

Ameriquest pays $2 million per year for the naming rights of the Arlington stadium (for another twenty nine years) but just settled with the Feds for $325m after being accused of misleading customers etc. (Official company press release, Local sports writer Randy Galloway's take on the issue)

I wonder if having your stadium named after a bankrupt/troubled company has any impact on the revenues/attendance/popularity of a team?

Torus Trooper is a pretty cool game. I score a lot of points even though I am not exactly sure what I am doing.

However, it is the type of game you should have on your laptop. On a plane, I can imagine it would get a little bit more attention than Freecell.

In the "learn something new every day" category, the Jan. 26, 1906 NYT reports that the Society for Prevention of Cruelty to Animals was pressuring companies that contracted to carry the mail to not use lame/older horses.

A letter to the editor from one W. Franklin Brush states:

I think it right to state that I have twice during the past month reported to the society the fact that I had seen a lame horse attached to United States mail wagon...I should think from what I have seen during the past few years of the horses which are used in the mail service that an Inspector of the Society for Prevention of Cruelty to Animals might very often hold up a mail wagon without undue suspicion of graft.

First, who knew the SPCA had been around for one hundred years? I figured the SPCA started in Hollywood sometime during the 1970s with the whole "no animals were harmed in the making of this movie" claim. Second, I wonder about the odds of a lame-horse delivery wagon for the U.S. Postal Service (albeit out-sourced to a contract) versus a lame-horse delivery wagon for, say, Sears-Roebuck or Marshall Field.

More time wasters : PACMAN / DONKEY KONG / ASTEROIDS / FROGGER / SPACE INVADERS / and more...

Ah, the nostalgia. These take me right back to junior high... (Yikes! What a horrible memory. Junior high sucked.)

The official announcement about the new World Marathon Majors has been made.

Here's a summary from the Boston Globe:

To be called the World Marathon Majors, the series will include races in Boston, London, Berlin, Chicago, and New York City, with the idea of raising the profile of running.

The Olympics and World Championship also will count in the series, which begins April 17 with the Boston Marathon.

Runners will get points for placing among the top five in each race -- 25 points for a win, down to 1 point for fifth.

Runners have to compete in three races over two years to be eligible for the prize, and if they run more, only their top four results will count.

Three races over two years. Whew. This puts to rest my preliminary reaction that doing five races in a single year would be impossible.

Tank Wars ala Atari 2600.

Oh, the memories.

An excerpt from Dave Barry’s Money Secrets, via NPR:

The problem was that gold is too heavy to be constantly lugged around. So, to make it easier for everybody, governments began to issue pieces of paper to represent gold. The deal was, whenever you wanted, you could redeem the paper for gold. The government was just holding your gold for you. But it was YOUR gold! You could get it anytime! That was the sacred promise that the government made to the people. That's why the people trusted paper money. And that's why, to this very day, if you–an ordinary citizen–go to Fort Knox and ask to exchange your U.S. dollars for gold, you will be used as a human chew toy by large federal dogs.

Because the government changed the deal. We don't have the gold standard anymore. Nobody does. Over the years, all the governments in the world, having discovered that gold is, like, rare, decided that it would be more convenient to back their money with something that is easier to come by, namely: nothing. So even though the U.S. government still allegedly holds tons of gold in "reserve," you can no longer exchange your dollars for it. You can't even see it, because visitors are not allowed. For all you know, Fort Knox is filled with Cheez Whiz.

Barry’s account is actually much more accurate than standard money and banking textbooks (like Miller and VanHoose), which imagine that a benevolent governments instituted fiat money to (somehow) lower transaction costs for the public.

Nice post on Congress, Craig. Essentially, Craig asks two pretty complicated and related questions. First, what is happening to partisanship in Congress over time? Second, what is the cause of the observed profile? (And maybe third, what is the effect?)

While there are some problems with using unanimous-opposition votes to measure partisanship, these reasons are kinda arcane and IMO best left to other forums.

To the first question, an alternative measure is “party polarization,” simply the difference between the two parties’ mean (or median) scores on ADA, NOMINATE or other (e.g., NTU) scores. This is actually a big topic in the political science literature (various papers by Keith Poole and Howard Rosenthal; APSR 1999 by Groseclose, Levitt, and Snyder; Public Choice 2001 by Bernie Grofman et al.). The consensus is that the parties are becoming more polarized over the past couple of decades. You can see this also in the unanimous-opposition chart that Craig posted.

To the second question, Carlos Ramírez and I have a paper in Public Choice (download from RePEc here) examining not only the trend in polarization but how it cycles with the economy. Among other results, we find that greater inflation leads the parties to converge. Thus, a partial response: the historically low inflation we’ve had for at least the past decade seems to explain at least a portion of the greater polarization in Congress.

I have some ongoing research on this, which I might discuss depending on how referees respond.

Watched CNN yesterday while eating lunch, and they had a story about parents and "advocates" suing Viacom and Kellogg for the advertisement of unhealthy cereal and snacks. Who are the "advocates?" Even though they may not have convinced us all to give up 2% milk or Mexican food, it's the Center for Science in the Public Interest. I guess public interest science is defined as legal representation in lawsuits.
They will ask a Massachusetts court to enjoin the companies from marketing junk foods to audiences where 15 percent or more of the audience is under age eight, and to cease marketing junk foods through web sites, toy giveaways, contests, and other techniques aimed at that age group.
Why eight? Why 15 percent? Does CSPI not care about the other 85%? Or about obese nine-year-olds?
'As a parent, I do my best to get my kids to eat healthy foods,' said Sherri Carlson, a plaintiff and mother of three. 'But then they turn on Nickelodeon and see all those enticing junk-food ads...This irresponsible marketing to young children undermines my efforts as a parent and must be stopped.'
I suppose if your efforts as a parent are so weak that you can't either a) monitor what your kids watch on TV (get a TiVO and skip past the sugary ads!) or b) resist your kids' pleas in the grocery store, you probably do need help from enlightened advocates and the police power of government.

Ford closes a bunch of plants and people are in an uproar. On Kudlow & Company yesterday, Larry wondered whether the government will ever close up any of its obsolete or inefficient operations for cost-cutting.

From Congressional Quarterly (reg req'd) comes one way to view partisanship on Capitol Hill. It is clear that partisanship, as measured by unanimous votes from one side or the other have become more numerous. Is this the result of redistricting, in which the majority of house seats are essentially locked into one party or the other?

However, a couple of points. Bush was able to work with Democrats here in Texas while governor. Admittedly, it is possible that Texas Democrats are closer to national-Republicans than national-Democrats, but given some of the recent antics of the Democrats here in Texas I wonder.

I wonder if any readers can point me to recent research on the question of causation in partisanship. It is a classic identification problem which good econometrics should be able to flesh out, but every instrument I think might help seems doomed.

Patrick Chisholm writes for the Christian Science Monitor,

The political left in America is emerging victorious.

No, this isn't about the damage that Jack Abramoff's mischief has done to the political right. Nor is it about President Bush's lousy poll numbers. And it doesn't refer to Democrats' recent win of two governorships.

It's about something much deeper; namely, that the era of big government is far from over. Trends are decidedly in favor of that quintessential leftist goal: massive redistribution of wealth.

ATSRTW(sorry)T.

[HT: Paul G.]

I am not an expert in the various alternative fuels that are available today, however a letter to the editor from the Jan. 23, 1906 NYT hints that tax policy might have shifted us AWAY from alcohol based fuels?

I'll let you decide:

In this country much pure ethyl alcohol is made from sugar waste - and, by the way, a great deal of our whisky is made from this product by suitable diluting and "doctoring" - the cost of production being as low, perhaps, as 8 cents per gallon. In fact, it has been seen sold in the past as low as $2.25 per gallon in carloads. As the tax is $2.07 per gallon, this is proof positive that the cost of production does not exceed 18 cents per gallon. At anything like 20-cents a gallon it would prove a formidable competitor of gasoline for use in explosion motors.

In other words, the excise tax on liquor made it cost prohibitive to use alcohol in combustion engines. Therefore, we moved towards gasoline/diesel engines and subsequent technology focused there. One wonders what we would be driving today if we had spent 100 years on advancing the alternative-fuel engine and how geopolitics would be different if crude oil wasn't as important as it is today. We have made substantial strides in the past ten plus years of working hard to improve fuel efficiency and it is difficult to judge just how important such a tax was in making us "path dependent."

However, it is fun to think about.

Government has a long history of involving itself in developing markets. From the Jan 23, 1906 NYT is a story concerning automobile taxes in New Jersey. A bill is to be presented and signed into law by the governor which provides for:

1. A speed rate of 8 miles an hour in cities and towns.
2. A speed rate of 20 miles an hour in open localities
3. A registration of 50 cents per horse power imposed on all vehicles.
4. A registration fee of 25 cents per horse power for all drivers
5. Tourists visiting the State for a short time will be required to pay a registration fee of $1 a day
6. The bill creates a Commissioner of Motor Vehicles who will have "power to appoint as many Inspectors as may be needed, all of whom shall have power of arrest for violations of the law."
7. "All cheaffears will be required to pass a satisfactory examination before receiving a license to drive a car"
8. No drivers under 18 years old will be given a license.

That's one comprehensive bill and offers a lot of potential talking points about how government responds to a new and developing market with knee jerk of two kinds. First, how to contain the market and make it "safe." Second how to control the market and make it provide "revenue" to the state.

To rub salt in the wound, as it were, the story goes on to promise that "[t]he money received through the provisions of the bill will become part of the State road fund, and a portion of this fund may be used by the State Road Commissioner to place suitable signs at road intersections and to provide lights at dangerous points at night."

Do we think the the Road Commissioner job would be coveted? He could hire as many "inspectors" as wanted/needed, and his second cousin could get the "sign" contract.

The median home price in Santa Clara County declined 2.1% in one month to $700,000 in December. Volume was down 6% for the month, and almost 17% on the year. Story here.

Meanwhile, apartment rents were up an average of 3.5% on the year in 2005 and occupancy is now at 95%. Story here. That might not be a lot, but the market seems to be tightening compared to just the previous quarter, according to RealFacts.com:

The third quarter [2005] survey of over 11,300 apartment communities in the RealFacts database revealed that…the annual rent increase for all communities in the database was 2.7% and occupancy increased a mere 1.5%. Over the past four years, rents have decreased 8.3% and occupancy has fallen 2.6%,…Full press release.

More on this to come.

One of the more curious lines of questioning during the Alito hearings was on the "Unitary Executive." Some Democrats seemed to think that this was the equivalent of a secret handshake among conservatives out to destroy the constitution.

Exhibit A of this conspiratorial mindset is an article by Jeffrey Rosen in the New Republic. (Unfortunately, the full piece is subscription only). I single out Rosen because he is generally smart and fair, and the New Republic equally so - making the attacks all the more curious.

Analysis below the fold...

Read More »

I’m currently watching the NFC conference championship. While Joe Buck and Fox Sports gush over Seattle, the Seahawks, the fans, and Paul Allen raising the so-called 12-th man flag over supposedly ultra-loud Qwest Field, allow me to remind the football universe that the original home of the original 12th Man is Texas A&M University.

In 1922 during a football game in Dallas against top-ranked Centre College, the underdog Aggies were decimated by injury to 11 players. Head coach Dana X. Bible was informed that a student named E. King Gill, who formerly practiced with the team as a squadsman, was in the stadium. Coach Bible called Gill from the stands, and he suited up. Though he never entered the game, Gill’s uniformed presence on the sideline came to symbolize the student body’s readiness to support their team, and the reason why students still stand through every game waving their white 12th Man towels. The Aggies beat Centre College 22-14.

In 1983, head coach Jackie Sherrill made the tradition a reality when he debuted the 12th Man Kickoff Team, an all walk on squad. Their first kickoff at Kyle Field came against visiting Cal, which had ended the previous season against Stanford in another famous kickoff (Stanford band spilling onto the field, yada yada yada). Over the next 7-8 years, the Aggie walk ons were the nation’s best in covering kickoffs, and didn't let one go for a TD…..until about 1990, after which the kickoff team would feature just a single walk on player. In 2005, beleaguered head coach Dennis Franchione reinstated the all walk-on crew.

Oh yeah, “the 12th Man” is a Texas A&M registered trademark.
Who knows whether A&M is receiving a licensing fee from the Seahawks?

After joining the DoL gang late last November, I quickly went on a 40+ day hiatus to travel and hang out with my fiancée in Texas. Now that the semester brings me back to reality (and, perhaps mutually exclusively, to California), I will now do a reappearing act. Topics for near future posts: housing prices in Silicon Valley, a series of on public choice, congressional reform, marijuana decrim., and Mozart. Good to be back.

The Jan. 22, 1906 NYT reports that the state of New York spent $41,064,842 on educating 1,797,238 elementary school students. At a per-pupil cost of $22.85, that sounds like a swinging' deal. On the other hand, what exactly was the quality of primary education in 1906?

EH.net puts the 1906 figure in the following 2004 dollars:

In 2004, $22.84 from 1906 is worth:
$477.79 using the Consumer Price Index
$380.54 using the GDP deflator
$2,093.25 using the unskilled wage
$2,769.50 using the GDP per capita
$8,947.96 using the relative share of GDP

If we go with the relative share of GDP, the $8900 per pupil is in the ballpark of the average spending per pupil in the United States ($8,019). However, in the 2002-2003 school year New York state spent approximately $35.9 billion to educate 2,879,228 primary and secondary students (12,140 per pupil).

The direct comparison between 2006 and 1906 is admittedly difficult. The numbers reported for 1906 include only elementary school students. The 1906 story does report that there were "86,736 registered pupils" in secondary schools, and total expenditures for these schools was $7,846,383 ($90.40 per pupil). However, the 2006 data mix elementary and secondary spending at the state level, which suggests that the reported average spending in 2006 might be biased upward, assuming states still spend more educating students in high-school than elementary school.

Furthermore, notwithstanding the easy-to-blame teachers union, spending on education today is likely more expensive because of technology (computers, etc), and additional expenditures that were not required/possible in 1906 (from white-board pens to school lunches to school buses).

Perhaps in light of these numbers the public education system is not such a bad deal? (I know, lots of libertarians just fainted). My point is that the primary and secondary education offered today is arguably better (both in total topics/information taught and in value added) than one hundred years ago and yet today we are spending about the same amount of money as a share of GDP as we did back then.

I wonder whether this would indicate that as a society we have been suckered for the past 100 years, essentially spending the same amount of money to a "failed" system, or that the unions are not as strong or as good at rent extraction as portrayed?

How welcome such a view would be today. From a Jan 22, 1906 NYT editorial concerning New York's stock transfer tax which, evidently, accounted for one fourth of all tax revenues gathered by the state:

We have already said much about the objections to the tax in principle - the taxation of trade instead of property, the taxation of capital in a manner to expel it from the State, the taxation of face values instead of real values, and so on - which would remain objections even were the operation of the law ever so excellent [emphasis added]

The editorial goes on to admit that volume and share values have increased on the New York Stock Exchange but that the increases have been considerably less than on the exchanges in Boston, Chicago, and Philadelphia. Moreover, after the share transfer tax was enacted, the price of NYSE seats appreciated less than on the other exchanges around the country.

Would such an editorial even be penned, much less published, today?

A couple of examples from an article about innumerate reporters:

5. College grades carry the most weight, making up 56% of the final score. Fourteen percent is composed of test scores, recommendations and activities. The final 29% comes from 10 other criteria.

10. Chipper Jones is batting just .176 in 85 at-bats with the Braves. But he has had more success as a pinch hitter, with five hits in 30 at-bats, including one that clinched a playoff spot.

For background on "The Diff," click here.

Stephen Kirchner ridicules “the fever-swamp Austrians, who argue that every tick in the business cycle must be attributable to a fiat money supply error on the part of the Fed.”

They internally contradict themselves, he argues:

These are the same people who argue that money demand is too complex a phenomenon for the Fed to be able to calibrate an appropriate growth rate in the money supply. That is perfectly true, which is why the Fed doesn’t even try. Yet the fever-swamp Austrians are implicitly claiming enough knowledge about money demand to determine whether monetary policy is too loose or too tight, just by observing simple growth rates in money, credit and even asset prices. This is what Hayek would term a ‘fatal conceit’ and is a travesty of Austrian economics.

Yes, for the same author to hold both positions (A: Fed can’t know enough calibrate money growth appropriately month by month, and B: But I do know, by looking at just a few variables) at the same time would be self-contradictory. I only wish Kirchner had told us who exactly has fallen into that mistake. You know: name the author and cite his works where he says A and B. Maybe even provide some quotes. Give us some evidence that the set of FSA’s isn’t the null set.

My own reading of the literature is that non-fevered Hayekians (like me!) do take position A. (Btw, the same problem applies equally to the Fed calibrating an appropriate interest rate target.) The economists who most conspicuously take something like position B are not the Austrians, but those employing the Taylor Rule or the McCallum Rule. Who is in both camps simultaneously?

Mark Thoma at Economist’s View points us to a 1998 interview where Milton Friedman made the following statement to an interviewer:

I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.

This statement is unfortunately not up to Friedman’s usual high standards for accuracy and fairness.

1. Hayek’s norm for monetary policy called for the central bank to stabilize nominal spending (MV), not to “let the bottom drop out of the world”. Hayek of the early 1930s can be faulted for failing to call for the Federal Reserve to counteract the MV contraction in the US, but the problem didn’t lie with his theory or policy norm – it was that he didn’t realize that MV was actually shrinking. Of course, neither did Federal Reserve officials realize it. For details see my article “Hayek’s Monetary Theory and Policy: A Critical Reconstruction,” Journal of Money, Credit, and Banking 31 (Feb. 1999), available online via JSTOR.

2. The sense in which Hayek and Robbins advocated a “do-nothing” policy was their opposition to New-Deal-type output restrictions, make-work programs, and deliberate efforts to hold nominal wages above market-clearing levels. They were right to do so – those policies exacerbated rather than moderated the Depression – and one would have thought Friedman would concur.

3. Rothbard’s book on America's Great Depression was published in 1963, a bit too late to have done harm in the 1930s. The book does indeed say silly things about the virtues of letting the banking system collapse, based on Rothbard’s idiosyncratic belief in 100% reserve banking at any cost. But Hayek doesn’t say any such thing, and the Austrian business cycle theory as such certainly doesn’t.

A news item:

MADRID: Spain's most important modern art museum has confessed it has lost a 38-tonne sculpture by the prestigious American artist Richard Serra.

HT: Wilson

After attending a Redwings' game on New Year's Eve, I wondered what effect the new hockey rules were having on scoring. Allen St. John, in the Jan 13 WSJ (subscription req) answers. He reports that goals are up about 1.2 per game (4.95 to 6.14) this year compared to the pre-strike year and that there have been only half as many shutouts (51 vs. 107). St. John, however, takes his analysis an additional step. He breaks down scoring into power play goals and even strength goals and finds that power play goals are up about 60% while even strength goals have increased roughly 10%. Hence the NHL's jump in scoring is primarily attributable to the roughly one-third increase in penalties called this year (13.47 per game vs. 10.27 in the pre-strike year) rather than rule changes such as legalizing two-line passes, changing goalie pads, etc.

From the Rome News-Tribune:

The tailgate of a truck owned by the city of Rome was reported stolen Tuesday.

According to Rome police reports:

Randall Vines told police a 2004 Ford F-150 was left at the city’s public works camp on Vaughn Road. When he arrived at the site close to 8:30 a.m. Tuesday, he discovered the tailgate was missing. There was no value listed.

Over at the Club for Growth Andy Roth posts a damning picture about laws passed by Congress over the past few years:

'Nuff said.

More stuff from news websites. The local dogtrainer tells us that the Lousiana Supreme Court has upheld a Caddo Parish (Shreveport) ban on cockfighting. This article is replete with hilarious lines.
--"Since Louisiana law has nothing to say about cockfighting, Caddo Parish is free to ban it, the state Supreme Court said." It probably doesn't say anything about blogging either; can the parish ban that too?
--"Though Louisiana has no law for or against cockfights, its animal cruelty law states that...fowl are not animals." They'd have to be vegetables or minerals then.
--quotes from Caddo's Sheriff: "In south Louisiana, [cockfighting is] pretty much culture." But all cultures are equally deserving of respect.

I'm too lazy to check the archives, but I'm sure the "academic bill of rights" has been discussed here. CNN.com has a story about the latest developments. Count me as one who, though with vast experience of Marxism from college professors, is skeptical of such a bill. Too much potential for unintended consequences, IMHO.
"...the document exhorts professors to present a wide spectrum of intellectual views in the classroom." Like in math classes? The conservative vs. liberal position on whether water really has two hydrogen atoms? Of course, Horowitz wants his bill to encourage conservative opinion in class, but since most of my off-the-cuff remarks are libertarian, would not a student have just cause under this bill of rights to take action against me for not espousing the liberal views Horowitz wants to counteract?

Thank Gaia that New Orleans' anti-environmental homes got washed away! There is a push now for "Green Building" in the Big Easy. In typically nonbiased fashion, the article mentions only benefits of green construction but no costs. Energy savings, indoor air quality, and the like, but no mention of whether the initial construction costs are comparable to traditional construction. Sure, if I installed a nuclear toaster in my house that saved 2% on my energy bill every month that would be great, even if it cost me $1 million to buy and install.

One Patti Cox, an environmental consultant, says "Buildings -- they are the gas guzzlers." Since we have HOV lanes on highways, maybe we can get HOBs. Or hybrid buildings that recharge whenever employees' weight presses down on stairs. The rest of you in your sport utility buildings ought to be ashamed.

In a similar story, CNN has "'Dream Team' to plan Katrina rebuilding." I didn't see any mention of Magic or Larry Bird, but we will get the next best thing with urban planners and "thinkers." (Wouldn't you love to have your business card say "Art Vandelay--Thinker.") Of course, the Green Chocolate City will be rebuilt according to "new urbanism," the form of city planning whose superiority is evident by the fact that no one likes to live in cities planned that way. Who needs spontaneous order anyway when thinkers are on the case?

P.S. I just found the perfect mascot for a rebuilt New Orleans.

Alex Tabarrok at MR asks himself, "Would I be a Good Dictator?" (Alex, if you have the humility to ask the question, you probably would make a good dictator.)

His post reminded me of the classic film, The Man Who Would Be King (1975) based on Kipling's short story, directed by John Huston, and starring Sean Connery and Michael Caine.

If you haven't seen it or haven't seen it in a while, I recommend it. Among other things the cinematography is awesome for any era much less 1975.

In the film Sean Connery's character, an British ex-soldier in India, is made the god-like king of the land of Kafiristan (think Afghanistan). He goes power crazy and in fact doesn't escape with his life.

There also a great scene in which Connery orders all the villages to give 10 percent of their harvest to him so that he can use it to help villages who have had bad harvests. A welfare state in the making!

Today marks the 25th anniversary of Ronald Reagan's inauguration as President. Drink a toast to the Gipper!

So asks Hunter Lewis in a thoughtful Forbes column today. Ultimately, as Lewis himself suggests, the question is ill-specified -- with respect to Bernanke’s role as Federal Reserve chairman -- because “conservatives as a group do not seem to have decided exactly what they want in monetary policy.”

The better-focused questions Lewis raises are: Is Bernanke a Keynesian (does he believe in “activist” counter-cyclical policy)? Bernanke’s views on the Great Depression point to yes. Does Bernanke favor tighter restrictions or greater freedom for financial markets? Lewis says Bernanke favors tighter restrictions to fight asset bubbles. Is Bernanke hawkish enough on inflation? Here Bernanke’s past speeches over-worrying about deflation give one pause.

Lewis refreshingly cites F. A. Hayek and the arguments of (unnamed) “contemporary heirs of Hayek” (modern free-banking advocates) on the desirability of mildly falling prices in a growing economy. He notes that the logical position for a free-market economist to support is “abolishing the Fed in favor of a gold standard and the kind of ‘free’ banking we had in the 19th century.” (Hmm, what contemporary economists might he have cited in connection with these ideas?)

ADDENDUM: Stephen Kirchner, who blogs at Institutional Economics, has also commented on the Hunter Lewis column. Kirchner argues that Bernanke is “an empiricist” and “eclectic”, which seems a fair enough characterization (independent of whether those are good or bad qualities in a Fed chairman). But I've had trouble making sense of Kirchner’s final sentence:

It is ironic that in recent years it has been central bankers like Greenspan and Bernanke who have upheld the view that markets and not monetary policy should determine growth rates in broad money, credit aggregates and asset prices.

In a fiat regime, the central bank controls the monetary base, and broad money is geared to the base via the money multiplier, so how on earth are “markets and not monetary policy” to determine growth rates in broad money? My best guess is that Kirchner is referring to inflation or price level targeting, under which the Fed would adjust the base and thereby broad money to support the targeted price level path. (Problem: Greenspan isn't an advocate of inflation targeting.) Even then, it's not really helpful to call that "markets" determining money growth.

Bob Bauer, a prominent Democratic Party lawyer in Washington, has a great little commentary on demands for lobbying reform, here.

There is no question that some reform is needed - the question is, who will be restrained - members of Congress, who have created this mess by handing out favors left and right, spending beyond all reason (Ted Stevens' "bridge to nowhere" comes to mind, though it may have shown that at some level even Congress has its limits), and generally presuming there are no limits on their powers, or average citizens, who want to expose congressional wrongdoing, contact their congressmen, and defend themselves from predatory legislation?

It appears that Washington is planning on the latter. Already, Straight-Talking Senator John "Keating Five" McCain has proposed a bill that would place limits on, “any attempt to influence the general public, or segments thereof, to engage in lobbying contacts whether or not those contacts were made on behalf of a client.” You know - "Call your congressman" type stuff, as the Skeptic notes.

What is going on is an effort to define all "influence" as illegitimate. But "influencing" government is what you and I and our neighbor do, or try to do. It is not illegit for us to try to influence government.

And as Bauer's post skillfully illustrates, when all the sources of "influence" are gone, there will still be those with the ability to "influence" Washington. But they will be a small, select group. Who will they be? Who will be allowed into the inner circle? Well, I don't know for sure, but I'll tell you this, Mr. Average Citizen - as the Former Chairman of the Federal Election Commission, with a 501(3) foundation , some Washington contacts, and knowledge of these increasingly complex laws on trying to speak out in public, it might be me, but I guarantee you that it won't be you.

NASCAR has the Chase for the Nextel Cup. Golf recently has copied the format, which it will begin in 2007. Now marathon running will have its version of an annual championship. The World Marathon Majors will bring together five of the world's top marathons -- Boston, London, Berlin, Chicago and New York City -- in a championship format, with prize money for the leaders of the series.

[Story.]

My $0.02: This is tough. Most of the elite runners will run only 2 races competitively per year. To perform well in 5 races in a year? That's a different kind of thing altogether.

1-800-Free-411

I don't know, they push advertising while you are on hold so TANSTAAFL.

From the Jan. 18, 1906 NYT are two articles concerning the 200th anniversary of Ben Franklin's birthday. Evidently this year there were some 300th anniversary celebrations, but a Google search didn't yield much in terms of recent (as in Jan. 17th, 2006) headlines concerning any events. Sorry, Ben, it seems you got knocked off the front page by the "chocolate" and "plantation" comments from Monday.

Anyway, one article from 1906 reports that "In the public schools of the city the two hundredth anniversary of Franklin's birth was celebrated yesterday. By order of the Superintendent, special exercises were held and extracts from Franklin's wors read." Somehow I think few school districts took time to read some of the sage words of Mr. Franklin's autobiography or other writings.

(Update: My brother claims that NPR had a rather lengthy story on BF, so, Kudos to NPR)

Another article from the Jan. 18, 1906 NYT:

James J. Hill, President of the Great Northern Railway, made the following observations regarding commercial conditions in the Nation:

"The Nation at large is prosperous. We are cutting a wide swath, there is no doubt of that. If we get down, however, to a closer examination, we will readily see that the Nation is living profligately. We are selling our natural resources - exploiting them as fast as we can without building up industries and trade relations to take their place when exhausted.

"It is only a question of time till our timber is exhausted. Our public domain is all gone, and the Nation cannot longer boast that it has homes for all. Where are the immigrants rushing to our shores to end up? Not on the land. We have no more to offer them. They must crowd into the cities.

When this nation has 150,000,000 people, they will have to do something else than exploit natural resources to earn a living." [emphasis added]

I would agree with the last sentence. People will find other things to do than farm, mine for coal, or cut timber when there is less need for labor in those areas, whether that is because there are fewer trees or because there are more technologically advanced ways to cut down trees.

It is a good thing that the individuals that make up our society do not listen to the likes of Mr. Hill - whether yesterday or today. If we all sat around working on the farm then I wouldn't have this neat wireless network at home from which I can blog in my easy chair on my Fujitsu laptop.

Yep, better to have a bunch of people figuring out other things to do than chop down trees.

There are a few interesting stories in the Jan. 18, 1906 NYT. From the "things never change" department, there is the "trial" of a public school principal in Brooklyn. The article calls the hearing a "trial," but it is held by the school district/union(?) so I am not sure if the word is actually appropriate.

Nevertheless, Mr. Frank Howard had been accused, through a petition signed by sixty residents of the school's neighborhood, that he was engaged in "systematic Christianization." He was accused of commenting on "the Scriptures in school; that the children had been countenanced in singing Christian songs; that the Principal permitted the display in the classrooms of pictures of the Madonna and Child, and that at Christmas exercises on Dec. 19 he had made particular references to Christ."

The complainants were not secularists - evidently Mr. Howard's school was in a predominantly "Hebrew neighborhood."

I have thought all along this "NSA spying" thing would just blow over. No one really cares.

But it appears the administration has actually made people really mad. Even some people who have been supportive.

Now, I'm a libertarian on this question all the way. Unauthorized spying, bad, always. But I didn't think anyone else cared.

And having Al Gore chirp about libertarian themes...well, it makes me sad when Gore is clearly right and Bush is so clearly wrong. (That doesn't mean that Gore is not still evil incarnate, of course....)

Be careful about the conditions of that second bet, Frank. The postive association between economic growth and life expectancy might be clear in the long-run, but it is by no means the case in the short run.

In Development as Freedom, Amartya Sen points out that in the U.K. from 1900 to 1960, life expectancy rose when GDP per capita fell and fell when GDP per capita rose. According to Boettke and Subrick, this finding is not an anomaly as it can be found to have occurred at other points in history. See, Peter Boettke and J. Robert Subrick, "Rule of Law, Development, and Human Capabilities," Supreme Court Economic Review, Fall 2002.

I'd like to make a couple of modest wagers, a la Julian Simon's bet with Paul Ehrlich.

WAGER 1: The Sunday Rome News-Tribune reprinted a Paul Krugman column (sorry no link). In that column Krugman writes:

The trade deficit isn't sustainable. We can run huge deficits for the time being, because foreigners ... are willing to lend us huge sums. But one of these days the easy credit will come to an end, and the United States will have to start paying its way in the world economy.

To do that, we'll have to reorient our economy back toward producing things we can export or use to replace imports. And that will mean pulling a lot of workers back into manufacturing.

My bet--let's make it $100 if Prof. Krugman will take me up--is that whenever the U.S. next has exports greater than or equal to its imports a smaller share of workers, not a larger share, will be employed in manufacturing. Two reasons why I'm confident in offering this wager: first, the rapid overall gains in manufacturing productivity. Second, a trade balance will probably be associated with a reduction of foreign investment in the U.S.; foreign investment (e.g., foreign auto plants built here) is a significant source of manufacturing jobs in the U.S.

WAGER 2: The Jan 9 WSJ (again no link) had a feature on so-called corporate social responsibility (page R6). In an exchange with Ilyse Hogue of the Rainforest Action Network and Fred Smith of the Competitive Enterprise Institute, Benjamin Heineman of GE wrote:

Rough numbers: The life expectancy of a male in Russia is about 58 years, in China about 74. One (not the only) source of disease in Russia is poor environmental protection. With rapid industrialization, China has to make sure it doesn't go the way of Russia.

My bet for Mr. Heineman--again $100 sounds about right--is that if China continues to industrialize, it will have increased, not decreased, life expectancy. (This bet should probably have a time frame--perhaps over the next decade.) Continued industrialization, as Fred Smith pointed out later in the exchange, should be associated with rising wealth, better health, and increased longevity.

Excerpted from the AJC:

Actor William Shatner has sold his kidney stone for $25,000, with the money going to a housing charity, it was announced Tuesday.

Shatner reached agreement Monday to sell the stone to GoldenPalace.com.

The stone was so big, Shatner said, "you'd want to wear it on your finger."

GoldenPalace.com originally offered $15,000 for the stone but Shatner turned it down, noting that his "Star Trek" tunics have commanded more than $100,000. His counteroffer was accepted.

Yuck. Ht to MR for the markets in everything concept.

One of the all-time greatest episodes of South Park is “Underpants Gnomes,” wherein the coffee-addled character Tweak finds that his missing underpants are being stolen by -- you guessed it -- a group of underpants gnomes. (In a parallel plot line, Tweak’s father runs a coffee shop, and enlists the boys to help him lobby the town government to block the “Harbucks” Coffee chain from opening a competing shop in town.)

When asked to explain why they are stealing underpants, the gnomes offer the following as their business plan:
Phase 1: Collect underpants
Phase 2: ?
Phase 3: Profit
Here’s a screen shot of a gnome contemplating the plan.

The gnomes themselves don’t understand Phase 2; the underpants are simply piling up. The lesson (reinforced by the parallel plot line): profit doesn’t appear by magic. You have to do something appropriate that actually yields a profit.

Now consider Jeffrey Sachs’ plan for enriching sub-Saharan Africa:

The rich world should offer impoverished regions like sub-Saharan Africa more economic support to break out of poverty. Of course, aid should be directed to specific needs – for example, malaria control, food production, safe drinking water, and sanitation – whose fulfillment can be measured and monitored to resist corruption. By raising living standards, we would also be empowering both civil society and impoverished governments to defend the rule of law.

Or in essence:

Phase 1: US taxpayers give (more) money to sub-Saharan African governments or multinational aid agencies, “directed to specific needs”.
Phase 2: ?
Phase 3: Africa embarks on cumulative growth.

It seems to me that, despite the list of “specific needs” to be met, Phase 2 is missing from the Sachs plan. How do transfers promote “breaking out of poverty”?

Of course, as a matter of arithmetic, if $X in cash or $X-worth of in-kind benefits is provided to a country’s ruled (putting aside the question of how well measuring and monitoring have ever been at preventing diversion to the rulers’ private benefit), it makes a one-time contribution to living standards: an average member of the public gains $X/population. But how does a transfer via African governments or aid agencies “empower[] civil society” in Africa rather than exacerbate dependency and subservience to the state? Have such transfers ever, anywhere, promoted the kind of embourgeoisiement that Africa needs?

If you believe in efficient labor markets, and you don't make $30m per year, this site will make you feel real good. By the time I earn 26 cents, Barry Bonds has earned $43.75.

Puts the whole PHD thing in perspective.

Painting advertisements on the roof so that they are picked up by Google Maps and others. At least this form of advertising is easy to avoid.

There was a famous beer party when I was an Asst Prof at Texas. Young graduate student, talking about what he wanted to work on. Mel Hinich happened to hear him, just as the kid said something about "my career."

Hinich laughed, then stared at the kid: "You think you have a CAREER?"

Then, Mel shakes his head and goes off to get another cold one. As I recall, it was a Shiner Bock.

At the time, this was spoken of to show what a bad guy Mel was. Now, Mel is my friend and coauthor, and he can be difficult. But he was exactly right. Most people do not have a career. They have big talk, but they never actually try to write anything, particularly not something good enough to have a career.

Here is a very nice, though now somewhat old, talk about "your career." Actually, it is "You and your research."

Now, get off your big o' ass and go write something. Career. Ha.

(nod to EZAngus, who really does have a career)

The Jan. 17, 1906 NYT reports the death of Marshall Field. There were likely those who felt that Marshall Field's (the company, not necessarily the man) was destroying the small mom-and-pop retailer, that Marshall Field stores eroded true American values such as the living wage, high-cost health care, a responsibility to buy American first and so forth.

From the NYT story, however, such sentiment was not apparent. Indeed, from the first paragraph one receives a completely different vibe about the paper (and society's?) view of Marshall Field :

Marshall Field of Chicago, the richest merchant in the world, the largest individual taxpayer in the United States, and, perhaps, the third wealthiest citizen in the country, died at 4 o'clock yesterday afternoon...Nearly all of the great merchant's relatives and friends were with him at the end.

Later on in the story there is a sub-headline "How he rose from farmer's boy to be one of world's greatest merchants." Let's see if these rules are taught in any business schools today:

Perhaps the best epitome of the rules of his life is furnished in his own words. He wrote:

He never gives a note.
He never buys a share of stock on margin.
He is against speculation.
He is no borrower.
He has made it a point not to encumber his business with mortgages.
He does business on a "cash basis"
He tries to sell on shorter time than competitors
He tries to sell the same grade goods for a smaller price.
He holds his customers to a strict meeting of their obligations.

The story goes on

And Mr. Field did more than make himself rich. He made his associates rich. One man after another has stepped out of the house of Marshall Field & Co. and retired with a fortune.

This sentiment seems all to rare in today's society. Yet, while Bill Gates and Michael Dell are very wealthy individuals, they have enabled thousands of others, directly and indirectly, to become wealthy as well. One can only hope that by the time the giants of our day pass on, society is more ready to praise and honor than denigrate and condemn.

Ohh, how I dislike economic impact studies. Here's a story about one for the Baltimore Marathon:

In an economic study conducted by RESI Research and Consulting, the Under Armour Baltimore Running Festival generated an economic impact of nearly $12 million in 2004 for the city of Baltimore

Hmmm?

The Baltimore Marathon had about 6000 runners in all events (marathon, half, 5k). I can't locate the full study online, but let's assume that (1) each runner had one spectator along with them; (2) two-thirds were from out of town; and (3) the local multiplier is 3.5. Under these assumptions, each couple would have to spend $860 to yield a $12 million local impact.

Yeah right.

UPDATE: I found some other economic impact studies for marathons.

Tampa. Honolulu. Cleveland. Cincinnati.

Pat Robertson was widely (and, in my view, appropriately) criticized for his claim that Sharon's stroke was God's retribution for dividing Israel. Apparently New Orleans Mayor Ray Nagin is a Robertson acolyte, for he now thinks hurricanes are an indication of God's unhappiness with the U.S. An excerpt from the AJC:

NEW ORLEANS — Mayor Ray Nagin suggested Monday that Hurricanes Katrina and Rita and other storms were a sign that "God is mad at America" and at black communities, too, for tearing themselves apart with violence and political infighting.

"Surely God is mad at America. He sent us hurricane after hurricane after hurricane, and it's destroyed and put stress on this country," Nagin, who is black, said as he and other city leaders marked Martin Luther King Day.

"Surely he doesn't approve of us being in Iraq under false pretenses. But surely he is upset at black America also. We're not taking care of ourselves."

Nagin also promised that New Orleans will be a "chocolate" city again. Many of the city's black neighborhoods were heavily damaged by Katrina.

"It's time for us to come together. It's time for us to rebuild New Orleans — the one that should be a chocolate New Orleans," the mayor said. "This city will be a majority African American city. It's the way God wants it to be. You can't have New Orleans no other way. It wouldn't be New Orleans."

Here's a quick test for anyone who doesn't think the U.S. media have a leftist bias. Compare the number of hostile editorials and cartoons that blasted Robertson to those that criticize Nagin. The former will no doubt outnumber the latter.

The Bank of Italy’s new Governor, Mario Draghi, formally assumed office today, following last month’s scandal-driven resignation by Antonio Fazio, who stands accused of exercising favoritism in approving bank mergers. Meanwhile in Serbia, the Associated Press reports,

Serbia's Central Bank on Monday dismissed a deputy governor who was arrested last week for allegedly taking a bribe.

[Dejan] Simic was arrested on Wednesday, along with a ranking Socialist Party official. Simic was accused of accepting a euro100,000 ($120,000) bribe to reinstate the license of a blacklisted bank …

Andrew Oswalt, Professor of Economics at Warwick University tries to understand why people run marathons for fun. His conclusion,

I believe the fun-run marathon is a cover for baser motives. It is about the search for status in a society where folk are no longer allowed to fight. People take part in amateur marathons because they enjoy the extra social rank it gives them. They go through the pain for a sound, but subconscious, reason. And this is why the running has to be in public.

As they staggered past me, those Florentine runners were subconsciously thinking: Hah, I am a tougher and better person than that funny man in a hat.

Damn right, Professor.

From the Jan. 15, 1906 NYT is a letter to the editor arguing against the Monroe Doctrine. Given the events since 9/11, to many the Monroe Doctrine might be a welcome respite from global interventions.

The letter writer suggests the following as a guide for foreign relations:

Two rules ought to guide us as a member of the family of nations, and those are, first, the "Golden Rule," and, secondly, "mind your own business."

The Jan. 15, 19066 NYT reports the 1905 trade volume with France. As reported, we had $166,000,000 in total trade with France, of which $90,000,000 was imports from France and $76,000,000 was exports to France. The report states that France mainly sent the United States (and other countries) "high-quality manufactures and wine" whereas the United States sent France cotton and agriculture implements.

From EH.net, the $14 m trade deficit with France would equal:

$298,390,188.68 using the Consumer Price Index
$240,593,366.01 using the GDP deflator
$1,348,458,598.73 using the unskilled wage
$1,790,464,329.90 using the GDP per capita
$5,879,742,553.41 using the relative share of GDP.

Was everything doom and gloom for the U.S. vintner and high-quality manufacturer? The article doesn't mention anything about the domestic wine industry, but does mention that from 1895 through 1995 the value of U.S. agriculture implements exported to France went from $500,000 to $3 million. Without knowing the prices of such ag implements it is difficult to tell if real trade increased, but if prices didn't inflate considerably over the decade, it is likely that U.S. exports were increasing over time, even as the trade deficit persisted.

Perhaps one of the hardest lessons in international economics is that trade deficits, in and of themselves, are not per se bad for an economy. Many worry about our contemporaneous trade deficits with China, Korea, and other countries, yet such worry might be misplaced given the historical record.

Economists typically scoff at the ex ante economic impact study. Here's one that seems to take the cake:

It is a building for the Flandrau Science Center at the University of Arizona. Unlike most buildings on campuses around the country, this building is expected to generate approximately $300 million per year?!!? That's more than ERA claims the Cowboys stadium in Arlington will generate (he he he).

From the article:

According to the report by the highly respected economic research and consulting firm, ConsultEcon, Inc., the project is expected to:

- Create approximately 5,000 permanent new jobs in the City of Tucson and Pima County

- Annually generate $362 million in direct, indirect, and induced economic impacts in the City of Tucson and Pima County, of which $123 million will account for salaries and wages

- Annually generate $18.6 million in new, non-property tax revenue for the City of Tucson and Pima County, the State of Arizona, and other counties/municipalities.

Hmmm, I don't think so.

More here, including the economic impact study.

HT: J-Walk blog.

… is my favorite line from the now-on-dvd Hindi film Apaharan [Kidnapping]. It means roughly “The government doesn’t work!” or “The government is useless!”. The film's official website is here.

Overall, though, the film is a disappointment. It wastes a great performance by Nana Patekar as a corrupt politician/ kidnap ringleader. Having dispensed with the usual song-and-dance filler, comedy, and romance subplots (while retaining the action and family-melodrama elements of the classic masala formula), the film could have been a taut 100 minutes long instead of a numbing 160. The plot puts the main character through too many implausible changes (e.g. he becomes a kidnapper so that he can afford the bribe required to enter the police force?!), and star Ajay Devgan can’t make them believable – he looks as baffled on the screen as the viewer feels in front of it.

The Jan 14, 1906 NYT provides an overview of a proposed continuous rail link from New York City to Paris. Trans-Atlantic trips were evidently too dangerous or uncomfortable, therefore the proposal was to ride a rail from New York to Alaska, cross the Bering Sea via two 36 mile tunnels (one dug by the U.S. and one dug by Russia), take one of three proposed routes across Siberia, and eventually cross Russia and Eastern Europe and eventually to Paris. From my understanding of rail travel at that time, it is not immediately clear that the rail link would be a more enjoyable trip than the sea-going version.

In one sense, the proposal was really focused on the Bering Strait and the digging of what would have been the two longest tunnels in the world (kind of like the Chunnel ninety years hence), although the trans-Siberia railroad had yet to be completed - the remainder of the rail link would have simply connected existing rails.

While the course of the next ten years would make the rail link an impossibility, the article ended with the following optimistic view of technological advance:

It is dangerous to fix any limitations upon human enterprise. A few years ago we should have laughed at the idea that in 1905 about three hundred British scientists would visit the Victoria Falls of the Zambesi by a railroad extending 1,600 miles from the ocean.

The most important event of the week has gone all but unnoted in the blogosphere.

In 1875, prohibitionists blew up the last saloon in Westerville, Ohio. The owner attempted to reopen his saloon four years later, and that was dynamited, too. Westerville has been dry ever since.

Until yesterday, when Michael's Pizza owner Michael Evans served up a beer to local jewler Bill Morgan. Last November, Westerville, once known as "the Dry Capital of the World," headquarters of the Anti-saloon League beginning in 1909, voted to allow two establishments to sell beer and wine. Evans auctioned off the first legal beer sold in town in 130 years to Morgan, who paid $150 for the drink (Evans donated the proceeds to local charity).

One small step for freedom; one giant leap for beer. (Sorry, couldn't come up with anything more inspiring.)

The state of New Jersey has decided that its new advertising slogan will be "New Jersey: Come See for Yourself." The also-rans?

New Jersey: Expect the Unexpected.
New Jersey: Love at First Sight.
New Jersey: The Real Deal.
New Jersey: The Best Kept Secret.

Given their recent political scandals and history of corruption, I wonder what other slogans could have been proposed.

Stuart Taylor, one of the true gentlemen of Washington politics and also one of the most thoughtful commentators around, offers up a typically superb column today at National Journal on what has gone wrong with the judicial confirmation process. Unfortunately National Journal is for subscribers only - C'mon Stuart, National Journal has a certain intellectual prestige, but we need you writing for something people outside the beltway can see. Here are a couple fair use excerpts below the fold.

Read More »

William Peirce, professor emeritus of economics at Case Western Reserve, is running for Governor of Ohio on Ohio on the Libertarian Party ticket. Here is his website.

At least Ohioans have a third (and I think a fourth choice) this year. In North Carolina, they've prevented everyone's favorite retired wrestler from running for Governor.

Rate your students.

Here.

Nod to BJN, with thanks.

Last year, I wrote an article for the GA Public Policy Foundation and testified before a GA legislative hearing in favor of a tax-expenditure limitation for the state of Georgia. (Some details are here.)

Today's AJC reports:

Gov. Sonny Perdue, heading into an election year armed with rising state revenues, proposed a voter-friendly budget Wednesday that contains millions for school construction, a child-care tax credit for families and even gift cards for teachers.

The record $18.6 billion spending bill for the upcoming fiscal year — $1.2 billion higher than this year's — also would pay for more prison beds, fund broadband Internet access in rural areas and hand the state's 100,000 teachers a 4 percent pay raise.

Too bad there isn't a TEL in place to prevent Gov. Perdue from using the state fisc as though it is his own private vote-buying fund.

From this week's State Tax Notes (reg req'd) comes this disappointing news:

Wary of resorting to more general tax increases, both the city of Chicago and Cook County, Ill., look as if they will rely on cigarette tax increases to bolster their budgets.

On the recommendation of Mayor Richard M. Daley (D), an increase of 20 cents per pack in Chicago's cigarette tax was approved as part of the 2006 budget and will take effect on January 10, bringing the city's rate to 68 cents per pack. The increase will raise an estimated $10 million a year; the city has a $5 billion budget.

The estimated $10 million in tax revenue suggests that at least 50 million packs of cigarettes are sold in Cook county each year, the equivalent of approximately 140,000 one-pack-a-day smokers in a county population of approximately 5 million in 2000. That numbers sounds awfully low - about 20% of the population smokes. Nevertheless, such taxation seems an example of the "tyranny of the majority."

In a slight nod to Dr. Laffer, the article concludes:

With the proposed county tax increase, the overall tax rate (federal, state, county, and city) for a pack of cigarettes in the city of Chicago would become $4.05 -- a potential combined rate that has raised concerns about smuggling, as well as purchases over the Internet or from surrounding jurisdictions.

Ouch.

From yesterday's "Best of the Web Today," here's a description of part of the Alito hearings:

The Democrats, eager to smear Judge Alito, have alighted on his membership in a group called Concerned Alumni of Princeton. This afternoon Ted Kennedy was interrogating Alito about his reading habits, demanding to know if Alito had read an article expressing some noxious views that appeared in a CAP magazine more than two decades ago.

Interestingly the senator thinks it's ok to question a Supreme Court nominee about his reading habits but thinks that investigating the reading habits of possible terrorists is not ok. To wit:

On July 31, 2003, Senator Feingold (D-WI), joined by Senators Bingaman (D-NM), Kennedy (D-MA), Cantwell (D-WA), Durbin (D-IL), Wyden (D-OR), Corzine (D-NJ), Akaka (D-HI), and Jeffords (I-VT), introduced the Library, Bookseller, and Personal Records Privacy Act as a companion bil to Rep. Bernie Sanders' Freedom to Read Protection Act. The bill would amend the PATRIOT Act to protect the privacy of law-abiding Americans and set reasonable limits on the federal government's access to library, bookseller, medical, and other sensitive, personal information under the Foreign Intelligence Surveillance Act and related foreign intelligence authority.

The Alito hearings have really brought good news to Americans. Many of my fellow bloggers on this site are worried about the Court's decisions in the realm of government takings of property; intellectual property; regulatory authority; criminal law; and much, much more.

But watching a few days of hearings, I've come to realize that the only issue facing the Supreme Court is abortion. Apparently, there are no other legal doctrines in dispute.

This is certainly good news, is it not?

These alternative rules for the game Monopoly seem interesting. In many cases they make the game more like competition than monopoly. Does anyone know if there is a "libertarian" set of rules for Monopoly?

Perhaps there is a teaching paper here?

Students Matt Ryan (West Virginia U.) and David Skarbek (San Jose St. U.) have started a blog, The Perfect Substitute. Check it out. I love the tag line:

The case where a consumer is willing to substitute one good for another at some constant rate and remain equally well off. This blog is that perfect substitute.

The slope seems to be getting slipperier. An earlier post discussed the risk to one's tenure chances of blogging on topics deemed controversial to a university's higher-ups. But now, it would seem, some of us may have even more to worry about when we speak our minds.

It apparently is now against the law to annoy someone over the internet:

"Whoever...utilizes any device or software that can be used to originate telecommunications or other types of communications that are transmitted, in whole or in part, by the Internet... without disclosing his identity and with intent to annoy, abuse, threaten, or harass any person...who receives the communications...shall be fined under title 18 or imprisoned not more than two years, or both."

This could pretty much cover every email I send to my students that starts with "Why did you miss class yesterday?" There is a lot of commentary one could make about this; who determines what is annoying, isn't there such a thing as the first amendment, should the internet be regulated, if the annoyer doesn't disclose his identity how do the police know who to arrest, does this mean the entire population of Nigerian assitant Treasury secretaries will be imprisoned for two years, etc. But I just had a big lunch and am going home to take a nap. Besides, my commentary would probably be deemed annoying to certain readers, and I've seen Shawshank Redemption.

P.S. They stole my idea anyway. In the interests of efficiency and internalizing externalities, I've wanted to begin a program where I charge people for annoying me and thus lowering my utility. "You talked on your cell phone for five minutes while my girlfriend and I were watching the movie. That will be two dollars, please."

After filing for Worker's Compensation for a bad back, stop running marathons.

While I don't really have the time to give the thoughtful response to Bob's urging that I think it deserves, here are some quick thoughts. Note that I have not given considerable thought to this and while I expect others to comment, this will be my last posting on the subject as I have too much work to do.

First, I should be clear that my reservations have more to do with the recent missive than the whole project. Outside of the top schools, colleges and universities have a variety of faculty to choose from and for this reason I tend to agree with Bob's earlier comments about living up to their own claims of intellectual diversity, although I have concerns about focusing on the fairness of outcomes rather than processes. My statements here are focused on the most recent article by Klein discussing the research by McEachern on political affiliations of editorial boards of top journals.

1. I don’t reject Dan’s right to undertake this project and I don’t disagree with the reasons for doing so. I am a huge fan of shame. I think we need more William Lloyd Garrisons.

2. What I disagree with is the approach. For me, political affiliations (or donations) tell me nothing of relevance since Republicans are no less interventionist than Democrats. To be honest, a journal comprised of Republicans (not libertarians) might focus on different issues but would not produce the type of scholarship that Klein seems to want.

In my opinion, focus on political affiliations obscures the point and does nothing to change the root of the problem. To me, the most powerful thing about Dan’s most recent piece was his discussion of Miron’s article on prohibition in the JEP and the lack of similar articles in the years since. That is the problem.

Fundamentally, it seems to me this is all about the lack of acceptance for classical liberal political economy at the top journals (and the top of the profession). Criticizing the make-up of the editorial boards of the top journals would be appropriate, it seems to me, if it were not reflective of the top of the economics profession. Yet it is. How many classical liberals are on the faculties of the top 25 economics departments? Two, perhaps three? An inclusion of even one classical liberal on the editorial board of a top journal is probably statistical overrepresentation.

3. To me the solution is for classical liberals to work harder, engage those we disagree with, and to get more individuals with classical liberal inclinations into top graduate schools.

I apologize if I have inferred any motives to Dan Klein here that he does not have or if I have misread his reasoning behind his project. Regardless, I think that the focus on party donations and affiliations obscures rather than clarifies the real problem in academic economics, which Klein himself addressed in “The Ph.D. Circle in Economics.”

Ultimately, shame will only work if there is work similar to Miron's being rejected from top journals. Is that the case? How many articles along the lines of Miron's article have been submitted to the top journals? That would be interesting to know.

I'd be interested to hear more from Josh about why he finds Dan Klein's work on the political identifcation of college faculty to be improper.

A recent missive from the AAC&U on "Academic Freedom and Educational Responsibility" includes the following:

Intellectual Diversity and the Indispensable Role of Liberal Education

In any education of quality, students encounter an abundance of intellectual diversity—new knowledge, different perspectives, competing ideas, and alternative claims of truth.

If this is true, then wouldn't colleges want to measure the actual extent of intellectual diversity among the faculty? If colleges really believe in this, then Dan's works shows that they ought to be ashamed at a the gross imbalances in political views among the faculty. Dan is trying, so far as I can see, simply to shame colleges and universities into living up to their own claims of intellectual diversity. I don't think Dan is calling for any kind of legal or policy remedy like affirmative action for conservative/libertarian professors ala David Horowitz's ridiculous Academic Bill of Rights.

Step 1: Pass a law banning people from engaging in trade. For example, let's ban the sale of human organs and tissues for transplantation.

Step 2: People attempt to engage in trade anyway. For example, people might steal bones for transplantation because the quantity demanded exceeds the quantity supplied from donors at a zero price.

Step 3: Pundits step forward to decry this unethical and illegal behavior, and call for additional regulations to close the "loopholes".

"Bodies and tissues are now becoming commodities, not for the common good but for the money that is generated," said Ronn Wade, director of Maryland's Anatomy Board . . . Federal law allows the donation but prohibits the sale of human organs and tissues for transplantation. There is no prohibition on buying and selling body parts for medical and scientific research, and no federal regulation of brokers of body parts for research. [Emphasis added.] . . . Arthur Caplan, director of the University of Pennsylvania's Center for Bioethics, said there is a lack of oversight regarding who is collecting human tissues and body parts for scientific or medical research. . .

[Whole thing.]

Step 4. Rinse. Repeat.

The issue can be found here.

I must admit that I am one of those people who find Klein's investigations of academic's political affiliations improper. While I still hold that position, he makes a strong defense of his recent work in this issue. See Dan Klein, "Sense and Sensibilities: Myrdal's Plea for Self Disclosure and Some Disclosures on AEA Members."

George Will is spot on about the Abramoff scandal. An excerpt:

The national pastime is no longer baseball, it is rent-seeking -- bending public power for private advantage. There are two reasons why rent-seeking has become so lurid, but those reasons for today's dystopian politics are reasons why most suggested cures seem utopian.

The first reason is big government -- the regulatory state. This year Washington will disperse $2.6 trillion, which is a small portion of Washington's economic consequences, considering the costs and benefits distributed by incessant fiddling with the tax code, and by government's regulatory fidgets.

Second, House Republicans, after 40 years in the minority, have, since 1994, wallowed in the pleasures of power. They have practiced DeLayism, or ``K Street conservatism.'' This involves exuberantly serving rent-seekers, who hire K Street lobbyists as helpers. For House Republicans the aim of the game is to build political support. But Republicans shed their conservatism in the process of securing their seats in the service, they say, of conservatism.

That's the headline of a story on msn.com. An excerpt:

In case there was any doubt, a study has confirmed that Americans have a lot of what economists know, technically, as stuff.

The computer has surpassed the dishwasher as a standard household appliance. The poorest Americans have posted a sharp rise in access to air conditioning. The richest Americans still own the most cars, but they are choosing to own slightly fewer of them than they used to.

These nuggets provide a glimpse of American lifestyles that isn't captured in the raw data of monthly economic reports. At a time of concern about the standard of living for future generations, the study offers hopeful signs of tangible progress, even as the pace of income growth has slowed in recent years.

It's only one piece of the overall picture of economic progress and doesn't resolve the question about future generations. But it confirms that what the Census Bureau calls "material well-being" abounds for regular folks today in ways that Louis XIV -- for all his palaces, silk stockings and ruffled finery -- could barely have imagined.

Be sure to scroll down to the table showing, among other things, that more than 98% of households own color tvs. For a more comprehensive treatment of poverty and consumption, see Cox and Alm's excellent (though slightly dated) Myths of Rich and Poor.

P.S. It was fun seeing co-bloggers Bob and Craig at the AEA meetings in Boston. Thanks to all the excellent candidates who interviewed for Berry's open econ position.

Things haven't changed much in a hundred years in the area of campaign financing. The latest "scandal" in D.C. is just another episode of rent seeking.
From the Jan. 11, 1906 NYT:

...a bill to amend the corporation law to provide that every corporation shall make affidavit, ten days after election, that the corporation has not made, directly or indirectly, any campaign contributions [emphasis added].

But why would such a law be needed?

"It is believed that over considerable areas, as many as 50 per cent. of the voters expect to be paid in some way for their vote."

A great line in This is Spinal Tap goes "there's a fine line between stupid and clever." One wonders if this pertains to the agencies that have been making the oh-so-subtle advertisements for EDS drugs - the football through the tires, the bathtubs on the hill in France, and so forth. It seems they might have underestimated the moral fiber of the NFL.

From Ad Age Daily:

The national football league plans to cut its ties with erectile-dysfunction drug ads, highlighting growing concerns about increasingly risque creative [sic] in the category and leaving manufacturers with a dearth of major sports marketing platforms for their brands.

Ooops.

I've just finished reviewing two books on knowledge spillovers, innovation clusters, and high-technology development. One strain of this literature focuses on the role that industrial clusters play in the diffusion of innovation across firms. I haven’t seen much on how innovation gets adapted into different industries although I’m sure that some work exists on that topic.

Anyway, this got research has got me thinking about country artists Big & Rich who are known for creating "country music without prejudice." Basically, this means they borrow inspiration from other genres of music, especially hip-hop.

While I find their incorporation of hip-hop elements into the music interesting, it seems clear to me that the lessons they have learned from the rise of hip-hop to the top of the pop charts is much more than including some rapping in a song. Big & Rich appear to have adopted the hip-hop model of having a well-defined group or "crew" which they call the "Muzik Mafia." They used their first album and tour to spotlight some of the Muzik Mafia such as Gretchen Wilson and Cowboy Troy and then used that exposure to spin-off those artists into their own solo projects.

Compare their approach to the approach taken by a top hip-hop producer and artist, Dr. Dre (Big & Rich are also producers, as well as artists). When Dr. Dre left N.W.A. he didn't try to make a Dr. Dre album with the sole intent of making his name as big as possible. He also tried to diversify by spotlighting talent he had discovered such as Snoop Dogg, The Lady of Rage, Tha Dogg Pound, and RBX. All of these artists went on to have solo careers, some more influential than others. Regardless, their success benefited Dr. Dre financially and in terms of increased reputation.

Two things will be interesting about Big & Rich's emulation of this technique. First, will they be able to substain it? As secondary artists become too large, the "crew" begins to dissolve. Second, will we begin to see other country artist adopt this technique? My bet is no. Two few country producers are also artists, and I think that is an important element for this approach to work. [See also, Puffy and his spin-offs: Mase, Notorious B.I.G., Craig Mack, etc.].

Throughout the latter part of 1905 there was a significant debate about whether American Football should be banned because of its violence and rough play. In early 1906 the debate still raged and the game was in serious jeopardy.

We know now that the game was ultimately saved and, IMHO, culminated in one of the best college football games of all time, perhaps THE best game of all time, in last week's Rose Bowl (and I love neither of the teams in the game).

From the Jan 10, 1906 NYT, is an article that outlines rules adjustments proposed by Harvard. I list them here in bullet-point form (which is not how they appeared in the original article):

To open up play: the ten yard rule and the forward pass between the twenty-five-yard lines;

To eliminate roughness: The separation of the two rush lines by the length of the ball

To eliminate mass plays: Restrict the number of men behind the line to four, if within five yards of the line and between the two ends;

To encourage kicking: The widening of the distance between the goal posts to twenty five feet.

Other rules changes:

The ball to be placed with the points towards the goals and no players to stand ahead of the points;

increasing the distance to be gained in three downs from five to ten yards;

permitting the ball to be passed in any direction when the play is between the 25-yard lines, provided the player has not advanced beyond the line of scrimmage;

no punt out for a try at goal;

increasing the distance between the goal posts to 25 feet;

no interference with a free kick;

a fair catch to be indicated by the holding up of hand;

no movement of players until the ball is put in place, except by one man,

not more than three men besides the man receiving the ball shall be less than five yards behind the line unless outside the position occupied by the outside man in the line;

For the conduct of the game the committee recommends

that there shall be a second umpire to watch the conduct of the players

that the head linesmen shall watch off-side plays, and penalize them and illegal formations;

that any player shall be instantly disqualified for brutality, roughness, and insulting talk, and no substitute permitted for five minutes;

that a player twice disqualified shall not play for one year.

that players of the side that has possession of the ball shall not hold, block, or otherwise obstruct the opponents except with the body;

the player with the ball can ward off an opponent with the hand

the penalty for holding or unlawfully obstructing by the side in possession of the ball shall be the loss of the ball.

For those who watch American football, both college and professional, these rules will seem very familiar - they are essentially still used today, with some minor modifications, except for the "loss of ball" penalty and the disqualification for "insulting talk." While Harvard has been demoted to Division I-AA status since the early 1980s, American football fans should give a tip-o-the-hat to the Crimson for devising rules that dramatically reduced the violence and injury in the game.

Hey kids! This rave review of the Space Cossacks' best-of CD, "Never Mind the Bolsheviks," kindly mentions the liner notes by yours truly ...

Here is the story, segun Greenpeace, of the ramming attack by Japanese whaling vessels.

You can get the video there also. About halfway down. Just press the play button.

Yobbo proposes we consider it as a geometry exercise. To wit:

As you can see, the highly skilled Japanese whaling captain somehow managed to “ram” the Greenpeace vessel’s bow using the starboard flank of his own ship. To an uneducated observer like me, this looks like the maritime equivalent of a handbrake turn. You’ve gotta hand it to the Japanese engineers who’ve invented the sea handbrake. Brilliant.

Another possible explanation is that the Japanese imported their technology from Neon Genesis Evangelion and secretly installed it onto the Greenpeace boat, then used a telepathic link to cause it to ram the Japanese boat against the captain’s will.

No two ways about it: the nose of the Greenpeace vessel strikes the side of the Japanese commercial ship. This is a lot like the thug complaining, "You hit my fist with your nose."

Now, before some Greenpeace folks decide to try to write this down on my permanent record somewhere, let me say this: I don't care much if the commercial vessel did ram you. So, save your technical explanations of the rules of the sea for someone who doesn't admire fishermen trying to do a hard job out on the ocean.

Sure, they should be careful. But they are trying to make a living by producing something. You bunch of nimrods are trying to make a living by playing on the sympathies of gullible contributors. I'm sure that Sad-eyes Sally in New Jersey will pony up another $100 for the outrage she feels about this video.

You should thank the fisherman. They enable your parisitic lives, Greenpeace. If you weren't such a bunch of pussweilers, you could become real pirates, like this guy. (Link from Yobbo, again)

I have written a couple of pieces on BCRA, the campaign finance deform legislation lately.

Over on THE END, I did a little dash-off piece.

The essay on EconLib is a little more serious.

Thanks to THE DOOR and THE CLUB for kind links.

From Bloomberg :

The Philadelphia Stock Exchange, the oldest in the United States, has said it will close its equities trading floor and become a fully electronic market.

[…]The closing would be the first since March 2002, when the Pacific Stock Exchange shut down its San Francisco trading floor. The National Stock Exchange was first, moving to an all- electronic trading system in 1980. The New York, American, Chicago and Boston stock exchanges still have trading floors.

The Philadelphia exchange handles an average of 5.68 million shares a day, fewer than those traded in the first half-hour of trading at the NYSE.

Got back to DFW this evening and it was 78 degrees. When I left Boston this afternoon it was in the thirties and snowing. I walked around a little on Sunday morning - saw Northeastern University (bigger than I thought) and walked around Fenway (a little more ratty than I thought). I did live out one-half of a lifetime dream by touching the back end of the Green Monster.

Catching up on some reading this evening, and came across this prediction that flash memory might take over for hard drives (especially in notebooks) by the end of the decade. In the article was this little graphic

Today's harddrives are running for $40 for 160 GB or about 25 cents per gigabyte. I think flash media will be cheaper than predicted by the end of the decade, but the price of hard drive space will likely also be cheaper. On the other hand, if flashdrive computers can run on a couple of Double A batteries for ten plus hours (my 1 Gig flash MP3 player can rock hard for 10 hours on a single AAA battery, kicking the stuffing out of the iPods the kids are playing, or at least the old ones), then the day of the laptop hard drive will be over.

Steve Levitt needs a lesson in the incidence of real estate agent fees.

My impression is that most “for sale by owner” websites haven’t been very successful. They struggle with the fact that for the buyer, there is no obvious cost to hooking up with a real estate agent since the buyer’s agent gets paid by the seller, not the buyer.

Excuse me? Just because the seller legally pays the real estate agent's fees doesn't mean the buyer gets the brokerage services for free. The real estate agent's fees do get factored into the price that sellers will accept so the buyer does bear some of the burden in the form of a higher overall sales price. (I am not saying this is a bad deal for either the buyer or the seller to pay the real estate fees as they obviously see value in the exchange. I am saying simply that the burden of paying for the agent is doubtlessly shared by both sides of the deal.)

Another opportunity cost to buyers who use a real estate agent is that the agents won't show FSBO houses because there's no seller's agent with whom to share the commission. You can actually hire yourself a buyer's agent and then he wouldn't care one way or the other.

On my last home purchase we found a FSBO house to buy. We had been using an agent (the same agent who listed the house that we were selling) and felt guilty that we'd had him do a lot of work for us and that he wouldn't get a commission out of our new home purchase. (Remember he was the agent on the house we were selling so we wanted to keep him on our side.) The solution was to hire him as an actual buyer's agent for $1 and then we increased the commission on the house we were selling by 1%.

Anyway, I bring this up to make the point that you really can't look at the legal payment structures in the contracts to determine who's paying whom what. In the case above we paid an agent money on the sale of our old house for services related to the purchase of our new house. Confused yet?

Nancy Pelosi:
"For years, at the expense of the American people, the House Republicans have enabled and benefited from the Republican culture of corruption engineered by Tom DeLay," said Rep. Nancy Pelosi of California, the Democratic leader. "The culture of corruption is so pervasive in the Republican conference that a single person stepping down is not nearly enough to clean up the Republican Congress."

Harry Reid:
"Tom DeLay bears much of the responsibility for the culture of corruption Republicans have created in Washington, D.C., but his removal from House leadership alone will not end the pervasive cronyism and corruption that he and Washington Republicans created."

Remember the candy bar commercials: "Peanuts in every bite?" No matter how small a bite you take, you'll get peanuts. Both of these "quotes" are designed so that, no matter how small the sound "byte", you will get "Republicans" and some bad stuff.

But when you quote the whole thing, sounds pretty dumb. Read the Pelosi quote, especially. Sounds like it was written by someone for whom English is not a first language.

Tom Delay is no longer just down, but now also out.

There will be a new Majority Leader in the House.

Delay's resig letter to Speaker Hastert included the following:

"The job of majority leader and the mandate of the Republican majority are too important to be hamstrung, even for a few months, by personal distractions"

Oops, too late for that. We have had months of delay, and wishful thinking. You can say that the case against further Delay is shaky, and political, but that's enough to make a Majority leader useless. The Hammer will beat no more.

Succesors?
Rep. Roy Blunt, R-Mo.
Rep. John A. Boehner, R-Ohio
Rep. Mike Pence, R-Ind
Rep Mike Rogers, R-Mich
Rep Jerry Lewis, R-Cal

in that order. Blunt wins, unless something happens.

Economic consequence? Even less ability to control pigs at the pork barrel trough. The next transportation bill could well be an orgy of "special" provisions. Ick.

Update: This is cute. Check the listing, if it is still up.

The wife is teaching a human geography class this semester and during the first class students were bashing the lack of cosmopolitanism among Americans. (Never mind that most the students had likely never left the state they were born in, let alone the country). I had the wife assign the students to read this excellent Screed (TM) by James Lileks.

A bit of set-up is in order. It seems The Guardian sent a reporter from Birmingham (UK) to Birmingham (AL) to write about the differences between the two and the reporter basically ends up taking a bunch of cheap swipes at the U.S. Lileks basically takes the guy behind the wood shed.

One example:

The Guardian:

The Olive Garden Italian restaurant looks a little more promising than the dozens of other eating places along the strip mall just off Interstate 20 in Birmingham, Alabama. The discreet hint of Tuscan decor and the passable wine list disguise the fact that there are 476 other Olive Gardens across North America, all with precisely the same menu.

Lileks:

That’s right. It’s called “standardization,” and it makes it logistically possible to run chains that span three thousand miles and simultaneously depend on local suppliers and national ad campaigns. It has its emotional cost, as the European keenly notes. Diners in Maine often put down their Olive Garden menus, stare into the middle distance, haunted by the suspicion that the exact same alignment of foodstuffs is also offered in San Diego. They shake it off and get back to ordering, but the feeling that their veal’s seasoning has been predetermined in a far-off corporate office gives the meal a false and hollow taste. On the other hand, screw it; you get as many breadsticks as you want. The hot soft kind, too. I mean, if you ask for ten, you get ten. What a country.

ATSRTWT.

The Abramoff scandal is the talk of Washington. Republicans are unsure of what to do - some are whistling past the graveyard, others running for the tall grass, and a few more ducking for cover behind John McCain's lobbying "reform" bill. (I bought of bunch of used metaphors at a garage sale recently and need to use them up). Senator McCain's bill, by the way, would regulate not just lobbyists, but, “any attempt to influence the general public, or segments thereof, to engage in lobbying contacts [i.e. "call your congressman" - Ed.] whether or not those contacts were made on behalf of a client.” If Senator McCain's disdain for the First Amendment wasn't obvious to everyone before, it should be now.

But there is a better alternative: play offense. I don't mean accuse Democrats of being just as sleazy. No, I mean use this scandal to cut the size of government. Go forward and make the case: "This, dear people, is what big government is. It is favors for special interests, unrestrained pork barrell spending, and a government so big you, dear voter, can't begin to keep an eye on all parts of it. It is lobbyists and money and corruption. Lobbyists lobby because government is giving out favors and subsidies, writing exemptions into the tax code, regulating most things you do and claiming the right to regulate everything else. The solution is not more regulation. It is smaller government. Take the power away from the politicians."

Whenever there is a scandal, there are elements of the left that use it to expand the size and scope of government, or, as in the case of Senator McCain's new lobbying law, to try to stifle political competition and criticism. But because scandals can rock the faith Americans put in government, they are also an opportunity to make meaningful reductions in the size and scope of government.

First and somewhat belatedly, I want to welcome Brad Smith to the DoL fold. Brad is my friend and colleague at Capital University (he's in the law school) and as regular readers know is John McCain's favorite former Federal Election Commissioner.

Re: Brad's questioning of the value of academic conferences. The only value of the conferences is in the networking. There never was much point to the paper sessions even less so in this internet age. But you still can't network effectively by the internet. I was drinking networking until the wee hours of the morning in fact.

Nigeria’s Central Bank has announced that it will proceed with liquidation of 13 failed banks that have failed to meet a deadline for recapitalizing. But a local clergyman is protesting the decision, worrying

that many of the sacked workers would take to crime. He said: "think of bankers who know too much of the use of computers. They will only resort to advance fee fraud as there is no other job for them to do.

So Nigeria should keep failed businesses open through taxpayer subsidies because the workers might turn to crime? That’s a novel rationale for a policy that would tie workers in perpetuity to jobs that shrink rather than expand the economic pie. Down that road lies greater poverty.

More optimistically, healthier Nigerian banks can be expected to re-hire many of the failed-bank workers as they expand by acquiring the offices of the failed banks. Acquisitions and consolidations are in fact already underway.

Professor Lawson claims to be at something called the AEA conference, which I assume is the Association of Enterprising Astronauts or some such thing. I'm at an academic conference myself - the AALS, or Association of American Law Schools. Sadly (fortunately?) few of the sessions are of interest to me, personally or professionally.

Is this one worth attending?:

Section on Scholarship:
Blogging: Scholarship or Distraction?

Is there a correct answer?

Writing at Tompaine.com (and the abuse of the name of Tom Paine - author of "Common Sense" and "The Crisis," and lover of liberty, by a left wing site devoted to stripping us of our liberties never ceases to irk me), James Sample of the Brennan Center (another group devoted to stripping us of our liberties, and hence one more appropriately named) is upset about new Federal Election Commissioners, not to mention Jack Abramoff.

Now, I promise not to turn Division of Labour into Campaign Finance Whack-a-mole Central. Still, this was too good to pass up.

More by clicking below...

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Yesterday President Bush made three recess appointments to the Federal Election Commission. Two of the three were appointed to seats occupied by Commissioners whose terms have expired, but who continue to serve as "acting." The third seat has been vacant since August, when I resigned from the Commission.

The so-called “reform” community – the foundation-funded groups that dominate editorial coverage on the issue of campaign finance – was disappointed by the President’s choices, as it usually is, and has been going beserk since before Christmas, when the President announced his intention to nominate the three new commissioners. The nature of this attack, however, merely points out how bankrupt this “reform” community has become.

More below the fold:

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Is the Jack Abramoff story big news in your community? It's not in mine, even though our community is represented in Congress by Bob Ney, one of the Congressmen most connected to the spreading scandal. I mean, it's in the newspaper, even on the front page, and the local TV news reports on it. But it's not something people talk about, and it's not something they see much affecting their lives.

But here in Washington, it is everywhere, and on everyone's lips. Just something that leaped out at me as I returned to visit my old haunts.

It might be my adolescent nature, but I often read and enjoy my daughter's books more than the adult fiction I read.

Stuart Anderson has an article at Reason about some libertarian friendly children's books:

(1) Lois Lowry's The Giver, Gathering Blue and Messenger are first rate.

(2) Also, I've just finished all six of Margaret Peterson Haddix's Shadow Children Books. Couldn't put the darned things down.

There will be a lot of navel gazing after the latest media flub last night. After last year's flubs one would think that the cable media would be less prone to reporting rumor/gossip as real news, much less putting the news in a "ticker" that ran across the Orange Bowl - and actually induced me to change channels to Fox to see what was going on!!

Perhaps the words "unconfirmed reports" or "rumor has it" would be enough to limit the euphoria and subsequent crash to reality?

The cable news channels are arguably stuck in a prisoner's dilemma in some sense. If CNN breaks the story first, Fox looks bad, and vice-versa. Hence, everyone wants to be "first" and in attempting to do so sometimes play fast and loose with the facts. However, if there were reputational costs (that ultimately showed up as monetary costs) for being wrong and, perhaps, playing with people's emotions a bit too much, the strategy of "wait and see" might become more valuable, although perhaps not valuable enough to preclude the "be first" strategy.

The fact that the one or more of the news channels has not decided to take a more somber, wait-and-see, "let's get the independent confirmation we need"-approach suggests one or more of the following:

1. There is no (or not enough) reputational/monetary cost from being wrong;
2. There is actually a monetary gain from being wrong as there is a ready made story about how the incorrect information impacted people;
3. The cable news channels aren't really reporting "news" as old-school journalism would define it but rather "news" as reported through a Surreal Life filter.

The first two points are not terribly disconcerting. I might personally like to hold members of the media a bit more accountable for being wrong, and perhaps there will be a lawsuit after this episode, but existing laws are likely sufficient to deter most libel/slander. Reporting false information might cause mental anguish or pain, as the reporting last night assuredly did, but I wonder if reporting false information in a general way is as damning as libel/slander. The create-your-own-story-by-being-wrong scenario seems to pertain to Katrina and West Virginia, but I don't think it is a viable long-run strategy for ratings and advertising revenue.

Number three is the one that gets me. I have no problem with reporting rumor, heck, isn't that what Entertainment Tonight and People Magazine do? My issue is that the news channels purport to be reporting news when it seems more and more of the "action" has to do with the reporter (think Geraldo and Anderson) who is "reporting the story" rather than the story itself. This might be a natural outcome of how the cable news market has evolved - because all of the stations are reporting the same thing, the only differentiation is on who is doing the reporting (how they look, sound, project, etc).

On the flip side, I likely couldn't pick ANY New York Times reporter out of a lineup, or any other newspaper's reporters for that matter. Perhaps print news reporters do not compete in the same way as on-screen reporters and therefore are less likely to pull a "thousands dead in the Super Dome" type of mistake? Perhaps print reporters are more prone to try to be the next Woodward and Bernstein, which might cause plagiarism, fabricated sources, and leaking of classified information?

Back to my original point that a little bit of "wait and see" or "unconfirmed reports" might be a good idea at times. The Jan. 4, 1906 NYT has the following ditty that made me chuckle (a little bit):

It is stated on the highest authority that there is not the slightest authority for Admiral Rojestvensky's aspersion on the neutrality of Great Britain.

I will do little blogging for the rest of the week as I head to the ASSA's in Boston (bhhhrrrrr).

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About a week before Christmas, a plane carrying a Rome insurance broker, his daughter, and two of the daughter's friends went down off the coast of Florida while en route to the Bahamas. One girl survived and another was found dead in the water, but the pilot and his daughter were not found until earlier this week when a shrimp boat snagged the submerged plane.

I'm bothered by the federal government's disparate treatment of this accident and the fairly similar loss of JFK, Jr and two passengers in 1999. In the Kennedy crash, the federal government sent Coast Guard and Navy vessels to aid in the search. A remote operated vehicle from the USS Grasp actually found the Kennedy plane. In contrast, the Coast Guard aided in the current search for about two days but suspended its involvement once hope of recovering the pilot and his daughter alive faded. And, unlike the Kennedy crash, no Navy vessels with underwater gizmos were used in this search. Perhaps there's a good reason--maybe the depth of the crash sites or the need to keep spectators away from the Kennedy crash--for the disparate treatment, but the difference reeks of political cronyism. Meanwhile a good family has its agony prolonged.

Heritage released its Index of Economic Freedom today.

Out of the 157 countries graded in the Index, 99 saw improved scores this year, and the average country score now falls into the “mostly free' category for the first time ever. Because economic freedom is linked with economic growth and prosperity, this is an important development.

Once again, Hong Kong and Singapore lead the pack, followed by Ireland, which jumped several spots. The United States is back in the top 10, after its first year out, due to narrow cuts in government spending and lower tariffs.

Or you can use the other economic freedom index. :-)

A news item:

SEATTLE (AP) - The Rabbit Hole is a maze of sofas and sectionals, mismatched, some worn to threads in places, full of soft spots that sink low to the ground. The lighting is low and dim; the music is usually alternative rock, played at a volume to match the light.

No alcohol is offered at the Rabbit Hole - just soft drinks, and hookah.

Hookah refers to the practice of smoking flavored tobacco through a tall, ornate pipe that sits on the floor; the hookah pipe has long been a popular pastime in Amman and Alexandria and all across the Middle East.

But this is Roosevelt Way in Seattle, cater-corner from University Mazda and down the street from Mamma Melina's restaurant. And that is something new - even as America is at war in the Middle East, this bit of the Middle East has found a place in America.

In liberal and literate Seattle, hookah lounges have opened on trendy downtown blocks and in predominantly white neighborhoods in the outer city, where the Rabbit Hole is located. Its customers are not middle-aged Egyptian men, but white kids from the suburbs.

And from Taiwan:

McDonald's Restaurants (Taiwan) Co yesterday celebrated sales of its home-grown rice burgers, which topped 5 million units six months after hitting the market, saying the local taste may be available in McDonald's worldwide soon.

I'm back from a week in Michigan and, like Bob, will be in Boston this weekend for the AEA meetings. The weather in Michigan was unseasonably warm and rainy so Pee Wee got little time playing in the snow.

A highlight of the trip was catching the Redwings 5-2 victory over Columbus on New Year's Eve. I'm not enough of a hockey fan to comment on the new rules vs. the old rules, but the game featured lots of offensive excitement. Detroit fans apparently have a grudge against former Wing Sergei Fedorov--he was booed each time he touched the puck. Detroit fans must have been especially happy that Fedorov's two penalties led to Redwing goals. A quick glance through the program revealed that many Redwings are at least 35 years of age--I wondered if this indicated that hockey players peak at a later age than players of other sports (e.g., late 20s for baseball) or if the Wings are an unusually experienced hockey club.

Returning to my buddy Phil's house after the game, we took some surface streets through Detroit. The contrast between the rot of Detroit and the normalcy of neighboring cities is a vivid example of the principle that institutions matter. Many blocks in Detroit had only a few buildings standing and vacant lots where previous buildings had been removed. Other blocks weren't so lucky--they had a few occupied buildings in decent condition surrounded by boarded up or crumbing buildings.

A final note on Detroit--skip Elmore Leonard's latest Detroit crime book Mr. Paradise. Having finished The Undercover Economist and wanting some airport reading (good thing since I had a 2 hour flight delay), I picked up a copy at a discount bookstore. Leonard has a reputation as a leading writer of detective fiction but I found Mr. Paradise to have a thin plot, little suspense, unbelievable characters, and sketchy writing.

ADDENDUM: A quick review of The Undercover Economist. It's a lively introduction to economic thinking; it would serve as a good complement to or replacement for a traditional text in a principles course. The book is generally sympathetic to markets/liberty and has a good chapter on the importance of institutions (see Detroit above). On the other hand, there is some tripe about "trying to balance the excesses of competitive markets" (p. 74), some dubious statistics (p. 76--25,000 UK seniors die in a typical winter because of inadequate heating), and an overly accepting view of market failures. For example, I think Harford should buttress his discussion of asymmetric information and lemons (chapter 5) with a discussion of how people often find clever ways (warranties, certification) around such difficulties. I also think he should mention that government is the source of many "market failures"--for example, he thinks that health savings accounts would be preferable to current health insurance schemes but doesn't realize that government tax policy has steered people away from HSAs.

You’d think that even the most incompetent national government can make a profit issuing paper money.*

But evidently not Zimbabwe, where two years ago

Zimbabwean currency had become so worthless that the government itself complained that it needed to invest ZIM$2 000 to print a Zim $500 note, the highest denomination note at the time …

As a stopgap measure, the Zimbabwe government issued “bearer cheques” in denominations of up to ZIM$20 000.

But the cheques were only meant to be a temporary measure. Now, three years later, President Robert Mugabe’s government has still not introduced the new banknotes because it still lacks the foreign currency needed to import the required paper. This has forced it to extend this week’s deadline of the expiry of the circulation of the bearer cheques by another six months.

Wow: the government has made its currency so worthless that it can’t even afford to buy replacement banknotes with more zeroes.

*Technical note for my students: for the conventional Cagan log-linear real base money demand function, the revenue shown by the Bailey curve (the "Laffer Curve" for seigniorage) remains positive even as the monetary expansion rate exceeds the revenue-maximizing peak and approaches infinity. See The Theory of Monetary Instiutions, chapter 7.

For no particular reason, I'm going to the AEA/ASSA annual meeting in Boston this weekend. I've never gone except as a part of the job market (first as a seller and then several times as a buyer). The plan this time is to attend some sessions, learn a little bit, makes some new contacts and maybe put out a few c.v.'s just in case, see old friends including a couple of former students who are in the job market, run the 17.1 mile Charles River Loop, and generally get the heck out of Cowtown Columbus.

I was looking through the preliminary program to lay out a plan of attack. The thing is massively long, so I hit the 'find' utility to look for the word "freedom":

Freedom: 2 hits (Economic=0, Political=1, Academic=1)

Not good! But fortunately searching for the word "liberal" came up with more hits:

Liberalization: 14
Neoliberal: 5

Unfortunately, judging from the titles, few of the papers are likely to be favorable to liberalization. Certainly, the term "neoliberal" is used exclusively in a pejorative manner.

Still after a while, I found some sessions worth going to:

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I am excited to be teaching principles of microeconomics for the first time in almost six years - I have been teaching graduate classes and upper level undergrad classes. I have actually been spending much of the winter break rethinking how to convey economics to those who have had no exposure. Having different ways to convey the concept of the "marginal whatever" is always useful.

From Boing Boing is a link to a couple who have repainted a baseball 19,100 times over the past twenty-plus years. It is now 38 inches in diameter and weighs 1,700 pounds. How great of an example is this!? Each layer of paint is, in and of itself, very light and thin but a bunch of layers add up to be something considerable.

Some interesting questions about which economics has something to say:

a) Why would these people choose such an undertaking?
b) Were there side payments required? If so, in which direction?
c) Can economics provide a justification for these people turning a dollar from their kooky idea?
d) Why don't more people undertake this exact kooky idea?

Any others?

Excerpt, on division of problems in society. The claim is that this reflects on division of labor, in Smith's sense. Interesting. On the other hand, it quotes Chomsky approvingly in the article itself, so how good can it be?

Whitehead realized that many of society's most important problems are multidisciplinary in nature. For example, such problems include preserving the environment, population control, or the allocation of scarce resources. He felt that individuals having the generalist style of education, who had a broad knowledge of the basic concepts of every field, as favored on the European continent, would be better prepared to solve these kinds of problems, rather than the specialist, with all the accompanying communication problems and whose views outside their discipline in any case would be necessarily subjective, and therefore more prone to error. .

However, Whitehead carried his reasoning one step further, and what he said next came as a surprise: he said that in the partitioning process, by default, you have inadvertently created two classes of people, "bright" ones and "dull" ones, to use Fuller's terminology. And since the prime intellects have been culled and guided into the specialties, it is left to the "dull" ones to solve the problems that are multidisciplinary in nature. It "appears" that we have created an educational system that fails to provide the proper training to solve a civilization's most critical problems. Fuller termed this "Whitehead's dilemma."

Fuller expanded upon Whitehead's observation, by giving this particular example. He classified business owners in this second tier of people. While in school, they were not selected to be among the intellectual elite. But they are good people, and they see all these different innovations being made by the scientists, and figure that there is money to be made here. So they are the ones to assemble a team of specialists, scientists and engineers, to build and manufacture something new, such as the automobile. But they notice that automobiles don't run very well over open fields. They need highways to run on. The automobile is just half of the solution to the problem of "high-speed highway transportation." But being specialized in making automobiles, and not knowing much about other fields outside of making automobiles, they find themselves facing the same obstacles as the specialists they employ. They know they need highways for the cars to run on, but they cannot possibly afford to build them. If they had to include the cost of building these highways into their business model, the cost of a car would be astronomical. So how come we ended up with this costly solution?

Fuller said what happened is that the business owners turned to yet a third tier of people, even duller than themselves, for an answer to the highway construction problem! These are the politicians, who know little about science, engineering, truth or costs, but who have the gift of gab, who tell the Populus, if you vote for me, I will have the government build the highways for you! No one in this group of people had even the slightest appreciation of the possible hidden costs in such a decision. It never crossed their mind. And the general public was just as ignorant. But, did you know that even as expensive as highways may be, in the grand scheme of things, it's just a drop in the bucket? Consider the hidden costs of how much we spend militarily to defend our access to oil supplies in the Middle East! Or the hidden costs of health care due to breathing foul air? Or even the loss of beauty of not being able to see a blue sky? Some people don't even know the sky is supposed to be mostly blue, and that red sunsets are something ominous. You have to read the accounts of early explorers to know what sunsets were like a hundred years ago.


ATSRTWT

I'm revamping my junior/senior level comparative economic systems course and would like to add some new books and movies to the course for the students to do reports on. I'd love to hear your recommendations for (1) nonfiction books (2) fiction books and (3) films that might work in this course.

E-mail me at rlawson[at]capital[dot]edu. Thanks.

One thing I have noticed from reading the paper from 100 years ago is a general lack of "talking heads," professional activists, navel-gazers, and "experts" offering their opinion as part of the story. While such comments did exist (see below), they were not as ubiquitous as they are today. Perhaps this is a function of national income and division of labor - our society is much more affluent today and therefore can "afford," and perhaps desires, professional opinions?

As an example of the lack of studied opinion, the Jan 2, 1906 NYT has an article concerning U.S. imports of luxuries:

[N]ever in the history of the Port of New York were the importations of luxuries so heavy as in 1905. The imports of foreign merchandise at New York during 1905 were valued at $823,272,192, while the duties collected amounted to $183,752,315...Besides imported precious stones and automobiles, for which over $40,000,000 was paid here last year, the records disclose heavy purchases of Swiss embroideries, Japaneses and Continental silks, jewelry, and paintings...Cigar entries at the Custom House for 1905 were valued at $3,000,000, while drugs, chemicals and kindred lines possessed a value of nearly $70,000,000. Something like $73,000,000 worth of champagnes, wines, liquors, and other beverages found their way here.

There is not a single opinion offered in the entire, relatively short, article. Today, such an article might point to how importing BMWs and Hondas threatened our national economic health and, perhaps, our national security. There would be professors, Congressman, labor union officials, and perhaps a psychologist or two to offer their considered opinions on how folks buying jewelry from Japan is bad for the United States.

In another article from the same issue the American Protective Tariff League announced their opposition to President Roosevelt's stance on free trade with the Philippines:

The Philippine Tariff bill is now before the House of Representatives, and the Tariff League has already taken steps to fight the measure. An officer of the league gave it as his opinion that even if the measure passed the House the Senate could be relied upon to strangle it.

I think the 'just-the-facts-ma'am' approach of the NYT from 1905/1906 is refreshing - but this might just be a novelty effect as this is generally not the style of reporting we see today.

Having learned six weeks ago that I'll need a kidney transplant in 2006, I highly commend this thoughtful piece by Gary Becker: “Should the Purchase and Sale of Organs for Transplant Surgery be Permitted?”. Fortunately for me, I have family members willing to donate, but not everyone who needs a new kidney is so fortunate.

The idea of a market in body parts makes many decent people squeamish, no doubt. But the idea of thousands of disease victims dying annually, when they could be saved by lifting a ban on mutually beneficial exchanges, should make decent people even more squeamish.

A Chinese business newspaper reports:

China's first national joint-stock commercial bank to be set up in almost a decade will kick off operations in the country's northeastern port city of Tianjin next month ….

Standard Chartered Bank of Hong Kong will own 19.99 percent of the new Bohai Bank, initially capitalized at $5b yuan (US$625 million). The remaining shares will be owned by various Chinese state-owned enterprises.

Gotta clear out some space in my cubicle and so I have to get rid of some journals. Anyone interested in paper copies of the last few issues of the AER, Economic Inquiry, Contemporary Economic Policy, as well as some assorted issues of Reason and the JEL, you can get them basically for the shipping cost here (and you'd be helping a grad student out).