Division of Labour: February 2006 Archives
February 28, 2006
20 points in 4 minutes
In all the hub-bub about millions of dollars for stadiums and star players coupled with Bode Miller revealing all that is bad about U.S. amateur sports, the story about the Rochester highschool basketball team manager scoring 20 points in four minutes was refreshing. Most people point to the fact that the young man is autistic, and I don't take away from that however I have no experience with autism. To me the real story was a) the coach letting the tireless and loyal team manager get a chance to play and b) said manager actually experiencing being a hero.
[Update: Of course, this entry makes a lot more sense if there is a link to the video itself. An odd typo made it invisible. Here it is]
My older son has not been reading enough lately. He is 16, just started driving, plays quite a bit of video games, and thinks that young women are very quickly becoming worth looking at.
Idle hands....The devil's workshop, and all that.
So I bought a copy of Hazlitt's Economics in One Lesson, gave it to him.
He read it in an afternoon (which isn't hard; it is ONE LESSON, after all).
He comes up to me the next day, and that, "That book really seemed simple."
I was a bit miffed; "Those are complicated ideas...."
He interrupts: "I didn't say simple-minded. I meant simple like...inarguably true."
Happy sigh for ol' Dad. I'll die someday. But good ideas, the really good ideas, are immortal.
Financial Market Center belatedly objects to Kroszner
The apoplexy I expected to hear from the economic left over Randy Kroszner’s free-market views never really surfaced between his nomination to the Federal Reserve System Board of Governors and his confirmation. But now, after his confirmation, the Financial Market Center vents its spleen, in its report yesterday on “Bush’s Board” (pdf file). Choice excerpts are below the fold.
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Kroszner has spent his academic career advocating a purist brand of laissez-faire thinking that questions the need for central banks and conventional payment systems. In addition, his doctrinal framework presumptively favors the abolition of most public-purpose limits and controls on financial activity. …
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Bumper sticker obliviousness
Recently spotted on the left-hand side of a car’s bumper: “Billionaires for Bush. Because tax cuts do create jobs, honest.” Okay, it’s class envy, but kind of cute. On the right-hand side of the same bumper: “Small government. Big wars.” Excuse me? If you think the Bush administration represents an ideology or trend toward small government, you’re just not paying attention. See this report on their profligacy.
The Joys of Socialism--Canadian Health Care Edition
From a recent NYT article on Canada's socialist medical system:
"This is a country in which dogs can get a hip replacement in under a week and in which humans can wait two to three years."
But there is some good news for Canadians needing medical services:
The country's publicly financed health insurance system — frequently described as the third rail of its political system and a core value of its national identity — is gradually breaking down. Private clinics are opening around the country by an estimated one a week, and private insurance companies are about to find a gold mine.
Medical Bills and Bankruptcy Revisited
David Himmelstein and colleagues recently contended that medical problems contribute to 54.5 percent of personal bankruptcies and threaten the solvency of solidly middle-class Americans. They propose comprehensive national health insurance as a solution. A reexamination of their data suggests that medical bills are a contributing factor in just 17 percent of personal bankruptcies and that those affected tend to have incomes closer to poverty level than to middle class. Moreover, for national health insurance to have an impact, it would have to define "medical" expenses in a much broader way than is now typical of either private or government-funded plans.
HT: The Locker Room
Incentives Matter: Trucker Perks Edition
From today's NYTimes:
"Why pull $7 an hour cutting hair when you can make $19 an hour driving an 18-wheeler?" Ms. Cromer said, handing the men a pamphlet in Spanish explaining the requirements for a federal commercial driver's license. "Seriously guys, don't you want to get a job with a future and get out of this neighborhood to see the country?"
Faced with what trucking experts describe as the worst labor shortage in the industry's history, recruiters like Ms. Cromer are canvassing cities and holding job fairs.
Fueled mostly by retirements, the driver shortage grew dire, industry economists say, starting in 2000 when average wages in construction and other blue-collar jobs surpassed those of long-haul drivers.
"Guys figured, why be out on the road for three weeks when they could swing a hammer during the day, make more money and sleep in their own bed each night?" said Bob Costello, chief economist for the American Trucking Association.
With predictions from the association that the current shortage of 20,000 drivers will grow nearly fivefold within a decade, trucking companies are offering generous 401(k), stock option and health care packages to new recruits and cash bonuses and prizes to drivers who refer viable candidates.
In hope of stealing drivers from competitors, companies have begun outfitting more of their cabs with satellite radio and television and introducing policies to allow drivers to bring pets and spouses on the road.
Chubby Chinese Canines
Yahoo News reports that China now has specially designed treadmills for overweight dogs. Perhaps Morgan Spurlock (of Supersize Me) could eat Chow Chow chow for a month and see what happens to his weight.
A friend's comment on the ports kerfuffle:
"Dick Cheney's behind this. The UAE company will be booted out, and Halliburton will take over."
February 27, 2006
The Blind Leading the Stupid?
Some claim that sports management is such characterized. Sometimes you do wonder. Consider this this blast from AB News:
The AP reports that Allen, the co-founder of Microsoft Corp., has lost more than $12 billion in bad investments over the past decade -- including $600 million he has poured into the Blazers and their arena since 1988 without realizing a dime of profit.
Now, I find it impossible to believe that the Blazers are not returning a dime of profit, but I haven't seen their (real) books. In the end, if Allen isn't good at running an NBA team, perhaps he should divest himself of his millstone.
Unfortunately, such is not the case, at least for the moment:
Executives with the Portland Trail Blazers say the NBA team will lose $100 million over the next three years and desperately needs some kind of "public-private partnership."
DANGER, DANGER, DANGER, WILL ROBINSON!! As soon as I see the words "public-private partnership" mentioned in the context of professional sports I wince. There is absolutely no reason for the citizens of Portland to be involuntarily forced to bear the risk involved with running/managing a professional sports franchise. If the team wishes to sell shares of its corporation to the public, then so be it. However, that is not what is implied in this statement.
Lance Conn (manager of Allen's investment company) claims that the Blazers receive no revenue for suites, clubs, courtside seats, game concessions or parking at the Rose Garden Arena." If true, and I do not closely follow the financial arrangements of NBA teams, this is testimony to myopic behavior by the city of Portland and/or to the ineptitude of Allen and company.
I have stated for quite some time that cities that build arenas/venues with public dollars should enjoy a greater share of the revenues generated by said arenas/venues. Unfortunately, cities seem reluctant to push back against franchise owners in negotiating revenue-sharing with the team. I do not necessarily envision the city becoming a for-profit partner with the team, rather the city should secure as much revenue as feasible to retire any debt incurred for stadium construction as quickly as possible (the opportunity cost of stadium debt is staggering).
I have no theoretical model (yet) to predict the optimal revenue sharing, however I am fairly certain that it is greater than the current norm. On the other hand, the city can't take all revenue generated by the arena/venue because if the team goes belly up the arena is essentially worthless.
I hope the folks in Portland keep their politicians from being swayed by threats to relocate the team, etc., to foolishly involve the local government/taxpayers in the business of a professional franchise. I know that it has "sort of worked out" in Green Bay, but that situation is likely the exception that proves the rule.
Product Service Review: iPodMods.com
I use my 40G iPod quite a bit. It came in handy when I was commuting back and forth from Pittsburgh to Morgantown last year and it is nice on those days when I make the 30 minute walk into campus.
So I was sad when my iPod stopped working a couple of months ago. I took it to the "Genius Bar" at the Apple store and they told me it was likely a hard drive problem which would cost about $250 to fix - if they could fix mine, which they couldn't because I bought it through "a partner." Ok...
Naturally, I turned to the web and found several iPod repair services but unfortunately few good reviews. So I thought I'd share my experience for anyone else looking for a solution to a damaged iPod.
After checking out the various online companies, I decided to give iPodMods.com a try. First thing you do is place a service order on their website. They charge your credit card a penny to verify that it is valid and they send you an email with information on where to mail the iPod. I packed mine off and mailed it on a Monday. By Thursday I had received an email saying they had recieved it and a technician was looking at it. Late on Thursday I received another email saying that the diagnostics was done and I could call for a quote.
It seems that the problem was not the hard drive but the "memory board." I agreed to the repairs and also bought an after-market battery with a longer life than the usual iPod battery. They made the changes and shipped it out the following Monday. I received the package on Wednesday and the iPod has been working great. In my opinion, iPodMods.com did a great job and is a reasonable alternative to buying a new one, since the diagnostic only costs you shipping.
Posted by Joshua Hall at 05:45 AM
February 26, 2006
Lunacy in New York c. 1906
In the Feb. 26, 1906 NYT is an article concerning lunacy in the state of New York. Now, I am no expert in the area of mental health and wouldn't claim to be. Nor am I making light of the obviously complicated problems of the human mind. However, the article points out that the State Commission in Lunacy (perhaps what we should be calling most state legislatures these days) had been carefully following the trends in lunacy and had found "there was a constant increase in the ratio of the insane to the general population."
Unfortunately, the commission data confuse supply and demand side influences. The Commission reported that in 1892 there were 17,275 "insane" people in all of the state institutions and the state population was 6.51 million (for a ratio of 1 in 377). By June of 1905, the Commission reported there were 27,300 "insane" people in state institutions and the state population was 8.06 million (fora ratio of 1 in 299). The commission went on to estimate that there were an additional 6,000 insane persons "being maintained in their own homes."
Of course, in 1892 there were considerably fewer state institutions in operation, and therefore it is impossible to determine whether the increase in per-capita lunacy is from the supply side (more people were crazy) or the demand side (the state needed more "lunatics" to justify the expenditures). Moreover, as science evolved over the 13 years between studies, it is entirely possible that a deeper understanding of the human mentality would naturally lead to more people being categorized in lunacy.
Perhaps there was a moral hazard problem in that public institutions, ultimately run by individuals (regardless of their intentions), were funded by the state. There was an average daily population of 25,280 patients in 1905 and total spending was $4.593 million. The article reports that $4.95 million would be requested in the coming year (a 7.7% increase!).
Yet another excellent quote from the article:
A similar increase [in lunacy] is reported by the Commissioners in Lunacy of Great BritainBeautiful wording...
On "Buy American" c. 1906
From a letter to the editor in the Feb. 26, 1906 NYT:
"Push American goods," says G.L. Hergert in your issue of the 17th inst., which is very good providing the pushing is not done the way he proposes - by asking the Government to furnish the means. He should remember that the Government is not in the manufacturing or mercantile business, and that it has no means except what it raises by taxation. Surely he would not have the people taxed for the benefit of our much-babied and much-protected industries.
Alas, today's government feels obligated and justified in intervening in the manufacturing and mercantile businesses.
Maybe Markets DON'T Work
So, I am interested in this.
A serious market failure problem.
On home networks, it is very common for the router to hang up. If you call the tech folks, the first thing they will tell you to do to restore a connection is always the same:
"You'll need to power cycle the router, and cable modem."
Now, that's fine.
Except that there is no power switch.
Which means that you have to unplug the thing, wait there all hunched over for ten seconds, and then plug it back in.
1. An on-off switch? The answer that the tech people give is that the manufacturers say you shouldn't have to "toggle" the power, so they don't include a switch.
2. A "power-cycle" button, which in effect just powers down and restarts the router, like a "restart" function on your computer? The answer is...you tell me.
The tech people, remember, WORK for the manufacturer. But they talk about the router as if it were made by robots not capable of learning a new configuration.
Maybe it WOULD cost more to put in an on-off switch, or restart feature. But I would pay more than it costs....
How can this be? I have enabled comments on this post, just to see if someone has an answer....
(There is a more general problem actually, for the computer generation. My son, who has been driving for a couple of months, is convinced that if you have car trouble all you have to do is turn the car off, wait ten cycles, and then "reboot", meaning turn the car back on again. Well, no...)
UPDATE: A loyal reader suggested that a power strip might be the answer. To which, I reply:
now, Karl: that would require that i have a power strip with ONLY the router plugged into it. since my computer, printer, and light is ALSO plugged into the power strip, that on-off switch doesn't help me as much as you apparently think!
cheaper to install a switch on the cord between the router and its own plug.
but that takes me back to the question: WHY NOT HAVE A SWITCH ON THE ROUTER!
February 24, 2006
FEC Showdown on Internet Regulation Set for March 16
The Federal Election Commission will take up proposed new rules to regulate political activity over the internet on March 16. This is an issue in which I have some interest. Typically, campaign finance "reformers" are dissembling - this post at Red State has links to the basic background you need if you want to understand what is at stake in this effort.
Poor justification for $1 billion
I hate to seem to be picking on Kansas City for the moment, but that's where a good amount of stadium activity is taking place.
The good folks of Kansas City are being asked to tax themselves $1 billion to provide roofs for Arrowhead and Kaufman stadiums, and to provide "upgrades" for the stadiums over the next 25 years. The main impetus for a roof over Arrowhead is so that KC can host a Super Bowl (once).
The mayor of Kansas City provides even worse justification:
Kansas City Mayor Kay Barnes highlighted the potential of hosting Super Bowl games, All-Star baseball games, college championship tournaments and extreme sport competitions at a roofed and renovated Truman Sports Complex.KC is already paying more than $220 million for an arena, but alas that is likely to be too small to host a final four. Ok.
Yet, just how valid is the Final Four argument?
There are various ways to skin a cat, but I grabbed the information on the Final Four from 1939-2005. Since 1939, Kansas, Missouri, and (I threw in) Kansas State, have been represented in the final four 15 times. Since 1970, the three schools have made it to the Final Four 8 times.
During the entire sample period, the city of Kansas City hosted the Final Four 10 times, by far the most of any city over the history of the Final Four [mainly because the NCAA was based in Kansas for so long]. However, since 1970, Kansas City has only hosted one Final Four. Both New Orleans and Indianapolis have hosted four Final Fours since 1970, the most in the country.
Assume the allocation of Final Fours amongst cities and the quality of basketball teams is independent (this might not be true, but so be it). Assume further that Kansas City replaced Indianapolis or New Orleans and hosted four randomly allocated Final Fours over the next thirty five years. Finally, assume the quality of MissKansas basketball was the same over the next 35 years as it has been in the previous 35 years, i.e., one or more of the three teams will be represented in eight (randomly selected) Final Fours.
With these assumptions in place, it is possible to calculate the odds that Kansas City will host a Final Four when one of the three MissKansas teams makes it to the Final Four as 0.228x0.114 = 0.026 or a 2.6% chance. How did I come up with that number? Take 8/35 and multiply by 4/35 to obtain 32/1225 which is approximately 2.6% (with rounding).
What proportion of the $1 billion in taxes would the folks of Kansas City consider worthy of "gambling" on the chance of seeing one of the three teams in a KC Final Four? This is impossible to objectively measure, of course. However, the mayor puts forth the Final Four as one of five general "mega events." So, perhaps we could use 20% of $1 billion. However, this number is just too high for a reasonable argument (as we will see).
I am going to take an extremely small percentage of the $1 billion to prove my point. Let's use 1%, or $10 million, for giggles. For the $10 million to be an "even gamble," the benefits to the entire population of Kansas City of seeing one or more of the MissKansas teams in the Final Four in Kansas City would have to be $285 million ($10 million/0.026)!!! Any claim that the folks of KC would value seeing any particular team in a Final Four at this level is simply not credible.
Granted, I have assumed that all of the value of hosting the Final Four in KC rests on the probability that one or more of three MissKansas teams play in the Final Four. This is a strong assumption, but in the end it likely doesn't make much of a difference. For example, let's assume hosting a Final Four (regardless of what teams are involved) yields a $3 value for each of 1 million people in the KC tax jurisdiction. Then, hosting the Final Four would have a value of $3 million, which would reduce the break-even value of the three-team possibility to $270 million. This number is still not credible.
Therefore, while the mayor's rhetoric seems reasonable on the surface, and who wouldn't want the chance to see their favorite college team play in the Final Four in their home town, a little bit of reflection makes it seem completely ridiculous. The Mayor of KC is not unique in this instance. Just about every politician appeals to the local constituency's hopes, dreams, and aspirations. Unfortunately, if the local citizenry were asked for their objective value of the politician's appeal, it is likely to be considerably lower than what the price of the stadium/arena/venue entails.
In fact, this might be one of the worst reasons I have seen proffered for spending considerable tax money to build/renovate a stadium.
Is it because it's too cold?
From the Minneapolis Star-Tribune:
Midwest Oil fined for selling gas too cheaplyMidwest Oil is being fined $140,000 for selling gasoline below the legal minimum price for 293 days during 2005. The minimum price legislation is packaged as a means to protect the small gas station that cannot "cushion below-cost gasoline with sales of other merchandise." How do such irrational market interventions survive?
February 23, 2006
The cost of "class"?
The answer to this question has eluded us for so long that, perhaps, we have stopped trying to find an answer. Now, however, we know the cost of "world class," at least for Kansas City!!
From AB News:
The cost of the Sprint Center in Kansas City, Mo., has risen 10% to $276 million because of upgrades to make the downtown arena a "world-class facility," officials said.
The cost of "class," in this case, is a mere $26 million!! What does KC get for the additional cost? What is it exactly that distinguishes the world class venues from the hunks-of-junk that mere wannabe cities build?
The increased costs include $3.5 million to enable the arena's exterior to be completely covered with glass and $2.5 million for terrazzo floors inside
Glass!?!? Terrazzo?!?! This is only an additional $6 milllion - what about the other $20 million? Response: crickets.
A better example of "if you're buying, I'll have top sirloin" is harder to come across.
Dershowitz on Summers
From a Boston Globe opinion piece concerning Larry Summers:
Summers could do no right in the eyes of his radical critics, who could never forgive him for his perceived original sins and who saw an opportunity to build wider coalitions every time Summers took actions that alienated other groups, as a president -- especially an activist and sometimes abrasive president -- will inevitably do. Some less ideological critics of Summers's leadership style then joined the radicals in a cacophony of strange bedfellows, but the core of the opposition always remained the hard left.
The NBA as market maker
Last year the NBA instituted a dress code for its players. There was a lot of howling that the league had no right to do this, but then it was pointed out that the current collective bargaining agreement indeed gives the league the right to institute a dress code. For those who didn't read the CBA before signing on, they have no one to blame but themselves.
An immediate outcome of the dress code was that several players received new endorsement contracts with men's fashion companies, many of which did not have endorsement contracts with basketball players before. While some players likely lost contracts with other companies, at least some players seemed to be made better off after the dress code. Why the players did not/could not obtain such endorsement contracts without the dress code is not clear.
However, the NBA as a league is a fairly well organized cartel and seems to be doing exactly what a cartel is expected to do - enhance and protect the profitability of its member firms. The dress code has evidently allowed the NBA the cover to launch an upscale men's fashion line:
The collection will be available later this spring. Initial product offerings include wool and leather blazers at $348 and $648, respectively, that feature NBA and team logo embroidery on the inside lining. Dress shirts will go for $87.50 to $89.50, and woven silk ties will retail for $39.50.
Now, I am not sure if there is a fashion foul if you work on Wall Street and wear an NBA team logo blazer. However, I am willing to bet that without the dress code the $650 leather blazer with NBA logo on the inside wouldn't be a big hit. How clever of the NBA to create a market for high end men's fashion. Just what cartels are supposed to do - find joint profit maximizing solutions that are not possible when all cartel members act individually.
While the NBA faces challenges, at least in certain areas the NBA qua cartel seems to be doing just fine, thank you very much.
February 22, 2006
The end of burger flipping?
Or, perhaps, the end of the cashier? I speculated that within the next decade big-box stores such as Walmart will do away with cashiers as they move to RFIDs and the ability to simultaneously scan all the goods in my cart. I also predict that when this happens, Walmart will be accused of letting go the very people that critics today complain are being exploited.
Standing in the American Airlines terminal at Atlanta Hartsfield-Jackson International Airport, I noticed that the Burger King had automatic ordering stations, much like ATMs. Touchscreen order, pay with your credit card, and your order spit out onto a chute, no muss and no fuss.
Evidently, these things are being tested elsewhere, like in Morrisville, NC for example, but not here in Arlington that I know of.
When KFC, Taco Bell, and the other fast food joints no longer hire as many teenagers and lower skilled workers, what complaints will we hear then?
U. S. CPI inflation hits 4 percent
There’s a lot of noise in the month-over-month inflation rate, but the year-over-year numbers released today should persuade Bernanke and company that monetary policy has been too loose:
Compared with a year earlier, the consumer price index was up 4 percent in January; excluding food and energy it was up 2.1 percent.
February 21, 2006
Nats to be Nameless Again?
The team without a home or owner might also not have a name.
According to a report in The New York Times on Tuesday, the United States Patent and Trademark Office granted a request for federal trademark registration on the name Washington Nationals to Bygone Sports last week. The Cincinnati-based company, which specializes in historic trademarks and sports apparel, applied for the trademark in September 2002.
According to the Times, Major League Baseball, aware of Bygone Sports' claim to the Washington Nationals name, thought it had reached an agreement with the company for the name's rights when the franchise was moved from Montreal in 2004.
Should the Nats become nameless once again, we here at DOL will gladly renew our offer of assistance in naming the team. More than ever, the name Porkers would seem appropriate for a team playing so close to the "Bridges to Nowhere" Congress and soon to be playing in a new stadium funded by the fleecing of DC taxpayers.
NCAA Sued for Monopsonistic Price-Fixing
LOS ANGELES -- As a UCLA linebacker in the late 1990s, Ramogi Huma left college after four years with $6,000 in credit card debt. His scholarship paid for tuition, room, board and required books but not incidentals such as phone bills and travel expenses. Coming from a lower-income family, he lacked the funds to cover the difference.
"That's where MBNA came in and cleaned house," Huma said of his high-interest credit card.
After graduation, Huma lobbied for a bona fide full ride for NCAA athletes, whose standard scholarship package, called a grant-in-aid, is equal to an amount about $2,500 a year less than the official cost of attendance. The NCAA wouldn't budge, despite supportive statements made by association president Myles Brand about raising the cap.
Now it has come to this: A federal antitrust lawsuit filed late Friday in Los Angeles seeks to prohibit the NCAA from telling member colleges they cannot offer athletic scholarships up to the full cost of attendance -- and could expose the NCAA to hundreds of millions of dollars in damages for past wrongs.
The class-action claim was brought on behalf of Division I-A football players and major-college basketball players, whose programs generate the overwhelming amount of revenue that flows into college athletic departments. Under antitrust law, any current scholarship athlete, as well as any player in the past four years, qualifies as a plaintiff. ...
On college campuses, athletes are the only students subject to aid restrictions imposed by an agreement among universities. Talented students in music, chemistry or any other area can be bid upon by individual colleges, without limits on the total value of their scholarship packages. Some, often graduate students, receive the full cost of attendance plus cash payments.
Huma, though, said that the lawsuit does not ask that athletes be treated in the manner of professional athletes with free-agent rights. Instead, it asks for the restoration of funds for incidental expenses, which the NCAA eliminated in 1973 in a cost-cutting move.
Congratulations to John and Dan
I'm beaming like a proud pappa tonight--not one, but two of my former students, Dan Alban and John Coleman, are finalists in the IHS Felix Morley Journalism Competition. Coleman was an honorable mention in last year's contest.
Good work gents!
Florida Legislature Bans Gifts
In a 2002 Public Choice paper, Russ Sobel and Tom Garrett tested theories of rent-seeking by comparing the composition of economic output in counties containing state capitals to similar counties that did not host a state government. They found, among other things, that capital counties had more eating and drinking establishments per capita than did non-capital counties. Events in Florida are consistent with their findings:
TALLAHASSEE - It's happy hour in Florida's capital city, but you wouldn't know it. The outdoor bar near the Capitol that used to be crowded with lobbyists and legislators is virtually empty on a Tuesday evening.
"Boy, this crowd is awfully thin," says House Speaker Allan Bense, R-Panama City, walking past the watering hole known as Clyde's & Costello's. "Where is everybody?"
Those deserted tables are a consequence of a new state law that bans lobbyists from buying drinks, meals and gifts for legislators and staff members. Lawmakers passed the sweeping ban at the end of a four-day special session in December, in the wake of a controversial trip to Canada by four legislators at a gambling firm's expense and an unfolding lobbying scandal in Washington.
The ban took effect Jan. 1, and brought an immediate lifestyle change for lawmakers long accustomed to having lobbyists pick up their tabs. Simply put, the law says: Dutch treat or don't eat.
The Fed is losing seigniorage to the Euro
The Times Online reports:
Strong demand for the €500 note led the European Central Bank almost to double the value of the bills that it printed to €95 billion last year, from €51.8 billion in 2004. … After the addition of 294 million new €500 notes in the past two years, the denomination now accounts for the most value in circulation of any euro note. …
Technical correction: While the Bank of England’s largest note is £50, two Scottish banks and two Northern Irish banks issue £100 notes.
The value of Federal Reserve dollar notes in circulation ($788 billion, an estimated 50-60% of which is held outside the United States) still exceeds the value of ECB euro notes in circulation (€565 billion), but:
The euro is catching up fast, with supplies growing at about 20 per cent a year, three times as fast as the American currency.
Harvard Faculty get their man
What a shame:
HARVARD UNIVERSITY'S EMBATTLED PRESIDENT, Lawrence H. Summers, resigned this afternoon and will be replaced, on an interim basis, by Derek C. Bok, who was president of Harvard from 1970 to 1990. Mr. Bok would be expected to "clean up the mess and make conditions right for the next president," according to a senior professor with knowledge of the tumultuous events of today in Cambridge, Mass.
The lesson to be learned? There are certain things that simply cannot be hypothesized.
Medical Schools: Conservatives Need Not Apply
Below is an excerpt of an email from a former student describing his interview for medical school at a highly-regarded East Coast university:
Not a particularly friendly interview overall. The discussion transitioned to health care funding. I [the student] noted some severe inefficiencies of the current billing model and that changes must be made for the system to be sustainable. He [the interviewer--a physician] said that nationalized health care solved all those issues nicely, didn't I agree? I (probably winced a bit and) responded that though NHS did solve some funding issues it introduced many other problems and inefficiencies, as demostrated by various studies and also personal anecdotes from my recent 5 months work in London. He responded that Canada's system worked much better, with which I also differed. Trying to conclude, I said that the kind of federal intervention that was needed was standardization of electronic record formats, codes, security procedures, and so forth, and that in fact there is a presidential appointee (David Brailer) and commission working on those things at the moment.
His response: "So do you think George Bush thinks?"
Me: "Well, I think he's a rational individual, based on his principles and presuppositions, just like everybody else. And while I disagree with many of his decisions, I do agree that freedom and democracy are good."
Him: "Maybe, but you can't force them on people. That will never work"
Me: "Worked out pretty well with Japan, didn't it?"
Him: "Good luck with your application, that will be all."
I cannot understand what a question about whether George Bush thinks has to do with a student's fitness for medical school.
I don’t know about you, but after their nail-biting win over Scotland (er, the UK) to qualify for the medal round, I’m psyched about the USA men’s Olympic curling team. Yeah, it’s like shuffleboard on ice – TO THE MAX. The Minnesotan (er, US) team: Unflappable captain Pete Fenson, hotheaded John Shuster (the mike caught him muttering “fricking” the other night after a bad shot), power slider Joe Polo, and the hero so far, the super-precise Shawn Rojeski. The semi-final game against Canada is tomorrow at 8pm EST on CNBC; the final game is Friday at the same time, same station.
CORRECTION: The USA-Canada semifinal will be be shown at 5pm EST, 4pm central, on CNBC.
Putting Excitement Back Into the Winter Olympics
Several of us were sitting around City Hall - er, I mean Brew's Pub - in our little town of Granville the other night, when the conversation turned from the usual topic - local politics - and it was noted that the TV ratings for the Winter Olympics have been lagging behind those for Reality TV. We decided that the Olympics needed more exciting events. So we were thinking of new events to improve the Olympics. Admittedly, we were mildly under the influence of legal beverages at the time, which can influence one's judgment (fortunately, in Granville everyone can walk home), but some of the ideas still seem worth a chuckle, so I thought I'd post a few here:
Short Track Ice Dancing: Couples race around the rink at speeds up to 35 mph, while performing the Ravensburg Waltz.
Luge Moguls: Admit it - wouldn't luge be more exciting if they put a few of those big bumps at the end of the sled run?
Bob Sled Slalom: We're tired of hearing about how the drivers steer with all these little twitches on the steering mechanism that no one can even see. C'mon, put a big sled in an icy downhill tube, who couldn't get to the bottom? But let's find out if these drivers can negotiate a real course.
Biathalon: Sure, the Winter Games already have something called the Biathalon. The problem is that the current event mixes the wrong sports: Cross country skiing and riflery. We think the Biathalon should consists of Curling and Riflery. Just don't grap the gun when you mean to reach for the brush!
Skeleton Half Pipe: Skeleton racers plunge headfirst into the half pipe, shoot up the other side and attempt a backside 360 with flip. Watch the huckers bonk, pack and bail. Who wouldn't want to watch that?
Downhill Figure Skating (inspired by Bode Miller): Imagine the excitement as skaters roar down the slope at speeds approaching 70 mph. "Here comes the triple toe-loop... OH, I don't like the looks of this. Tell us what went wrong, here's Dick Button!"
500 meter speed skating free style: Judged on time and points for style.
Nordic 4 x 10km: In this event, which lasts over an hour, relay teams of 4 cross country skiers do several laps around a track, covering a total of 40 kilometers. We think it would be more exciting if several hungry polar bears were released in the area before hand.
We have no idea if any of these sports will catch on. We're not even sure they're funny ideas. But surely if a bunch of yahoo nimrods in a bar in Granville can come up with such things, the brainiacs at the IOC could come up with a few new twists on the Winter Games.
On lobbying and campaign finance reform
Steve Hoersting, Executive Director of the Center for Competitive Politics, and I have this piece up on National Review Online. We note that as part of "lobbying reform," Congress appears poised to place restrictions on "grassroots lobbying," i.e. "call your congressman" type stuff aimed at stimulating voter to legislator contact. We think this is exactly the wrong way to go. The op-ed is adopted from this longer primer released by the Center. By the way, the Center is a new 501(c)(3) organization; you'll see the website substantially upgraded soon.
I've been a busy boy of late, also writing these three posts on campaign finance reform for the popular political blog Redstate. My basic argument: Republicans are stupid, and in their myopic desire to regulate George Soros funded "527" organizations they are a) shooting themselves in the foot, and b) squandering an opportunity to repeal at least portions of McCain-Feingold.
Housing Bears on the Vanguard...?
In my neck of the woods (Santa Clara County), the median home price stayed about steady from last month (up to $705k from $700k). Regional sales volume is down to a five year low for January. From the local paper:
In January, 6,004 properties changed hands in the nine-county region, 20 percent fewer than the same month in 2005. Though sales slowed, median prices moved higher compared with a year earlier, according to a report Thursday from DataQuick Information Systems. In Santa Clara County, the median price hit $705,000, up from $700,000 in December, and $615,000 in January 2005.
On the low end, recent sales on new 1BR condos (~875 sq. ft.) range from $340 in a not great downtown (San Jose) location to $440 in a nice downtown location. Same location 2BRs range from about $440 to $625.
Beyond Silicon Valley, there are interesting things of late on the housing bubble blogs, including: MLS listings up everywhere (e.g., this chart); the so-called "reset" problem in which rising interest rates threaten to tip sub-prime ARM borrowers into default; shaky stock prices and accounting fundamentals among high-end housing builders; layoffs and facility closings among mortgage lenders.
The least interesting but most salient feature in the bubble sphere continues to be the hair-pulling cries of "collapse" (or worse), in many cases based on month-to-month changes during seasonal downturns. Still, while I haven't seen any serious claims that housing prices are falling (other than seasonally), the facts on net seem to be catching up to the bearish bubble folk.
Some of the blogs where I've been reading this stuff (quality not guaranteed...):
February 20, 2006
The Party Identification Project at Capital University
The College Republicans at Capital University have released the results of their Party Identification Project:
An extensive study conducted by the Capital University College Republicans has revealed a large crevasse between the number of registered Democrats and Republicans within the university faculty. The organization found 72 percent of Capital University faculty and deans are Democrats and only 28 percent are Republicans.
Link to Dan Klein's work on this issue.
Why pay when you don't know what you bought?
In an example of some of what is wrong about the public subsidy game in professional sports, the Charlotte Business Journal reports that attendance is up 13% for the NBA Charlotte Bobcats, who moved into a new $265 million publicly funded arena this year. The increase in attendance moves the Bobcats to 20th out of 30 teams for the season. Hooray!!
Such attendance boosts are not uncommon in new facilities, although evidence suggests that the so-called "honeymoon" or "novelty" effect lasts for less than ten years (this has been shown by a number of researchers, including Brad Humphreys and Dennis Coates in a recent Contemporary Economic Policy paper [I'll try to dig up a link]).
However, the article also states:
While the team has shown gains in tickets sold, franchise executives won't discuss the overall financial performance and have declined to disclose the number of season tickets sold in the new building.
I understand that the Bobcats are privately owned, and revealing such information to the public also reveals the information to their competitors. However, if the cities won't negotiate for access to this information, then why pay the money in the first place? Perhaps it doesn't matter to the local taxpayer - after all, there is an arena and that's what was purchased. However, in the spirit of full information, how about letting the good folks of Charlotte know a little more about what impact the arena had on the Bobcats's bottom line? I know, owners as a group don't want the information revealed because the paying public might suddenly wake up to the massive income boost the owners get from a new arena. And that, right there, is the problem.
If revealing team financial information is a deal buster, then I say "so be it." I am an advocate for getting all public dollars out of the venue business. Short of that occurring, cities should demand a peek behind the curtain after paying a few hundred million dollars. Otherwise, infer what you will from the lack of forthcoming information.
I'm going to
I ran the Tallahasse Marathon yesterday in 3:13:47 besting my previous PR by 5 minutes. Most importantly, I finally qualified for the Boston Marathon! (I'm planning to go to Boston in 2007.)
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Mile Lap Split
« Close It
An idea for those old books?
I am not exactly sure where I come down on this one, but my first impression is that if you participate in this effort you are not violating any libertarian principles (although I could be wrong):
February 19, 2006
Division of Labour in action
Or an interesting video for a principles class showing the tradeoff and complementarity between labor and capital - The building of an Airbus A340 in fast motion (Windows Media file). Personally, I find it impressive how few people are involved in the final assembly of the plane.
Daddy won't be happy
Why you don't loan your Corvette to your teenager. (Some ads may not be suitable for work?)
For the distance runners out there
Including DOL's own Robert Lawson and local colleague Courtney LaFountain, from the Feb. 19, 1906 NYT:
Having completed 47,888 miles of the 60,000 which he is attempting to walk in seven years, and having already worn out thirty-seven pairs of boots on his journey, a septuagenarian engineer named Mark All arrived at Leicester Feb. 3.
Wow. That's a testimony to 1906 manufacturing: 1294 miles per pair of boots! I wonder what mileage distance runners get from today's running shoes?
The cost of amateur athletics c. 1906
From the Feb. 19, 1906 (not 2006!!) NYT:
One week from today the American Olympic Games Committee will select the athletes who will represent the United States in the Olympic Games at Athens, Greece...It was originally attended to send sixty athletes providing the sum of $25,000 could be raised. Up to the present but $8,000 of this sum has been secured, with but one week before the subscription list coses. Secretary James E. Sullivan of the Amateur Athletic Union has been in correspondence with Andrew Carnegie, who is taking a deal of interest in the big athletic event, and it is probable that the philanthropist will make up the difference between the total sum collected and the $25,000 needed to give the United States proper representation.
Today, the USOG admits to a little more then $500 million per year for total operations. I haven't found a price tag for the Torino games, but if someone knows of one, I'd be interested in comparing the figures.
Why not public funds?
Having been out of town for the past few days, my blogging has been slow. However, catching up on my NYT from 100 years ago, I came across this interesting tidbit in the Feb. 19, 1906 NYT:
E.F. Swinney, President of the First National Bank and Director of the Chicago and Alton Railway Company, tonight announced that six railroads entering Kansas City would build a magnificent passenger station on the territory bounded by Grand Avenue, Broadway, Twenty-first and Twenty-third Streets, the building and ground to represent a total cost of more than $20,000,000.
The article goes on to explain that 36 acres of land had been purchased for $65,000 per acre and that the "proposed new station...will serve only to relieve the serious congestion which exists at the old Union Station in Union Avenue." Finally, the article suggests that "the roads which will continue to enter the old station will in time construct another new passenger station."
How refreshing such sentiment would be in today's world, that is, companies building their own infrastructure and places of business without a hint of tax abatements or public funding. Of course, in 1906 there weren't that many taxes and definitely not that much tax money to dole out, but is that an excuse?
Today, for example, the economic impact of a professional sports team (and other companies like Cabelas and Bass Pro Shops) is an excuse to dedicate hundreds of millions of public dollars towards sports venues, and franchise owners insist that they shouldn't have to shoulder the entire burden of construction because of these external benefits. However, BEFORE tax dollars were available to build the cathedrals of industry, firms (gasp!) spent their own money to build their venues, regardless of any external economic benefits they were generating.
But wait, you say, surely $20m in 1906 wasn't all that much. The folks over at EH.net offer the following conversions:
In 2004, $20,000,000 from 1906 is worth:
$418,377,777 using the Consumer Price Index
The first three numbers aren't that different from recent stadium agreements/proposals. In Arlington, TX, the new Cowboys stadium will cost 650 million, and the mayor insists the city will not spend more than $350 million, which of course means the city will likely spend more than $350 million. In Kansas City, there is a proposal to spend approximately $400 million in public money on a roof for Arrowhead Stadium so that KC can have a Super Bowl (plus some renovations of Kaufman Stadium). In DC, the current plan suggests that spending on the new stadium will be no more than $611 million, which (again) suggests that the city will likely spend more than $611 million on the new stadium.
Tax abatements, direct taxation, and other gimmicks to provide corporations with a place to do business, are justified today on the grounds of economic benefits and development. Without any fancy econometric analysis or a consultant report, I would be willing to bet that the impact of a second railroad station to 1906 Kansas City would likely be greater than the stadium proposal 100 years later.
Perhaps in 1906 the great cabal of government and big business hadn't evolved to the level of intrigue it has reached today. However, it is interesting that all railroads were evidently expressing a willingness to spend their own money to build stations (although I understand that the railroads had already been heavily subsidized in various ways for the past forty years).
February 17, 2006
Kroszner, Warsh sail through
Reuters reports today:
The U.S. Senate on Friday approved the nominations of University of Chicago economist Randall Kroszner and White House aide Kevin Warsh to be members of the Federal Reserve Board.
February 16, 2006
How Should States Encourage Entrepreneurship?
Kreft and Sobel’s research finds that the degree of economic freedom within a state is positively related to the entrepreneurial activity in that state. In other words, policymakers should follow the example of states like North Carolina and Nevada and focus on lowering taxes, securing property rights, minimizing regulatory barriers and other public policies consistent with individual freedom. By doing so, it will increase the rate of new business start-ups, and the venture capital necessary to help fund these new ventures will flow into the state automatically. Capital is more mobile than labor, so the focus of state economic development policy should be on how to make it easier for individuals to pursue their dreams.
Posted by Joshua Hall at 02:37 PM
There's been a pretty big hubbub on my campus about grade inflation after it was revealed in the student newspaper that about 45% of the grades in the College of Arts & Sciences were A or A-. B's (including B+ and B-) were about 30%. C's were only about 14%. D's less than 5%. And F's less than 5%.
As usual, the economics department, like William F. Buckley, is "standing athwart history, yelling stop".
Even this is too many A's imo. We're going to have to work on that.
Slippery Slope--Taiwan Edition
Wu Hui-lin, a research fellow at the Chung-Hua Institute of Economic Research, thinks the government should set gas prices.
Step 1: Create a government-owned monopolistic company to sell petroleum.
Step 2: Watch as service declines and prices rise.
Step 3: Call for government price contols to "fix" the problem.
Back to work guys, we got some learnin' to do.
Revising Dr. Smith
Here's yet another attempt by a Marxist to co-opt Adam Smith.
To refute the laissez-faire capitalism often ascribed to Adam Smith, it is only necessary to quote . . . Adam Smith
This should have read "To refute the laissez-faire capitalism often ascribed to Adam Smith, it is only necessary to selectively quote . . . Adam Smith"
It would be nearly impossible to quantify the number of times that pro-corporate, laissez-faire activists have used the phrase “invisible hand” to justify all manner of unjust and brutal economic policies and their outcomes.
Ok let's get this straight once and for all: laissez-faire activitists are PRO-FREEDOM not pro-corporate. (Apologies for the scream.) Corporations (which in Smith's day, unlike today, were all government granted monopolies) are very often against laissez-faire. I defy you to find me a bona fide laissez-faire activitst defending ADM's ethanol subsidy or the car quotas on Japanese cars or local tax abatements....
I was going to go on dissecting the article, but just can't put myself (or you dear reader) through the misery.
February 15, 2006
The "Austrian" self-labelling issue
The Workshop in Philosophy, Politics and Economics of the George Mason University Department of Economics has a number of interesting speakers lined up for this semester. Times and locations are listed here, with links to the papers being presented. Particularly lively should be a debate on Feb. 20 between Dan Klein (affirmative) and Pete Boettke (negative) on “Is It Time to Retire the Label ‘Austrian Economics’?”.
Klein pleads for dropping the "Austrian economics" label in order to instead emphasize "spontaneous order economics". There's obviously some irony in a proposal to deliberately re-engineer our language for the purpose of promoting spontaneous order ... but that doesn't mean I'm against it. I've lost count of the number of times I've had to advise young economists to reconsider the title of a paper they've labelled something like "An Austrian Approch to X". Why ghettoize your own work?
Mallard Fillmore, the comic-strip duck I thought was a traditionalist conservative (he’s certainly a cultural conservative), declares himself to be a libertarian.
Jobs I’m glad somebody else does: pig breeder
Information (expurgated by me) about a very specialized agricultural job skill, from Temple Grandin and Catherine Johnson’s fascinating book Animals in Translation: Using the Mysteries of Autism to Decode Animal Behavior, now available in paperback (p. 103):
I talked to a man who had one of the most successful records for breeding sows … Each boar had his own little perversion the man had to do to get the boar turned on so he could collect the semen. Some of them were just things like the boar wanted to have his dandruff scratched while they were collecting him. … The other things the man had to do were a lot more intimate. He might have to hold the boar’s *** in exactly the way that the boar liked, and he had to *** some of them in exactly the right way. There was one boar, he told me, who wanted to have his *** played with. “I have to stick my finger in his ***, he just really loves that,” he told me. …and remember, this is a business we’re talking about. The number of sows successfully bred by the boars translates directly into the profits a company can make.
Yeah, try getting anyone to develop that expertise that under state-run agriculture.
APEE is pleased to announce the winners of the Essay Contest, sponsored by the John Templeton Foundation:
February 14, 2006
Need some anti-foreign aid talking points?
Parade ranked the Sudan’s Omar al-Bashir as the world’s worst dictator. During his reign OECD countries gave his regime more than $6 billion in non-military aid. The U.S. accounted for more than $1 billion of that aid. Kim Jong-Il was ranked as the second worst dictator and received a little over $1 billion in aid, with more than half of it coming from the U.S. Than Shwe of Myanmar, Robert Mugabe of Zimbabwe, and Islam Karimov of Uzbekistan round out the top five dictators on the list. The U.S. contributed $32 million to Myanmar, $1.1 billion to Zimbabwe, and $385 million to Uzbekistan.
"The Land of 10,770 Empty FEMA Trailers"
That's the headline of a story in the LA Times. An excerpt:
Today, legions of wide-bodied mobile homes sit empty at Hope's [Arkansas] Municipal Airport, a sprawling former military base. After all these months, storm victims can't seem to get the trailers, which are proving a mixed blessing to Hope and Arkansas.
"It just boggles the mind in this day and time," said Mark Keith, director of the Hope-Hempstead County Chamber of Commerce. "There are 10,770 trailers at Hope Airport. That's one for every man, woman and child in Hope, with a few left over to send to Emmet, down the road." ...
Why haven't the trailers been sent to those who need them?
Rep. Mike Ross (D-Ark.), a graduate of Hope High School, asked that question as he toured the airport Thursday with FEMA officials. "It cost $431 million and they're all sitting there, 75% of them literally parked in a cow pasture," Ross said in a telephone interview. "They are brand-new, all totally furnished, and yet people have been living in tents for five months in a row. It just makes you sick to your stomach."
FEMA says it has been stymied by federal regulations, such as one forbidding trailers to be positioned in flood plains — which rules out much of the area hit by Katrina — and by officials in Louisiana, where the need is greatest.
"It's amazing that every state in the union embraced Katrina evacuees except the folks in Louisiana," FEMA spokeswoman Nicol Andrews said.
It boggles the mind to think that Paul Krugman would like the same governmental central planning that plopped 10,000 trailers down in Arkansas to oversee people's medical decisions.
While we're on Katrina and FEMA, the WaPo reports on the staggering amount of fraud in FEMA's relief spending. Again, how could any rational person think that the government's response to Katrina means we need more government rather than less?
A follow-up to Bob's posting on Easterly's WaPo article. A new NBER paper finds "little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth." Abstract here; non-technical NBER Digest version here.
Of course, the surprising finding is that aid is not inimical to growth.
February 13, 2006
Lecture at Marietta College
For anyone in the Eastern OH, Western WV or Southwestern PA area:
THE ECONOMICS, MANAGEMENT, AND ACCOUNTING DEPARTMENT AND THE ECONOMIC ROUNDTABLE OF THE OHIO VALLEY
Failed states index
Foreign Policy has a new(?) ranking of nation states with a high probability of "failing." I haven't had a chance to read through it all, but it is of passing interest.
William Easterly says, "The West Can't Save Africa"
In the WaPo:
Economic development in Africa will depend -- as it has elsewhere and throughout the history of the modern world -- on the success of private-sector entrepreneurs, social entrepreneurs and African political reformers. It will not depend on the activities of patronizing, bureaucratic, unaccountable and poorly informed outsiders.
Alarming headlines c. 1906
From the Feb. 13, 1906 NYT:
Evidently there was the possibility of "an outbreak in China which will necessitate our armed intervention." However, there were concerns stateside that any intervention could be pulled off: "[t]he main difficulty of the War Department in making adequate preparation for such a campaign is a lack of money. The refusal of Congress to grant the $100,000 asked for by Secretary Taft...has left the department crippled."
Fair Pricing c. 1906 - An Update
The other day, I pointed out that in 1906 the state of Ohio passed legislation reducing the price per passenger-mile on the state's railroads from 3 cents to 2 cents. As we know, the laws of the market have a surprising resilience to the laws of man.
In this case, the Feb. 13, 1906 NYT reports (gasp!) that Ohio railroads were considering additional changes to the pricing of railroad travel:
In chair cars the rate may be made at least 3 cents per mile, and there may be charges for baggage and for transfer and other little extras.
The upshot? Before the price ceiling was instituted, the three cents per mile was for a bundle comprised of person and baggage (much like today's airlines). The proposed response by the railroad operators to the price ceiling was to unbundle the baggage and the person, thereby charging those with baggage a bit more for the additional cost.
Whether breaking up the bundle would be revenue enhancing or simply revenue neutral is not directly testable with given information. However, it is likely that the best the railroads could expect, given the price ceiling, was revenue neutrality. Why? If breaking the bundle up would yield more than three cents per mile (average revenue), the railroads would have done so without the ceiling.
Even if the proposed changes were not revenue neutral to the firm, there would be some consumers who might be charged more than three cents per mile (while others were charged less). Whether this would enhance social welfare is also ambiguous.
The unintended consequences of market interventions are not new, of course, although, as I mentioned before, I wonder how much the general population and the politicians understood them at the time.
February 12, 2006
God's Gift to Jay Leno
VP Cheney accidentally shot a hunting companion yesterday; the incident will be a ripe target for late night comedians. Look, too, for editorial cartoonists depicting Cheney as Elmer Fudd. The victim, who apparently will recover, is a lawyer--perhaps providing even more (ahem) ammo for the comedians.
February 11, 2006
Bold prediction #245
As I was standing in line at the Target this afternoon watching two transactions ahead of me pay by check (WHAT!?!) and the teen-age clerk scan products ever so slowly, I passed the time imagining how Target, and other big boxes, might make my life a lot easier.
I don't understand all the ins and outs of the RFID (Radio Frequency ID) chips, but ostensibly they send out little radio signals that can be picked up by scanners, big brother, and so forth. What if Target has RFIDs on all of its products which transmit product code, and hence price and weight? In theory, I could push my buggy to a sensor, push the checkout button and all hundred or so items in my cart would be scanned simultaneously. That alone is worth the price of admission as I don't have to watch the clerk scan everything. I suppose Target would need a scale of some sort to ensure that I didn't somehow put the 12oz RFID on the 20oz Ragu Sauce, but you get my point.
Now, there are some benefits to the scanning clerk - you get to see how Brangelina is doing, whether Brittany has had an episode, and also, at times, there are certain items that you decide you don't want to purchase. However, those are rarities for me.
Essentially, instead of standing in line to scan/scan/scan/scan/bag/scan/scan/scan/scan/bag/scan/scan/scan/scan/bag/pay, we might (will?) one day, scan/pay/bag/bag/bag/bag. Perhaps there will be wait times for bagging stations, but this might be obviated by having disposable carts (i.e., the cart is a box that is thrown in the trunk leaving behind a frame with wheels that goes back to the store).
Once the hand scanning (even self-checkout scanning) is replaced by RFID blasts, Target won't need thirty or forty checkout people, but perhaps only five or six. If they provide a cart-sized box to put my goodies in, they don't have to purchase bags and if the boxes are reusable, heck I'll bring mine back. Because my transaction costs have decreased I might a) buy more at a given time, b) be willing to pay more for what I currently purchase), and c) shop more often at Target. Those are all possible revenue enhancers for Target.
On the cost side, while there are some fixed costs in RFID equipment, RFIDs don't get sick, demand a living wage, demand expensive health care, or sue for discrimination. These would seem to be cost savings for Target.
The upshot? Higher revenues with lower costs equal greater profits (gasp!). All without having to dehumanize local workers by paying them only $10/hour. And there's the ironic question. If Target/Walmart/Costco did away with a substantial number of their employees, would this stop the attacks against said companies? Nope. They would be castigated instead for laying off the very workers who now critics claim are being exploited.
[Last note: Target, et al., could make a lot of friends if they somehow destroyed the RFIDs as you left their building, make it impossible for Big Brother to track down my Doritos and Southern Style Pilsbury Biscuits.]
Fair pricing? c. 1906
How about a price ceiling set 33% below the prevailing market price? So reported in the Feb. 11, 1906 NYT:
there will be no opposition made by that company [the Lake Shore and Michigan Southern Railway] against the adoption of the new [Ohio] State law which requires that passengers must be carried at the rate of 2 cents a mile instead of 3 cents.
At the time, the train was the primary long-distance mode of transportation (water travel still being popular as well), and from the ongoing debate from the state and federal level, the price of train travel (freight and passenger service) was a big concern. There were accusations of monopoly pricing, but just as often the concern was price discrimination in the form of the "rebate." Moreover, much like today, there was a considerable number of people who lobbied for government intervention in the market because they didn't like the outcome (price, quantity, quality, etc), i.e., it wasn't fair to "someone." Therefore it is necessary to make the price "fair" for some, without regard to the ability of the railroad to earn a profit, and, perhaps even worse, without regard to the railroad's private property rights.
Ohio railroads evidently agreed to the price decrease, and I am sure many at the time figured "AH HA!! The profits of those greedy capitalist pig dogs will be curtailed, and at the same time my trip from Cincinnati to Cleveland to see Mom will be that much cheaper!" However, what isn't reported (and likely wasn't, although I will be watching) was the reductions in service quality, the number of trains, and other changes in the railroad business, expected to result from a binding price ceiling [but perhaps we are a little early in the history of economics as a field to have had such input to the story as printed in 1906?].
However, fast forwarding to 2006, would a mandated one third decrease in the price of gasoline (here in Arlington $2.15 per gallon) be politically feasible today, even after the recent price volatility? I wonder, but personally doubt it would happen. If my hunch is correct and politicians and the general population recognize that a price ceiling is not a good idea, perhaps the power of markets has gained more credibility (although I'd admit there is a lot of work to do).
The spoils of war c. 1906
From the Feb 11, 1906 NYT:
The recent issue of Russian notes placed in Paris sold at a price to yield the investor 6 per cent. The last issue of Japanese bonds placed in November, 1905, carried 4 per cent. interest, and were sold at a price which yields about 4.95 per cent to the purchaser of the bonds. These offer a striking contrast to those which govern the first of the loans put out by the Russian and Japanese Governments after the two countries had become engaged in war. Russia found no difficulty in the beginning in borrowing funds at about 5 per cent., while Japan had to sell 6 per cent. bonds at a discount.For those not aware, the Russo-Japanese war of 1904-1905 began with Russia proclaiming confidence and ended with Russia eating crow.
Expressive Voting or Decision Rule?
I used to relish voting in the small Ohio suburb I used to live in. It was fun and easy because I could apply a simple decision rule - if the Republican mayor was for it, I was against it. [The reason why is unimportant for this post]. This rule allowed me to economize on the costs of obtaining information on various amendments to the city charter and such, and since they never put tax cuts before the voters, I had little reason to be concerned about voting against my own interests.
I used to think of my little decision rule as nothing more than a cheap way to gather information about the items on the ballot. Now I wonder if perhaps I was engaging in expressive voting? The theory of expressive voting states that as the probability of being the decisive voter declines it becomes cheapter for individuals to vote against their own narrow self-interest and instead vote for "expressive" reasons.
My take: a little from column A, a little from column B.
Quilts or Sleeping Bags
I am sure that it is often trying to be married to an economist. I used to carpool with an economist who one day told me he had upset his wife because he had questioned one of her friend's charitable activities. It seems that she would spend countless hours and money making quilts for the homeless. My friend pointed out that if she truly wanted to help the homeless stay warm, she should take the hours she spent on the quilt and work at McDonald's instead. In doing so she would earn enough to buy several mass-produced sleeping bags that would be far more effective in keeping the homeless warm. Needless to say, this suggestion was not taken in the spirit in which it was intended.
Today I realized that my friend was merely channeling Gordon Tullock.
"[i]n my classes I commonly tell my students that if they really want to help the poor what they should do is get two jobs, work as hard as they possibly can, and then give all their income except the minimum amount that they need to stay alive to the inhabitants of India. They normally object to this pattern of behavior, but are normally not willing to admit that the reason they object is simply that they do not really feel that charitable."*
Gordon Tullock, "The Charity of the Uncharitable," Western Economic Journal 9 (1971): 387.
McChesney on the Abramoff Scandal
Fred McChesney's take on the Abramoff scandal is a must read. A teaser:
The real solution? Consider that both rent seeking and rent extraction are functions of the ability of government to create and extract rents. If governments did not arrogate to themselves the right to outlaw or regulate gambling, there would be no need for government lobbyists. There are no Jack Abramoff's needed to persuade government to allow you to open a grocery store, or me to start a law office. Why? Because, for the most part, government has no ability to stop us from doing so. If government did not have the ability to siphon off tribal revenues by taxation, lobbyists would have no work in that area, either.
The Appalling Labor Practices of...UNIONS???
My former student, Dan Alban, blogging at the Harvard Law School Federalist Society site, has much fun with the Detroit News article on unions hiring homeless people to picket but paying them low wages and providing no fringe benefits.
February 10, 2006
Milton Friedman Clips
APEE has just put up some video (and audio) clips on its website.
Tax Incidence for Dummies
Yesterday's WSJ (sub req) had an article on the DC baseball stadium by Mark Rosentraub ("Washington Gets Its Stadium Issue Almost Right", p. D8). I thought the article was poor overall but this sentence was especially bad:
It is also true that the District is using taxes on businesses [to finance the new stadium], thereby minimizing the pain for lower-income residents.
Since I just happened to be at the tax incidence part of the semester in my principles classes, I opened class today (i.e., before any lecturing from me on tax incidence) by asking my students what they thought might be wrong with the Mr. Rosentraub's sentence. Their conclusions:
1. At least some businesses are owned by low-income people therefore taxing businesses does not spare (or even "minimize") low-income people from the pain.
2. Businesses might respond to the tax by raising prices thereby shifting the burden of the tax to consumers. Some of said consumers might just be low-income residents.
3. Businesses might respond to the tax by eliminating jobs or reducing wages. Some of the lucky winners of layoffs or reduced paychecks just might be--you guessed it!--low-income residents.
So we have a bunch of (primarily) college freshman (only 5 weeks in to their first economics course) who instinctively know more about tax incidence than Mr. Rosentraub who is dean and professor of urban affairs at the Cleveland State University's school of urban affairs.
Warsh nomination draws heat
Bloomberg reports nothing but praise for Randy Kroszner’s nomination to the Fed, but grumbling over the qualifications of the other nominee, lawyer Kevin Warsh.
February 09, 2006
Conspiracies and Elections
When I was young, and modern liberalism dominated American politics, I recall periodically running across voting conspiracy kooks, usually conservatives, who were absolutely convinced that American elections were rigged. This type never completely goes away, but their numbers can rise and fall.
Of late, conspiracy theories about voting have been getting out of hand. A major problem is that a large element of the American political left has embarked on a campaign to convince Americans that their elections are fraudulently manipulated at the most fundamental level, and many people in positions of responsibility have been unwilling to throw water on the fire, thinking somehow that they can harness that energy for electoral victory.
A good example of this left-wing election paranoia is found at a site called, sadly enough, The Brad Blog. This particular post was published shortly after November's election, when Ohio voters overwhelmingly rejected a package of four proposed amendments to the Ohio Constitution, placed on the ballot by a coalition of left wing called "Reform Ohio Now." Brad Blog (relying heavily on the "analysis" of Bob Fritrakis, a leftwing Columbus political gadfly for many years) finds obvious fraud in the fact that the results did not comport with - indeed were vastly different than - the results of the Columbus Dispatch mail poll, a poll which traditionally is quite accurate. Furthermore, notes Brad Blog, it was accurate with regard to a 5th issue on the ballot, a state bond issue.
But as usual, there are in fact very average, normal reasons why the pre-election poll was so off the final results. The Dispatch poll (subscription required) was taken over a very long time, from Oct. 24 through Nov. 3, with election day falling several days further out, on November 8, always a potential problem. Other issues, identified by the Mystery Pollster Mark Blumenthal (a Democrat, for what it's worth), may also have contributed to the poor performance of the Dispatch poll. These include changes in the Dispatch methodolgy from past polls, including adding an "undecided" option; the fact that the Dispatch had not previously done an off-year poll featuring only ballot issues; the fact that the Dispatch poll itself showed support trending downward as its responses came closer to election day; a substantially lower response rate than in the past; the length of the ballot issues, which were not reproduced in full in the poll; and the fact that the Dispatch poll has always been least accurate at predicting statewide ballot issues.
Now Democratic pollster Celinda Lake (Lake Research Partners) has released a report on why voters in Ohio (and California) rejected redistricting and other initiatives, and it should (but surely won't) put the final nails in this little leftist conspiracy theory. You can link to a pdf file of the Lake report here.
Among other findings, Lake found that 75% of Ohio voters made up their minds close to election day (see Table 24), and 73% of them voted "no" on the redistricting reforms. Also, newspapers were the single most important source of information on the intiatives for Ohio voters, and especially for voters deciding in the last week (79%). This is relevant because eighty one of 104 Ohio newspaper editorials on the intitiatives urged a "no" vote.
We are living in bizarre times, indeed, when so many people insist that, though there is no direct evidence of fraud, the fact that exit polls and pre-election polls did produce corresponding results conclusively demonstrates that the actual election day results are invalid. But as usual, and as we see in the Ohio vote, there is an easy explanation.
Back to commodity money: penny meltdown in Korea
I noted recently that the copper in pre-1982 US pennies is now worth more than one cent, and wondered at what nominal copper price the culling and melting down of pennies would become common. South Korea, according to this report, is already seeing jewelry-makers melting down its 10-won coin (worth about one US cent), which has a copper-zinc content worth 14 won.
"It can be concluded that these craftsmen have found it cheaper to melt down the W10 coins and use the metal than to purchase raw materials,” BOK [Bank of Korea] official Chung Nam-seok says. The production cost of a W10 coin is about W40, W14 of that for copper and zinc alone.
The melting is currently legal, but the BOK is now seeking legislation to outlaw it. They will also, as the US Treasury did in 1982, redesign the coin to reduce its copper content.
Congressional Term Limits I
On the scandal vector, Congressional Democrats today are no less poised to take control of the House than were Gingrich et al. in 1993-94. Consider DeLay as Rostenkowski and Abramoff as House Bank. I’m still waiting for the Senate GOP to serve up their version of Keating Five, at which point a DEM majority in both chambers would seem inevitable with the next Congress.
On cue, the journalistic-pundit class has dusted off the old term limits idea (including George Will, Thomas Sowell (who is obviously far more than a pundit, but writes a column), Fred Barnes and Grover Norquist). Some may recall these same journalist-pundit folks chanting the term limits requiem just after the 1998 elections. But in reality, groups like U.S. Term Limits and Citizen Congress never completely disappeared. After the Supreme Court and House rejected term limits in 1997, these groups began to cajole scores of candidates into promising anachronistic devotion to the principle of voluntary rotation, under a Cinncinatus inspired notion that Representatives would serve a few terms under a burning sense of civic duty all the while yearning to return home to the plow. The problem is, newbie candidates make an ex ante promise to come on home at about the time that they realize ex post that they’ve worn butt grooves into the seats on some pretty juicy committees. There’s no disputing incentives (isn’t that how the saying goes?). But like a feeding tube, these (usually) false promises kept the comatose term limits idea in a persistent grass-root-ative state. And, like a soap character’s miraculous return from the dead, congressional term limits may be poised to make itself an issue again.
A less derisive summary of the pros and cons with congressional term limits coming soon. Bottom line, if you’re an advocate of limited government, look elsewhere.
After repeatedly voting down levies for sports stadia in this city, it looks like the pols are going to go forward with a new stadium for the AAA Columbus Clippers baseball team without an increase in local taxes.
Huntington Bancshares Inc. will pay $12 million over the next 23 years to put its name and logo on a stadium that is to house the countyowned team by 2008.
$55 million? Wanna bet?
Corporate money is a big part of the county’s financing plan for the stadium. Although they will seek $7 million in state funding through the Ohio Cultural Arts Commission, county commissioners have vowed not to use local tax dollars for the project.
Ok, so the plan is to screw over the artsy fartsy museum set.
Still I'll believe this no tax stuff when I see it.
McCain, Obama & Me
To add a few thoughts to Frank Stephenson's comments on the big McCain-Obama flap...
I've had minor contact with both the principles.
Obama and I were in Law School together - he was a year behind me.
Read More »
It would be a mistake to say we knew one another - I vaguely recall meeting him once in a group, but I don't recall that we ever had a conversation. But I knew who he was. Obama was definitely a campus leader, and it was clear that his advice and judgement was highly valued by the campus's left wing activists. Since his keynote address at the Democratic National Convention last summer, Obama has been touted as a future star with the ability to reach across the aisle, and he has made at least some noises, as a Senator, that this is a role he would like to play. Now McCain rather tartly expresses his displeasure that Obama is unwilling to work on a bi-partisan lobby reform bill.
What is worth noting, however, is that there is really nothing in Obama's background (at least that I know of) to suggest that he will be a bipartisan coalition builder. Looking for clips about his career in the Illinois legislature, I find nothing to suggest that he was anything more than a doctrinaire liberal during his time there - smarter than most, more obviously a comer, but with a voting record and pattern that would, without exception, pretty much fit any liberal Democrat. Similarly, in the hotbed of minor league politics that was Harvard Law School, Obama was smart, good looking, articulate, and a leader on the left, but he did not reach across ideological divides. I don't recall him ever taking a position that was anything less than the standard liberal line; to my knowledge (which could be wrong) he had few if any close, or even casual, friends among the campus's conservatives. Despite his obvious gifts and brilliance, in his first year in the Senate, I've seen little to suggest that 3 years from now he will be considered anything more than another version of John Kerry (or pick your liberal Democratic senator).
As for John McCain, that he can get away with this letter is indicative of the free pass that the press gives him. Yes, such a snarky letter is fun to read, but is it really what our Senators ought to be writing, how they ought to be behaving? Is this really a man we want in the White House? And is there any doubt that if Bill Frist had sent someone such a letter, the press would be all over him?
Admittedly, I don't think much of Senator McCain. As a young man, in very trying circumstances, he sacrificed much, and showed much courage, in the service of his country. Sadly, his career since has not lived up to that promise. After returning from Vietnam, McCain divorced his wife (acknowledging the breakup was due to his infidelity) and married a wealthy young heiress. First elected to Congress in 1982, he did little of distinction for several years, and by 1990 was best known as a member of the "Keating 5," a group of 5 senators subjected to disciplinary action in the Senate for unethical behavior. In McCain's case, beyond the behavior for which he was brought before the Senate Ethics Committee, he accepted a number of trips on Keating's private jet to Keating's resort in the Bahamas.
After the Keating 5, McCain "found religion" as it were, becoming the ardent campaign finance reformer. He had opposed campaign finance "reform" previously, but embraced it as scandal protection in his 1992 re-election campaign. The rest, as they say, is history. But it has always been more of a "do as I say, not as I do" type of reform. Senator McCain's leadership PAC, Straight Talk America, is one of the largest, yet gives very little money to other candidates, preferring to spend it flying Senator McCain around the country, and paying "consultants." Then there is the "Reform Institute," which Senator McCain chairs and which some have called merely a sham McCain campaign front. Senator McCain has solicited some major bucks for the Reform Institute from people with business before his Senate committee. And I have noted publicly, on many occasions, that Senator McCain's power probably benefited from the substance of the McCain-Feingold reform bill more than that of any other politician, with the possible exceptions of George W. Bush and Hillary Clinton.
I've never had a conversation with Senator McCain - see below for my best efforts - but our paths have also crossed. Senator McCain has, on multiple occasions on national television, called me "corrupt," though without attempting to identify any "corrupt" behavior other than disagreements with him. (My wife tells me I'm the worst "corrupt" public official she's heard of: "Where are the fancy clothes, the vacations?" she asks). He has accused me of doing or saying things I have not, sometimes in such a way as to suggest that my behavior may have been illegal, and then repeated the allegations after public corrections were made by others (whether because he doesn't know or doesn't care, I don't know). He has always refused to meet with me. Finally, in 2004, I caught up with Senator McCain at a Senate hearing. When I approached and said, "Senator?" he instinctively took my hand, but when he saw it was me, he yanked his hand from mine (scroll to bottom for witness account), and proceeded to call me a "bully," a "coward," "corrupt," and someone with "no respect for the Constitution." He refused to allow me to speak at all.
Senator McCain's experience in Vietnam appears to have given him wisdom on that issue, a sense of judgement and proportionality. He has been willing to tell some veterans' groups things that they did not want to hear (to wit, that it is probably not true that American servicemen remain in captivity in North Vietnam); from his arrival in Congress, he has called for better relations with North Vietnam. But from his experience as a member of the Keating 5, he seems to have drawn all the wrong lessons. He has adopted foolish, unthinking "campaign finance reform" measures that he clearly does not understand; he has considered all opposition to his position to be personal and dishonorable, and has refused even to hear other views presented to him. He has engaged in regular name calling against those who disagree with him, not just me (for example, he has dubbed Democratic FEC Commissioner Ellen Weintraub "corrupt" and "an apparatchik" for failing to do his bidding at all times), even while he goes on the Tonight Show to preach political civility. He has been disingenuous - claiming to support a free, unregulated internet while supporting a lawsuit to regulate the internet.
Perhaps, to play amateur psychiatrist, the difference is that Senator McCain is confident that he behaved honorably in Vietnam, but not confident that he behaved honorably in the Keating 5 affair. If so, it is good that the Keating 5 affair was a wake-up call for him to be a better man, but it is unfortunate that he has so let it cloud his judgement, perspective, and personal relationships on questions of campaign finance and government ethics.
I see that Senators McCain and Obama have made up - which of these two talented, ambitious men benefits more from the photo op, I can't say. Perhaps there is some shrewdness in McCain's letter to Obama, appealing to Republican voters he will need in the 2008 primaries (I've noticed an instinctive dislike for Senator Obama in many Republicans - I do not share that dislike, but I've seen it in others). On the other hand, Senator McCain does have a vicious temper, and one often gets the sense that he needs a couple staffers with the guts to call him back and make him calm down. I am not thrilled at the thought of a man of Senator McCain's temperment and self-righteousness occupying the oval office, but there is a good chance that he will do so in 2009.
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Bottom-up Democracy, Fred Foldvary Style
One of the root problems with modern American democracy may be its sheer scale. Today the average congressional district has a population about 680,000. A century ago, that number was about 200,000. (Right Craig?) But it’s far from intuitive that doubling or trebling the size of the House of Representatives would lead to less rent seeking.
Fred has done a lot of work looking at small-scale efficient provision of public goods outside the usual parameters of centralized, or top-down federalized, government. In this paper, he sketches a bottom-up, "cellular" democratic government that has a flexible institutional structure designed: 1) to better take advantage of local, tacit knowledge, thus improving on standard preference aggregation problems in conventional democratic mechanisms; and 2) reduce inefficient rent seeking.
Start with very low population cells (less than 1,000) of “small neighborhood districts, each electing its own council… [T]he borders of the districts should be flexible, so that at the option of the members, the jurisdiction may be adjusted…” These so-called level-1 neighborhood councils group into bigger regions of level-2 governance, with about the same number of neighborhoods per region as council members per level-1. In turn, level-2 councils group into bigger regions, and elect level-3 councils with about the same number of representatives as in each of the level-2 councils. “The process is repeated until it reaches the highest level council, designated … as ‘level h.” Any level council may secede from the next higher level and join an alternative, with the exception of level h. Finally, all council members have elected alternates and can be recalled by petition & vote of the lower level councils (or in the case of level-1 recall, the level zero households). “Thus, each council, other than h and h-1, has an exit as well as a voice option.”
There is much more detail to the proposal, and if anything it provides for interesting reading and different thinking about standard problems. In the paper, Fred discusses the epistemic advantages—including a lesser need for campaign finance because every voter knows council members personally—and some implications for public finance. To me the biggest advantage is affording local groups the flexibility to experiment and converge to the optimal club size, a la Buchanan. Efficiency, come on down.
At the seminar this week, Fred generated a lot of discussion although he drew many skeptical questions about the tax base being subject to free riding. (I can think of lots of worse problems with our current tax system.)
Co-blogger Larry White is next on our colloquium schedule, presenting "Can economics rank slavery against freel labor in terms of efficiency." Very much looking forward to that.
Cupid, let your arrows go
It looks like confirmation of the nominations of Randy Kroszner and Kevin Warsh to the Federal Reserve System Board of Governors will be soon and brief. Reuters reports that a hearing will be held at 10 am on Valentine’s Day, and will also cover the nomination of Ed Lazear to chairmanship of the Council of Economic Advisers.
No word yet on whether C-SPAN will cover the hearing.
February 08, 2006
Rod Fort and I were mentioned in this Dallas Morning News story.
Censorship on the Internet
Censorship on the Internet is a growing concern, so much so that I wrote a paper on it a number of years ago that economists, sociologists, demographers, and political scientists had/have no desire to publish (burried amongst my working papers somewhere).
J-walk blog had an interesting comparison on the search term "tiananmen" on images.google.com versus images.google.cn.
In the spirit of his search, I went to both sites and searched the term "Craig Depken" and obtained 4,280 hits on google.cn and 23,800 hits on google.com (although I am shocked that I would have that many mentions on the net!).
I also tried the term "Division of Labor" and obtained 3,010,000 hits on google.com and 469,000 from google.cn.
Thus, the two searches yielded an 18% google.cn-to-google.com ratio for Depken and 15.5% google.cn-to-google.com ratio for the term DOL. It would prove interesting to know exactly what is not being included on Google.cn - although the two searches suggest that the "censorship" might be more broadbased than initially reported?
Nevertheless, the image search is an eye-opener. Here in the States the majority of the censorship efforts have been directed towards bomb-making instructions and dirty pictures, for the moment at least.
[Update: 2/8/2006 - From today's Chronicle of Higher Education:
The government of Thailand has blocked access in that country to the Web site of Yale University Press. The move is in response to the site's publicity material for The King Never Smiles: A Biography of Thailand's Bhumibol Adulyadej, a book in which the author criticizes the king of Thailand.]
February 07, 2006
McCain vs. Obama
It looks like Barack Obama will be joining co-blogger Brad Smith in John McCain's doghouse. An excerpt from McCain's snarky letter to Obama:
"I would like to apologize to you for assuming that your private assurances to me regarding your desire to cooperate in our efforts to negotiate bipartisan lobbying reform legislation were sincere. . . . "I'm embarrassed to admit that after all these years in politics I failed to interpret your previous assurances as typical rhetorical gloss . . . "I understand how important the opportunity to lead your party's effort to exploit this issue must seem to a freshman Senator, and I hold no hard feelings over your earlier disingenuousness."
Perhaps an instance of a broken watch getting the right time twice a day?
What is it about modern liberalism (not classical liberalism) that has made its adherents such boors?
At the Coretta Scott King funeral, with the President in attendance, Joseph Lowry has just gone off on "weapons of mass deception" and an attack on the President's politics. This has nothing to do with the President's policies. What ever happened to basic manners? Respect for dead?
February 06, 2006
Writers on the Take
Tom Giovanetti, President of the Institute for Policy Innovation, has a column up today at National Review Online which defends conservative and libertarian writers, including Doug Bandow and Peter Ferrera, for writing "pay for play" op-eds.
I agree. In fact, I find the flap a bit ridiculous. These columns were, after all, op-eds. The authors made no pretense to being impartial - that's what "opinion/editorial" means. I recently wrote a column for the Ripon Society magazine because they called me up and asked, "will you write a column arguing that McCain-Feingold has not been successful? We'll pay you X." I've written many times for USA Today - they always call up and ask, "We're running an editorial that says Y. We need an opposition column. Would you be interested in writing a column taking Position Z." And they pay me to do it. Would it really be different if someone else called me up and offered to pay me to write an editorial saying McCain-Feingold was a failure, and they would try to place it in a magazine or on the op-ed page of USA Today?
Giovanetti is right, I think. Bandow et al. were not posing as impartial researchers. And there is no evidence that they wrote anything they disagreed with. This is just another effort by the left to silence those on the right.
Incentives Matter--Chinese Scientific Research Edition
Five years ago China recruited Gavriel Salvendy, an American scientist from Purdue University, to set up a department of industrial engineering at Tsinghua University in Beijing. Salvendy didn't speak Chinese -- "not a word, apologies" -- but that didn't matter. In the department he created, 75 percent of the lectures and 100 percent of the textbooks are in English.
Tsinghua is China's top science university, and it had global ambitions even before Salvendy arrived. Professors were rewarded with $700 bonuses every time they published in an international journal, which they did slightly more than 800 times in 2001. Salvendy turbocharged this system by extending bonuses to graduate students. By offering a ridiculously small sum -- $125 -- he created a powerful incentive, because the standard pay for a research assistant at Tsinghua is around $60 a month. Pretty soon, students were churning out work that appeared as papers co-authored with professors. By 2005, Tsinghua's international-journal count had jumped eightfold.
Those are the first two paragraphs from Sebastian Mallaby's delightfully contrarian article on using a perceived threat from China as the basis for more government funding of science and math in the U.S. ATSRTWT.
Blame it on the courts?
From the Feb. 6, 1906 NYT:
COURT AT LAST DEFINES PRACTICE OF MEDICINE
Whew! Thank goodness we got that put down on paper.
Why did the government (specifically the court) have to specify a definition of medicine? It was evidently central to the case of one Madame Mee who advertised in a local paper:
Acute and chronic diseases cured. Madame Mee, 76 East 104th Street.
Evidently. Mme. Mee examined some "women agents," diagnosed their trouble as "nervousness" and administered message treatment as a curative measure. She charged $2 for her services, and was subsequently charged with "unlawful practice of medicine."
On the surface, this seems more like a rent-protection scheme on the part of the "real doctors" rather than a patient-health concern, although I realize there were instances of actual injury/death that came from early medical contraptions/practices. At least one justice dissented with Judge Green, declaring "that diagnosis and the regulation of the diet and finger-tip manipulation did not constitute practicing medicine."
Paul Krugman, MD--A Follow-up
Last week I took a swipe at Paul Krugman's desire for government to decide on the medical treatment that people receive. Hopefully Krugman will take a peek at his NYT colleague John Tierney's piece on the federal government's prosecution of docs who prescribe pain meds. An excerpt:
The Supreme Court agreed with her this week in upholding the Oregon law. In the majority opinion, Justice Anthony Kennedy said the federal drug law did not empower the attorney general "to define general standards of medical practice." It merely "bars doctors from using their prescription-writing powers as a means to engage in illicit drug dealing and trafficking as conventionally understood."
That's news to the D.E.A. and the federal prosecutors, who have gone way beyond any "conventionally understood" idea of drug trafficking. They've been prosecuting doctors for prescribing painkillers like OxyContin, even where there's no evidence of any of the drugs being resold on the streets. It doesn't matter that the doctor genuinely believed that the patient needed the drugs and was not abusing them. It doesn't matter that the patient was in pain.
No, doctors are now going to prison merely for prescribing more pain pills than the D.E.A. and prosecutors deem a "legitimate medical purpose." These drug warriors are not troubled by the enormous range in the level of pain medication that different patients need.
...a pain specialist might have a one-in-three chance of being investigated for prescribing opioids.
Faced with those odds, doctors are understandably afraid. As noted in The New England Journal of Medicine this month, the D.E.A. has made doctors reluctant to give opioids to desperately ill patients, even when these drugs are the most effective pain treatment. The article warned that a victory for the Bush administration in the Oregon case, besides affecting terminally ill patients in Oregon, could cause doctors across the country to "abandon patients and their families in their moment of greatest need."
$7.2B vs. $2.7T
The AP reports on the proposed federal budget for the next year. In what is becoming a little too predictable, the federal government's overall spending increases while the Repubs claim they are fiscally responsible and the Dems claim people will be dying in the streets if proposed spending cuts or reduced increases are not met. From today's Star-Telegram:
President Bush is sending Congress a $2.7 trillion spending plan that provides big increases for the military and homeland security but squeezes many other government programs in an effort to get soaring deficits under control....Even before the documents were released, Democrats were attacking the plan's call for $36 billion in Medicare cuts over five years. Senate Minority Leader Harry Reid, D-Nev., said that Bush's budget was "filled with pages of giveaways to special interests and cuts to those who can least afford it."
And giving free drugs and health care to those over 62 years old isn't a giveaway to a special interest? Arguing over $36 billion over five years, when the government plans to spend $2.7 TRILLION!?!?
The folks in Washington are fairly good politiicians, by definition, and therefore likely know how to spin the argument for their own benefit. Reid and his side can latch onto the supposed cuts in an entitlement program that seems, to this casual observer, more dangerous to my bank account than Social Security, and in the process terrify grandma and solidify votes.
But the $36B over five years is chump change compared to $2.7T. The politicians argue over the small stuff because it works at the ballot box. I suppose this is because most people find it easier to focus on the (gasp) cut to Medicare, which is unlikely to be a true cut in the end, and find in near impossible to contemplate 2.7 trillion of anything.
Summer Camp U
Arnold Kling compares going to college to going to summer camp. He's onto something. Bascially I think a lot of people go to college because it's a fun thing to do. And unlike summer camp, you can drink and have sex!
We college professor types like to debate what it is that we're doing here. It's obvious that 99% of our students don't give a damn about what we're teaching so why are they here? (For our own mental health we prefer not to ask ourselves why we're here.) Yes, yes, they want better jobs. There is certainly something to the signalling model that says we're here as an elaborate obstacle course to help employers separate the wheat from the chaf. But...
Ultimately I've concluded that colleges are all about selling an experience. Football in the fall; basektball in the winter; frats and sororities; bad food in the cafeteria, and even boring professors, are all part the image that people find appealing. Basically, they're buying idea of a college education. It's an identity thing. They want to say "I went to college at _______."
As an aside, this is one of the reasons why I'm not too concerned about distance education replacing me. Sitting at home staring at a computer screen or listening to a podcast doesn't offer the same kind of college experience.
February 05, 2006
Food for thought
Seven tips to financial independence? I think the Starbucks and high yield savings accounts are good ideas. The others suggest intertemporal utility comparisons, which I always think are as difficult as interpresonal utility comparison.
I suppose there are worse things you could do to save money.
Price as a rationing mechanism
It is a common mistake to assume that the world would be a wonderful place if the price of desirable things were zero. The popular website Craigslist (no relation, unfortunately) is going to begin charging money (gasp) for postings. Is this an evil capitalist plot to take advantage of market power? Nope. It seems the real reason for charging prices is to cut down on redundant postings (which of course are free at the moment).
From today's WaPo:
Starting March 1, a $10 fee will be imposed for listings in New York with hopes of deterring the brokers who list the same apartment several times in a single day, Craigslist Inc. chief executive Jim Buckmaster said. There are no plans to impose fees for real estate listings in other cities.
A pretty cool site with lots of free audio of the "greatest" speeches of the past 100 years. Just listening to Reagan's Challenger speech again after 20 years gives me chills.
Posted by Joshua Hall at 12:15 PM
I wish economists wrote more for newspapers...
Bill Harbaugh (University of Oregon) writes about natural resource depletion for the Eugene, Oregon Register Guard,
Here's a related problem that I give in class.
UPDATE: Here is why I wish economists would write less for newspapers. The very same economist writes,
What scares me is that with all the attention they are devoting to oil scarcity and the coming collapse of civilization, Eugene and its politicians are getting distracted from working on the many things that markets don't reliably deliver - such as health care access, affordable housing, transportation, good paying jobs and education - and which we rely on good government to help provide.
Huh? I wonder what grade 50% gets in his class?
February 04, 2006
With “property-rights-friendly” policies like these, who needs eminent domain?
In a recent issue of Privatization Watch (vol. 29, no. 5, 2005; sorry, no online version), published by the Reason Foundation, Samuel R. Staley, Reason’s director of urban and land use policy, lists the following “tools” among “property-rights-friendly approaches to redevelopment”:
“Upgrading roads, sewers, public transit and other infrastructure;”
“Implementing zoning regulations that restrict land uses to certain types and densities;”
“Employing tax rates, tax abatements, and tax incentives to promote certain types of development; ”
“Encouraging private-sector development of specific types of projects through incentive zoning;”
“Offering loans, grants, and direct subsidies to developers and builders”.
Restrictive zoning is property-rights-friendly? Using the tax code to promote government-favored land uses over others? Milking taxpayers to upgrade public transit or give developers grants and susidies? Gee, that’s not how libertarians at Reason used to think about property rights …
C.S.I. c. 1906
In the Feb. 5, 1906 NYT it is reported that Sgt. Joseph A Furot, who had been sent to Europe by NYC police commissoiner McAdoo, had returned from his journey a convert to the finger printing system that had been adopted by Scotland Yard.
Said Mr. Furot:
in his opinion, the finger print system was about as near pefection as was possible, and that there was no limit to its scientific application.
Wouldn't Mr. Furot be surprised with our technological advancements of today.
On church fires c. 1906
The church fires in Alabama are disturbing. The Feb. 4, 1906 NYT contained an article describing the threatened burning of a Long Island church. The pastor of that church had an interesting response to the threats (of which Dr. Coase might have approved?)
Threats made against Bethel African Methodist Episcopal Church of Huntington, L.I., by certain persons of that place have drawn from the Rev. Albert Long, its pastor, a statement.
Such a transaction would have been odd, to say the least, but would have avoided destruction and dead weight loss. One reason markets are so much better than violence and anarchy - voluntary transfer of property rights ensures that both parties in the transaction are made better off.
An example of "Markets in Everything" ?
February 03, 2006
Ethanol, Science, and Religion
An excerpt from the transcript of a discussion between NPR reporter Martin Kaste and Berkeley engineering prof Tad Patzek (the conversatin aired on NPR yesterday--no link; transcript via Lex/Nex):
KASTE: Although he goes by Tad in the U.S., his real name is Tadosh(ph). The name honors an 18th century Polish general who fought valiant battles in a losing war against an overwhelming Russian army. The name suits Patzek's penchant for lost causes, especially his effort to get the ethanol industry to accept certain calculations he's made.
Prof. PATZEK: About a tenth more fossil fuel is required to produce ethanol than the energy you get.
KASTE: That's right. He's saying it takes more fossil fuel to make corn ethanol than the energy that comes out. It's a disturbing claim, given that ethanol is being sold as a way to get this country off foreign oil. In his controversial equations, Patzek tries to count all the fossil fuels burned in the making of corn ethanol: the mechanized farming, the petroleum based fertilizers, the drying and cooking of the corn in the ethanol plants. All told, he says, more goes in than comes out, and that has earned him some hate mail.
Prof. PATZEK: If I get an e-mail that the best way to solve energy problem would be to burn people like me, that actually comes from a guy who probably drives a bio-diesel car.
KASTE: Patzek is often accused of being a shill for big oil, even though it's been more than a decade since his last job in the industry, and the fact that he's in favor of cutting oil use as much as possible. His calmer critics, and there are many, say he's too broad in what he counts. For example, why should he count the energy that it takes to build the farmer's tractors? Patzek counterattacks with new data from Illinois showing that in real life, corn does not yield as much ethanol as its advocates claim. What started as a classroom exercise now has Patzek traveling around the country, taking part in debates, and testifying against new ethanol plants.
Often issues of science and religion are framed as benighted fundamentalists against noble scientists. But check out this bit of enviro worship from the same NPR story:
Mr. NEIL KOEHLER (CEO, Pacific Ethanol): We know that what we're doing is the right thing to be doing; it's the right thing for the economy. But it sure would be great if everybody could agree that what's happening here is the correct way to be moving and that we can continue to not confuse the public, but get them to demand more of the kind of things that we're bringing to the market.
The Leviathan (Ohio Edition)
The following is a list of the state boards and commissions that license various occupations.
Accountancy Board of Ohio
Paul Krugman, MD
Thankfully most of Paul Krugman's scribblings are now kept behind the NYT firewall. Last weekend's RNT, however, reprinted a rant on health care; some excerpts:
Yet health reform is a job for the public sector, which already pays most of the bills directly or indirectly and sooner or later will have to make key decisions about medical treatment. ...
So if costs are to be controlled, someone has to act as referee on doctors' medical decisions. During the 1990s it seemed, briefly, as if private HMOs could play that role. But then there was a public backlash. ...
Moreover, it's neither fair nor realistic to expect ordinary citizens to have enough medical expertise to make life-or-death decisions about their own treatment. ...
So cost-sharing [translation: health savings accounts], like HMOs, is a detour from real health care reform. Eventually, we'll have to accept the fact that there's no magic in the private sector, and that health care--including the decision about what treatment is provided--is a public responsibility.
So, now, all in favor of Hillary Clinton, Tom DeLay, and their ilk deciding on your medical care please stand up. While I might not always make the wisest possible choices of treatment, I'd rather risk my making a mistake than having my treatment determined by a pack of politicians.
BTW, dictionary.com defines fascist as "a reactionary or dictatorial person." Krugman, who advocates having people's medical care dictated to them by government authorities, seems to fit this description. Perhaps dictionary.com can add his photo next to the definition.
Projects on the Prairie
John Miller argues (in the 1/27 WSJ) that a lack of private property rights is a much more serious impediment to Indian prosperity than any misdeeds of Jack Abramoff. An excerpt (note the echoes of DeSoto toward the end):
Although Indians once were able to obtain title to specific parcels within reservations, this practice ended in 1934--an act that essentially turned the reservations into not-so-little housing projects on the prairie.
The main problem with Indian reservations isn't, as some argue, that they were established on worthless tracts of grassland. Consider the case of Buffalo County, S.D., which Census data reveal to be America's poorest county. Some 2,000 people live there. More than 30% of the homes are headed by women without husbands. The median household income is less than $13,000. The unemployment rate is sky high.
Just to the east of Buffalo County lies Jerauld County, which is similar in size and population. Yet only 6% of its homes are headed by women without husbands, the median household income is more than $30,000, and the unemployment rate hovers around 3%. The fundamental difference between these two counties is that the Crow Creek Indian Reservation occupies much of Buffalo County. The place is a pocket of poverty in a land of plenty.
Maybe we should give land back to the rez-dwellers, so that they may own private property the way other Americans do. Currently, the inability to put up land as collateral for personal mortgages and loans is a major obstacle to economic development. This problem is complicated by the fact that not all reservations have adopted uniform commercial codes or created court systems that are independent branches of tribal government--the sorts of devices and institutions that give confidence to investors who might have the means to fund the small businesses that are the engines of rural economies.
February 02, 2006
I never thought I'd be doing this, but for those interested in eminent domain issues, you might want to check out the next to last segment of the Hannity and Colmes show tonight (currently 8:55pm Central time).
The two discuss some terrible behavior on the part of the Detroit Stadium authority, essentially ignoring court ordered compensation and, in at least one case, dragging out full payment to an erstwhile landowner for more than nine years.
I truly hope this type of behavior doesn't take place here in Arlington. According to the Ft. Worth paper from a couple of weeks ago, there is one residential holdout here in Arlington. She owns four acres of land with two houses on it, the land has been in the family for a couple of generations (although that has no impact on property value, of course) and the county appraises the property at $360,000.
Wait a second. She has four acres of land in the middle of the 49th largest city in the country where there are 360,000 people in 100 square miles, and the land is worth less than $90k per acre? Perhaps, now that all the land around hers has been purchased for the stadium, her land has little residual value. I haven't seen her exact property, but the neighborhood is well treed and, while a little tired perhaps, was not unsalvagable. I just can't believe her property would be worth so little. Nevertheless, if the county has appraised her property at such low a low value for years, then she has been paying less in property tax.
Those poor telegraph operators
The end of the telegraph was announced yesterday. Creative destruction took 145 years to have its ultimate effect on the friendly (and all too often not so friendly) telegram.
Where is the outrage?
What? We can't hear you
An owner of Apple Computer Inc.'s iPod music player filed a federal lawsuit against the computer maker, claiming the device causes hearing loss in people who use it.
Damn. My kick-butt 1GB mp3 player (which runs for 10 hours or so on 1 AAA battery) was made by some "company" in Japan, but I couldn't tell you which one as I purchased it for $120 on e-bay two years ago.
Alas, in the Age of the Lawyer, strategic purchasing, embodied in the act of paying more for a lower quality product that, after all, is made by a deep-pocket Fortune 500 company, might actually make sense if the ability to sue is deemed necessary.
Just a minor point
There is a lot of hub-bub about the record profits of Exxon-Mobil, and the Congress is likely to try to impose some form of "wind fall" profits tax.
However, the company that exists today is the result OF A MERGER OF TWO FIRMS - Exxon and Mobil!!! (There were likely more firms involved but I haven't had time to look it up.)
My point is that the "record profits" is really a combination of the profits of what used to be two different firms. There might be some additional profits the combined firm is able to earn, granted, but the "record profits" are not coming from reduced competition caused by the merger. Rather, the record profits are obtained by adding what would have been the profits of Exxon to what would have been the profits of Mobil.
If the two firms hadn't merged, would there be as much "concern" over profits in the oil industry? I bet there would be fewer "most profits of all time, world is coming to an end" stories.
I bet there are a lot of industries where the aggregate profits (even of the top three or four firms) are at an all time high. If Congress passes a windfall profit tax against two firms that were "allowed" by the Federal government to merge, will anyone see the irony?
Perhaps an unintended/underappreciated potential cost to merging?
The status of the whipping post c. 1906
Back in December I pointed out that in 1905 Pennsylvania Representative Adams wanted to institute the lash and whipping post for those found guilty of domestic violence, what the NYT termed "wife beaters." At the time, Pres. Roosevelt evidently gave the idea his full suport.
The 1905 version of the bill died a quiet death but this evidently did not dissuade the honorable Mr. Adams. The Feb. 2, 1906 NYT reports that Mr. Adams had successfully moved his "whipping post" bill out of committee and to the House for a vote, and the story mentions that the President was still on board. The bill would provide the whipping post as the punishment for "wife beating," but would pertain only to the District of Columbia.
I suspect that the bill did not pass, however the rhetoric surrounding the vote must have been interesting.
I hope this fosters some similar posts. We got our course evaluations back today from the Fall semester, and I received the following response to the question "What did you dislike and/or value least about this course and why?" (italics added):
"I did not like how there wasn't a whole lot of reviewing material. We were sometimes expected to know the information."
This one is going up on the fridge. As my office neighbor asked me, "Sometimes? What about the other times?"
Why the EEOC should be abolished...
The Chronicle of Higher Education reports,
Colleges and other employers that advertise job openings only online may be violating federal antidiscrimination laws, according to a letter issued by the U.S. Equal Employment Opportunity Commission...The letter, which was released after a Freedom of Information Act request, says online recruiting and hiring may violate antidiscrimination laws in two general ways: if the job searches have a disparate impact on different groups and if the searches require job seekers to disclose certain information to potential employers."
I'm @$%^&* speechless.
February 01, 2006
Jonathan Wilde on the CLW
An impressive contemplation of Libertarianism's rather lint-filled navel.
Elections are won with money, and money is given in return for favors of special privilege - the exact opposite of libertarian policy prescriptions. It’s not a contradiction that a country with so many people who define themselves as “socially liberal and fiscally conservative” has no libertarians in major political offices. That isn’t to say that I don’t appreciate the efforts of libertarians to enact political change. I just hope they realize the magnitude of the odds stacked against us in the political arena....
The belief that liberty has to be respected for it’s own sake (libertarian morality) for people to prefer it. Liberty merely has to be in people’s self-interests. Not everyone finds the moral argument against taxation convincing, but make it easy and profitable to evade taxes, and nearly everyone will take advantage of it.
I'm not so sure about that second one. Yikes.
The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith
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