Division of Labour: June 2006 Archives
June 30, 2006
The Dilemma of School Finance Reform

I have just received notice that my paper "The Dilemma of School Finance Reform," will be forthcoming in The Journal of Social, Political, and Economic Studies. Here is the abstract:

In many states school finance litigation has mandated the centralization of education funding in an attempt to improve educational adequacy. This study uses data on Ohio school districts to investigate the factors affecting school district performance and finds few aggregate variables that state education policymakers can change to improve student performance. I argue that this presents a dilemma for state policymakers under judicial order to improve educational opportunity through increased financing. Given the constraints imposed by the judiciary, the superior knowledge of local officials suggests that state policymakers should give local school district officials autonomy to craft local solutions.

Posted by Joshua Hall at 12:44 PM in Economics

June 29, 2006
Hire education

Two education related stories on CNN.com today. The first includes two supposedly unrelated points in the very first paragraph:

A draft report released Monday by a national commission on higher education calls for more federal money to help low-income students attend college, and places much of the blame for rising prices on the inefficiencies of colleges themselves.

It couldn't be that colleges charge more because they perceive that their customers' incomes have risen as a result of receiving more federal money through financial aid, and thus feel little pressure to be more efficient. Not that I'm denying higher education's supreme ability at engaging in inefficient production.

The draft also calls for states to require public universities to measure what students learn, and recommends several surveys and standardized tests that some colleges have begun using.

I don't know how many of you at AACSB schools have had to adapt to the Assurance of Learning standards, but from my perspective it has just seemed like busywork.

The second and more interesting story discusses teachers who buy and sell their original work online, a la Ebay. When you spend hours and hours making those perfect PowerPoint slides, with the shifting curves and animated text, don't you think other lazy professors might be more willing to pay for those slides than to spend the time to make them themselves? Wouldn't the quality of all instruction improve? Certainly, the availability of good presentations would improve if the author could be paid over a situation where good presentations are made available for free. Heck, if I could sell my slides for P>$0 instead of P=$0 then I would be richer and more students would be exposed to them, including the slides where I discuss Adam Smith's argument that it is not out of charity that producers produce but out of their own self interest, and that we're all better off as a result.

It might be interesting to compare the price of tuition for a class with the price that professor could receive for the material he uses in the class. Compare price of the slides with the number of students signing up for a class. Is it worth spending hours to make pretty presentations?

BTW, there are currently no economics materials on the site. Let the price gouging begin!

Posted by Tim Shaughnessy at 12:55 PM in Economics

Observations on the minimum wage debate

There's been a lively minimum wage debate this week over at Cafe Hayek. Long entries with tons of comments.

Best argument either pro or con, IMHO:

You're [Don Boudreaux] right, of course. What you might have added is that supporters of minimum wages themselves are selective readers of Card and Krueger. They say (p280 in my copy of of Myth and Measurement) that the impact of minimum wages upon poverty is "statistically undetectable."
Does any advocate of minimum wages really believe they are a better way of reducing poverty than a basic income or negative income tax?

The strength of the Law of Demand comes from its strictness, embodied in the familiar phrase "ceteris paribus". For example, the perennial exception to the LoD that gets trotted out is the (largely hypothetical) Giffen Good. This is a good where raising the price increases consumption because it crowds better goods out of one's budget. Giffen Goods are NOT actually an exception to the LoD because they violate ceteris paribus in that the individual's income has changed. (Note that this is a pet argument of mine and not the consensus view.)

I find it beneficial to sort through all the arguments again every time Congress considers increasing the minimum wage. Personally I think the debate has shifted away from whether MW helps/hurts the poor. If it hurts (which it almost certainly does on net), the magnitude is fairly small and there are lots of compensating factors/opportunities in this dynamic economy. Rather, the debate is now whether economic theory still has bite for policy analysis. If interventionists can chip away at the law of demand on this point, that opens up a lot of doors (e.g., progressive taxation, safety regulation, you name it). Personally I oppose MW more on natural rights and slippery slope arguments than on harm to unskilled labor. But it's like my dissertation advisor used to say with a grin. "Ed, if we don't defend homo economicus, who will?"

One more observation. A well known counterpoint to the law of demand is price as an indicator of quality. I find it pretty interesting that Tyler Cowen not only eschews evidentiary arguments against MW, but also predicts the main effect of MW is on job quality.

If minimum wages go up, I expect some mix of two scenarios:
1. The employer restores the previous net wage by worsening working conditions.
2. The employer upgrades the quality of job and thus marginal products, to meet the new level of minimum wage.

That is all. I'm off to Burger King.

Posted by Edward J. Lopez at 11:30 AM in Economics  ·  Comments (0)

Should I say good-bye to my pre-run bagel?
Bonking is, of course, slang for running out of energy during exercise. It usually happens when the working muscles run low on glycogen, which is the body's limiting fuel source for sustained activity.

Bonking is something you'd never want to do on purpose. Or would you?

Believe it or not, one highly respected exercise scientist has suggested that it may be beneficial to bonk regularly in training.


Posted by Robert Lawson at 11:15 AM in Science

Say it ain't so: Harry's Toast

Professor Bainbridge makes a good case that Harry Potter is a goner in the 7th and final book.

Indeed, most great stories end with the world being redeemed by the hero followed by the death or departure of the hero. Moonglum's sacrificial death to allow Elric to blow the Horn of Fate followed, of course, by Elric's own death. Frodo's departure to the Undying Lands. Anakin Skywalker's redemptive death.

I might add King Arthur to the list.

I have been saying for some time that Harry's undoing is going to come at the hands of his best friend, Ron. (Think Lancelot.) Ron's increasing jealousy of Harry's fame and especially his money is going to get the best of him. It may even be unintentional but something Ron does (probably for money) is going to be Harry's ultimate undoing. In the end Ron will be a hero as he realizes the error of his ways. Or I could be wrong. :-)

I know I'll cry when (ok, if) Harry dies.

Posted by Robert Lawson at 09:39 AM in Culture

Adam Smith in USA Today
One overlooked "founder" offers enduring answers: Adam Smith. Smith published the Wealth of Nations in 1776, the same year the Continental Congress declared American independence. By the time of the Constitutional Convention 11 years later, his ideas had been incorporated into the thinking of the new nation's leaders.


Posted by Robert Lawson at 08:35 AM in Economics

June 28, 2006
Light blogging

I'm off to San Diego for the Western Economic Association meetings. Light blogging for me over the weekend.

I will catch up on the NYT c. 1906 when I return.

Also on my to-do list is a comparison of 1905-1906 and 2005-2006. Some issues that pop to mind:

2005-2006: Gas price increases
1905-1906: Ice price increases

2005-2006: Hurricane Katrina hits New Orleans
1905-1906: Earthquake destroys much of San Francisco

2005-2006: Abrahmhoff scandal
1905-1906: Bribery scandals in many states and Congress

2005-2006: Japan halts U.S. beef exports over concerns of BSE
1905-1906: Europe halts U.S. meat exports over concerns of tainted meat.

2005-2006: Teachers call for smaller class size and more money.
1905-1906: Teachers call for smaller class size and more money.

2005-2006: Terrorist attacks abound but not in the United States.
1905-1906: Terrorist attacks abound but not in the United States.

2005-2006: Republican President tries to tackle immigration reform.
1905-1906: Republican President tries to tackle immigration reform.

2005-2006: Congress passes hasty legislation to fix perceived problems.
1905-1906: Congress passes hasty legislation to fix perceived problems.

What does it all mean? I have a hunch, but more when I get back.

Posted by Craig Depken at 11:20 PM in Misc.

An interesting idea c. 1906

From the June 28, 1906 NYT:

After the meeting of the Board of Governors of the Stock Exchange yesterday the following notice was sent out on the ticker..."In accordance with the amended State law the tax on sales of stocks is now 2 cents on each share, irrespective of the par value."

A flat-tax rather than capital gains tax on stocks is an interesting proposal.

In real terms, the two cents in 1906 is approximately $0.43 in 2005 dollars. Let's round that up to $0.50. If there were a fifty cent per share flat-tax on shares sold rather than a capital gains tax, what would be the impact on the market?

As for tax revenue, yesterday's NYSE volume was 2,278,454,000 shares and yesterday's NASDAQ volume was 1,750,934,000. Four billion shares from just these two exchanges at $0.50 per share would yield $2B a day to the government for doing nothing. [Is there a more disgusting name for a tax than the "capital gain tax"?]

Would a flat tax for equities ever get off the ground?

Posted by Craig Depken at 12:57 PM in Economics  ·  Comments (2)

Fiscal Competition and Tax Instrument Choice

I have just put the finishing touches on another working paper: Fiscal Competition and Tax Instrument Choice: The Role of Income Inequality.

The abstract:

School districts in Ohio have the choice of two tax instruments with which to raise revenue: the property tax and a residence-based income tax. Economic theory predicts that local governments, if given the choice, would prefer to diversify their tax base to reduce the political costs associated with excessive reliance on one tax. Why then, do some school districts not utilize the income tax? This paper extends earlier work on this issue by showing that income inequality is negatively associated with the choice of an income tax.

Posted by Joshua Hall at 09:14 AM in Economics

June 27, 2006
Updated working paper

A heavy revision of a paper that made the rounds last year is now available here.

Multiproduct Pricing in Major League Baseball: An Empirical Analysis Using Principal Components


Darren P. Grant

The empirical analysis of multiproduct pricing suffers from a lack of clear theoretical guidance and appropriate data. These limitations often render traditional regression-based analyses impractical. This paper analyzes ticket, parking, and concession pricing in Major League Baseball for the period 1991-2003 using a principal components methodology. This approach allows inferences to be formed about the factors underlying price variation without strong theoretical guidance or abundant information about costs and demand. The most important factor is general demand shifts, which explain about half of overall price variation. Also important are price interactions that derive from demand interrelationships between goods or the desire to maximize the capture of consumer surplus in the presence of heterogenous demand. The principal components methodology can effectively reveal the economic forces underpinning pricing in a multiproduct context using data on prices alone.

Posted by Craig Depken at 04:46 PM in Economics

Obesity concerns c. 1906

A display ad from the June 27, 1906 NYT:

Posted by Craig Depken at 03:41 PM in Misc.

Learning by doing c. 1906

From the June 27, 1906 NYT:

[T]he article...calls to my mind the bad results following the introduction of the system [of turnstiles] in the stations of the Illinois Central Railroad in Chicago.

Two or more persons were injured, particularly women, nearly every day by running against the bars and being caught by them. This, I believe, was the cause of many suits being filed against the Illinois Central Company.

There is nothing more dangerous than this turnstile method of entrance and exit where the public is to be dealt with. I have seen persons very badly injured by those now in use at some of the stations of the elevated road.

Isn't running against the bars and being caught by them the purpose of the turnstile? And why point out that women were particularly prone to being injured by the complicated system of controlled access?

Evidently in 1906, the term "turnstile jumping" would not have been used.

A Google search of the term "turnstile injury" yielded one (1) hit. Perhaps after 100 years we have learned how to use the turnstile in a safe and orderly fashion?

Posted by Craig Depken at 03:39 PM in Misc.

From ABBA to Zeppelin, Led: Using Music to Teach Introductory Economics

Bob Lawson and I have a new economic education working paper available. It is called "From ABBA to Zeppelin, Led: Using Music to Teach Introductory Economics." It can be downloaded from my website here.

The abstract:

A quick look around any university campus will see students walking to and from class listening to music on headphones. This paper describes a writing assignment designed to harness student interest in music to improve economic understanding and reasoning. In the assignment, students are given the lyrics to a song and asked to respond to a series of questions focusing on the economics contained within the song. Five song examples are given together with several student responses.

Posted by Joshua Hall at 12:34 PM in Economics

Congratulations to Santiago Pinto

I am fortunate in so many ways. I have great friends, a loving family, an an intellectually stimulating environment.

One of the ways in which I am fortunate is the quality of the faculty here at West Virginia. When I decided to come to West Virginia, I did so because of Russ Sobel. The quality of the other faculty did not enter my decision-making process. Yet ten classes must be taken in order to take the one graduate course that Russ teaches. It was not clear to me at the beginning that I would make it see Russ's class or how beneficial my experience would be should I make it.

Fortunately for me, the graduate faculty here at West Virginia are excellent teachers. I certainly do not consider myself to be a "macro" guy, but after taking Ron Balver's Macro Theory 1 I feel like I really understand macroeconomics and it is no wonder that our graduates tend to be good teachers of introductory and intermediate macro given that they have all taken his class.

The best graduate faculty member, in my opinion, at West Virginia University is Santiago Pinto. He teaches Math Econ, Dynamic Methods, Micro II, and Graduate Urban. The quality of his teaching in Math Econ was extremely beneficial to me after being away from school so long. With a lesser teacher, I am afraid I would not be typing this today. His careful and detailed explanation of the basic monocentric model in Graduate Urban gave me a newfound appreciation for the usefulness of model building. In addition he is an excellent scholar with a recent publication in the Journal of Public Economics and a couple others in the Journal of Urban Economics. In my opinion his recent receipt of the College of Business and Economics' Outstanding Teacher Award is well-deserved.

Posted by Joshua Hall at 12:31 PM in Personal

June 26, 2006
On World Cup Discipline

With all the hub-bub about the 2 Red Cards for the U.S. team and the overall number of cards that are being presented in this year's tournament, I gathered data from the 2002 and 2006 World Cups and estimated a little instrumental variables model.

The main dependent variable is the number of Red Cards (total) each team received during the tournament finals. There are more matches in the data for the 2002 Cup, so I control for that with a dummy variable. I model the number of red cards as being a linear combination of the number of team yellow cards, the number of matches played, a 2006 dummy varaible and dummy variable for whether the team is from the host country.

Yellow Cards and Red Cards are related to each other by some underlying physicality of play - on the part of the particular team of focus and its opponents. While it is possible for a direct Red Card to be issued, often the Red Cards stem from previous Yellow Cards.

I therefore consider Yellow Cards as an endogenous regressor and model Yellow Cards as being a function of the number of fouls a team commits and the number of fouls committed against a team. It is expected that the more fouls committed, the more Yellow Cards issued. I contend that the impact of Fouls Suffered is ambiguous (although colleague Dennis Wilson suggests the impact should be positive).

Here are STATA results of the two-stage regression. The first stage suggests that the more fouls committed, the more yellow cards issued. In fact, on average over the two tournaments there was one Yellow Card issued for every 5.5 fouls committed, ceteris paribus. A couple of interesting results from the first stage regression: the host team receives 4 fewer Yellow Cards over the course of their participation in the tournament and the more fouls committed against a team the fewer Yellow Cards issued to the victim team, ceteris paribus. This suggests (to me) that referees might let the victim exact some revenge on the pitch without punishing the victim for their redress.

. ivreg2 reds (yellows =foulscomit foulssuff match06) matches yr06 hc, r first

First-stage regressions

First-stage regression of yellows:

OLS regression with robust standard errors

                                                      Number of obs =       64
                                                      F(  6,    57) =    12.35
                                                      Prob > F      =   0.0000
Total (centered) SS     =   846.359375                Centered R2   =   0.5672
Total (uncentered) SS   =         5799                Uncentered R2 =   0.9368
Residual SS             =  366.2885346                Root MSE      =    2.535

             |               Robust
     yellows |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
     matches |   .0851108   1.004385     0.08   0.933    -1.926136    2.096357
        yr06 |   2.726882   4.007503     0.68   0.499    -5.298004    10.75177
          hc |   -4.63538   1.161479    -3.99   0.000    -6.961201   -2.309558
  foulscomit |   .1837463   .0298394     6.16   0.000     .1239939    .2434988
 foulssuffer |  -.0605243   .0319657    -1.89   0.063    -.1245345     .003486
     match06 |  -.1744405   1.222848    -0.14   0.887    -2.623151     2.27427
       _cons |  -.5548464    1.78105    -0.31   0.757    -4.121337    3.011644
Partial R-squared of excluded instruments:   0.3870
Test of excluded instruments:
  F(  3,    57) =    13.76
  Prob > F      =   0.0000

The next set of output is basically a battery of tests to determine a) whether there is an endogeneity problem and b) whether the instruments selected, namely the fouls committed and fouls suffered, are good instruments (i.e., they are independent of the shocks to Red Cards). On the surface, one wonders if the number of fouls committed or suffered would be independent of Red Cards. However, the statistical tests suggest they are - there is more to be done here.

Then comes the good stuff. The instrumental variable regression suggests the following. Based on the 2002 and 2006 World Cups, there is one Red Card issued for approximately every 12-13 Yellow Cards. There also seems to be a little home cooking for the host team above and beyond what consideration the team gets from the Yellow Cards issued.

IV (2SLS) regression with robust standard errors

                                                      Number of obs =       64
                                                      F(  4,    59) =     5.86
                                                      Prob > F      =   0.0005
Total (centered) SS     =           33                Centered R2   =   0.2031
Total (uncentered) SS   =           58                Uncentered R2 =   0.5466
Residual SS             =  26.29657278                Root MSE      =     .641

             |               Robust
        reds |      Coef.   Std. Err.      z    P>|z|     [95% Conf. Interval]
     yellows |    .079954   .0378841     2.11   0.035     .0057027    .1542054
     matches |  -.0317426   .1084575    -0.29   0.770    -.2443155    .1808302
        yr06 |   .0989152   .1865216     0.53   0.596    -.2666604    .4644908
          hc |  -.5537637   .2174461    -2.55   0.011    -.9799503   -.1275771
       _cons |   .0132214   .3341736     0.04   0.968    -.6417467    .6681896
Anderson canon. corr. LR statistic (identification/IV relevance test):  31.320
                                                   Chi-sq(3) P-val =    0.0000
Hansen J statistic (overidentification test of all instruments):         2.849
                                                   Chi-sq(2) P-val =    0.2406
Instrumented:         yellows
Included instruments: matches yr06 hc
Excluded instruments: foulscomit foulssuffer match06

The Hansen J-statistic is a test for whether the instruments are jointly independent from the Red Cards error term. Fancy talk for whether these instruments can be considered exogneous. The test supports the applicability of the instruments (although I mention that there is more to be done here).

What I found interesting is that the U.S. team received 2 Red Cards on 5 Yellow Cards. Given the estimation results, the U.S. should have received 0.39 Red Cards (round down to zero) and yet received two. Was there bias against the U.S.? Hard to tell without more data. From these two tournaments (2002 and 2006), the 95% confidence interval of the number of Yellow Cards per Red Card is [0.89, 24.12], centered on 12.5. Therefore, this evidence suggests that the U.S. experience was within the 95% confidence interval, but right on the lower bound. My gut tells me there is still statistical bias in the estimation results, and therefore the confidence interval is a bit too high. This would suggest that the U.S. was likely not discriminated against.

Some might quibble with the linear regression model, versus a count data or some other non-linear specification. I plead guilty, but the qualitative results are likely to hold [fingers crossed!!]. With a little time, I might come back with some additional results from non-linear estimation.

[STATA data file]
Posted by Craig Depken at 06:12 PM in Sports

No you can't; yes you can...

A group calling itself SmokeFreeOhio is circulating petitions to get a statewide ballot initiative to ban smoking in public places:

We believe that everyone has the right to breathe clean indoor air in public places and workplaces including offices, factories, restaurants, bars, and bowling alleys. All workers and patrons in public places deserve protection.

Smoke Less Ohio is also collecting signatures for its own more limited ban:

Smoke Less Ohio is a coalition of hospitality businesses and organizations that are committed to supporting a common sense smoking policy for all of Ohio. The Smoke Less Ohio proposal would ban smoking in public places, but make limited exemptions for venues like bars, bowling alleys, bingo halls etc.

Wouldn't it be funny if they both passed?

Meanwhile, libertarians await the constitutional amendment saying we have a right to be free from meddlesome interferences from the state. Oh wait, we already have that.

Posted by Robert Lawson at 04:29 PM

Vintage Milton Friedman Video

Courtesy of Google Video: Milton Friedman video from about 30 years ago.

Posted by Robert Lawson at 03:59 PM in Economics

NYT editorial page c. 1906

At one time the NYT was a champion of individual liberty. Try this editorial from the June 26, 1906:

When those employed in any profession, trade, or calling through their accredited representatives make the rules and regulations under which they are willing to work no other authority should be recognized.

This Great Truth seems to be the leading plank in the political platform of the Abraham Lincoln Democratic League. It might be more tersely put, thus: "It takes one to make a bargain."

Posted by Craig Depken at 11:50 AM in Culture

Tax Foundation Report on Ohio's Tax Burden
In 1971, Ohio lawmakers voted to impose a tax on the income of all individuals and corporations in Ohio. When the votes were cast, Ohio was a low-tax state. But the course set by lawmakers in 1971 would radically transform Ohio into a high-tax state over the next 35 years.


Posted by Robert Lawson at 10:29 AM in Economics

June 24, 2006
"Serious Study: Immaturity Levels Rising"

That's the headline of this story, which I found irresistible. Money excerpt:

Specifically, it seems a growing number of people are retaining the behaviors and attitudes associated with youth.

As a consequence, many older people simply never achieve mental adulthood, according to a leading expert on evolutionary psychiatry.

Among scientists, the phenomenon is called psychological neoteny.


While the human mind responds to new information over the course of any individual’s lifetime, Charlton [the study's author] argues that past physical environments were more stable and allowed for a state of psychological maturity. In hunter-gatherer societies, that maturity was probably achieved during a person’s late teens or early twenties, he said.

“By contrast, many modern adults fail to attain this maturity, and such failure is common and indeed characteristic of highly educated and, on the whole, effective and socially valuable people," he said.

"People such as academics, teachers, scientists and many other professionals are often strikingly immature outside of their strictly specialist competence in the sense of being unpredictable, unbalanced in priorities, and tending to overreact.”

I'd read the study itself, but I'm going out to play now.

Posted by Edward J. Lopez at 01:42 PM in Culture

The Gentle Cynic c. 1906

The June 24, 1906 NYT reports the "Musings of the Gentle Cynic"

  • Oratory is merely talk with a frock coat on.
  • If at first you don't succeed, do it over; but don't overdo it.
  • What's the good of a cookbook when it doesn't tell how to keep a cook?
  • The choir may sing "Peace on Earth," but that doesn't mean peace in the choir.
  • A girl's first proposal always convinces her that it will be necessary to establish a waiting list.
  • It's a poor fool that can't be worked both ways.
  • The fellow who falls in love at first sight deserves another look.
  • Putting up a sign "Post no bills" won't keep them from coming through the mails.
  • God created the first woman, but the devil was hanging around and stole the pattern.
  • Some men are born great, some shrink, and other never find out how small they really are.
  • A plain duty is naturally the most unattractive.
  • It is a poor shoe that can't keep body and sole together.
  • He who cuts off his nose to spite his face can't very well blow about it.
  • Don't look for trouble unless you know what to do when you find it.
  • The higher education often demonstrates that the more we know the less we believe.
Posted by Craig Depken at 01:30 PM in Culture

Weathering Corruption

A great new paper by my colleagues Pete Leeson and Russ Sobel, Weathering Corruption.

The abstract:

Could bad weather be responsible for U.S. corruption? Natural disasters create
resource windfalls in the states they strike by triggering federally-provided natural disaster relief. Like windfalls created by the natural resource curse and foreign aid, disaster relief windfalls may also increase corruption. We investigate this hypothesis by exploring the e¤ect of FEMA-provided disaster relief on public corruption. The results support our hypothesis. Each additional $1 per capita in average annual FEMA relief increases corruption nearly 2.5 percent in the average state. Eliminating FEMA disaster relief would reduce corruption more than 20 percent in the average state. Our findings suggest that notoriously corrupt regions of the United States, such as the Gulf Coast, are notoriously corrupt because natural disasters frequently strike them. They attract more disaster relief making them more corrupt.

Posted by Joshua Hall at 09:50 AM

June 23, 2006
Like Ice Cube Said, "Today It Was A Good Day"

Found out two nice things today:

1. Futurama is coming back.

2. I passed my field comps and am now a Ph.D. candidate.

That is all.

Posted by Joshua Hall at 07:32 PM in Misc.

More Evidence Against Sporting Events as (Economic) Stimuli

From Reuters:

BERLIN (Reuters) - The hordes of beer-swilling men who have descended on Germany for the World Cup are proving a disappointment for the host nation's sex workers, preferring to party in public rather than spend time with prostitutes.

While some larger red-light establishments in host cities have seen their cash tills ringing, a lot of prostitutes say the anticipated boost for Germany's liberal sex industry has failed to materialize.

"The pent-up sexual demand of horny fans from around the world which has been widely anticipated has not materialized at all," said Karolina Leppert, president of Germany's association for sexual service providers BSD.

"Business is pretty dead, even the regulars stay away because of all the crowds and the hype," said Leppert, who has been working as a dominatrix in Berlin for eight years.

That last paragraph provides a new wrinkle to Phil Porter's finding that sporting events have a displacement effect.

Posted by E. Frank Stephenson at 04:53 PM in Sports

Minimum Wage vs. Free Trade

From the comments on Greg Mankiw's post on Paul Krugman and the minimum wage:

It is interesting to compare the debate over the minimum wage to that over free trade.

Free trade produces winners and losers and economist as a group are in favor of free trade because they believe the benefits outweigh the cost.

The minimum wage produces winners and losers. But as a group economist oppose the minimum wage because it causes some to lose.
But the debate completely ignores the posibility that their are also winners from a rise in the minimum wage.

Looks to me like their is a massive bias in the analysis.

Nice try but here are two ways, one libertarian the other utilitarian, to explain the difference:

1. Minimum wage laws are a restraint of individual liberty (to contract at a mutually agreeable price) whereas free trade laws do not restrain people's freedom to contract with whomever they please under whatever terms are mutually agreeable.

2. Using economic tools such as consumer surplus, it can be shown that minimum wage laws are negative sum whereas free trade is positive sum. That is, losers in minimum wage laws lose more than winners gain (the wage increase that some folks receive is a pure transfer from employers but there are lost gains from trade resulting from fewer people being employed) whereas winners in free trade gain more than losers lose.

Posted by E. Frank Stephenson at 02:41 PM in Economics

On Weather c. 1906

From the June 23, 1906 NYT:

AUGUSTA, Ga - A special from Athens says during a hail storm in Clark (sic) and Oconee Counties great damage was done. In some places the hail fell to a level of fourteen inches. Pine trees for miles were stripped of their foliage.

In Clark (sic) county the storm was about 2 mile wide and seven miles long. In Oconee it was two miles wide and ten miles long. Corn, cotton, and other crops in the path of the storm were totally destroyed.

If such a storm happened today - 14 inches!?! - would this be used as more "evidence" of global warming, the variability of the weather, and how humans are to blame?

If all that is needed to "prove" the downside of global warming is weather variablity, then all those folks should come to Texas - as they say here "if you don't like the weather, wait ten minutes."

My biggest problem with the whole debate is that the global warming issue and what to do about it is simply too easy for totalitarians and totalitarians-in-training to hijack.

Posted by Craig Depken at 12:30 PM in Science

Kelo One Year Later: Part 5

Last in the series here. A few predictions.

1. Local governments will further loop hole "public purpose". Some will try to expand public use to encompass asthetic and ideological preferences of a majority. Some majorities will seize on mere speculation of public purpose. Wicksell and Buchanan will not be forgotten.

2. The dominoe of state laws will run its course, ostensibly to restrict eminent domain. Some will have real teeth. Others will be "consciously designed to placate voters without effecting any meaningful change".

3. Tension will mount between local governments' eminent domain powers and states' statutory limitations. A sufficiently interesting and difficult set of facts (like this one?) will emerge from that tension, landing a case in federal court within a few years. Good arguments that it's not a federal matter will continue to be ignored, like this one by Stephan Kinsella, or this one by Ilya Somin.

4. Eminent domain abuse will never go away.

5. The U.S. will never win the World Cup. Brazil will beat Argentina in this year's final.

Posted by Edward J. Lopez at 12:19 PM  ·  Comments (0)

A Leftist's Dilemma

Lefties like to invoke children as their rationale for statist policy. (A Lex/Nex search of "Clinton" and "for the children" was stopped because it would return more than 1,000 results.) Lefties also like universal childcare. A new NBER working paper must therefore cause great conflict in lefty hearts; it finds:

We carefully analyze the impacts of Quebec’s “$5 per day childcare” program on childcare utilization, labor supply, and child (and parent) outcomes in two parent families. We find strong evidence of a shift into new childcare use, although approximately one third of the newly reported use appears to come from women who previously worked and had informal arrangements. ... Finally, we uncover striking evidence that children are worse off in a variety of behavioral and health dimensions, ranging from aggression to motor-social skills to illness. Our analysis also suggests that the new childcare program led to more hostile, less consistent parenting, worse parental health, and lower-quality parental relationships.

A non-technical summary of the paper is here.

Posted by E. Frank Stephenson at 12:00 PM in Misc.

Right Diagnosis, Wrong Cure

In the recent Senate debate on increasing the minimum wage, Senator Kennedy sputtered:

"Thirty thousand dollars we've increased our salaries, and nine years, we've refused to provide an increase [in the minimum wage] to the men and women who are working on the lowest rung of the economic ladder. That is obscene."

He's right, but not about the need to increase the minimum wage. It is indeed obscene that Kennedy and his senatorial colleagues are running off with another $30k of taxpayer dollars. So I say cut Senate pay; don't increase the minimum wage.

Greg Mankiw, whose relatively new blog is high on my reading list, has some "convincingly" good fun with Clinton hack Gene Sperling's take on the minimum wage. He also quotes Krugman on the minimum wage's job-killing effects.

Posted by E. Frank Stephenson at 11:34 AM in Politics

Incentives Matter--Doctor Pay Edition

From yesterday's NYT:

[T]he decline in doctors' inflation-adjusted incomes appears to be affecting the types of medicine they choose to practice and the way they practice it — resulting in fewer primary care doctors and a tendency to order more revenue-generating diagnostic tests and procedures.

Primary care doctors, who are already among the lowest-paid physicians, had the steepest decline in their inflation-adjusted earnings — a 10 percent drop — according to the report by the Center for Studying Health System Change, a nonprofit research group in Washington.

The average reported net income for a primary care physician in 2003 was $146,405, according to the study, after expenses like malpractice insurance but before taxes. The highest-paid doctors were surgeons who specialize in areas like orthopedics, who had an average net income of $271,652, nearly double what the primary care doctors said they earned.

Doctors, he said, are reacting to the financial incentives under the current payment system by choosing to specialize and work in fields where they can increase their income by providing more services, like diagnostic tests or procedures ...

The current Medicare payment system, for example, rewards physicians for entering fields like cardiology or gastroenterology in which they can perform a procedure or do a test. Doctors like psychiatrists or primary care physicians, who spend their time evaluating or diagnosing patients, do not have as many of those options for generating additional revenue.

"Physicians have responded to the stagnant fees by producing more visits as well as more procedures," said Mr. Ginsburg.

More here on NPR.

Posted by E. Frank Stephenson at 10:53 AM in Economics

Mohican 100

Big time congrats to my two running friends, Rita Barnes and Jeff Schmidt, who ran the Mohican 100 (yes miles!) last weekend. Rita finished in 27:10 (third female) and Jeff in 28:27.

Posted by Robert Lawson at 10:36 AM in Sports

June 22, 2006
"Our capital account surplus"

Alan Reynolds takes on what, to my thinking, is the most worthless or misleading economic statistic--the trade deficit.

Posted by E. Frank Stephenson at 02:34 PM in Economics

More IHS Seminar Follow Up

1. In one of my IHS seminar talks, I made a brief reference to Karl Marx. Here's more courtesy of Walter Williams and takes by Tyler Cowen and Brad DeLong.

2. I've just come across the World Bank's Private Sector Development blog--it has gobs of material similar to my institutions and growth talk. And, as I mentioned near the end of my talk, Economic Freedom of the World project (run by my co-blogger Bob Lawson and his mentor Jim Gwartney) is another great source of info on institutions.

3. After one of my talks there was a question about population growth and scarce resources. Julian Simon addresses those issues in The Ultimate Resource II.

ADDENDUM: Two more follow up items.

1. Here's an article on India's growth over the past 15 years.

2. One of the questions posed after my third lecture was about how one might measure corruption. The International Country Risk Guide publishes a measure of corruption (here but it requires payment); I think it is based on surveys of people living or doing business in each country. Co-blogger Craig Depken has a couple of papers here and here on the effects of corruption on credit markets.

Posted by E. Frank Stephenson at 01:18 PM in Economics

Best jobs in America

College professor is #2. Here is the list and lots of other fun stuff, from Money and Salary.com. Now I gotta get back to work. Heh heh. Yeah right!

Posted by Edward J. Lopez at 12:44 PM in Culture

Buffalo's rampage on drugs

What a success story, this war on drugs thing.

Posted by Edward J. Lopez at 12:25 PM in Economics

Kelo One Year Later: Part 4

It remains to be seen whether Kelo and the resulting backlash will result in a net strenthening or weakening of eminent domain powers. Less than half the 44 states considering restrictions on eminent domain have figured out their approaches. (See part 2 and part 3 of this little series). But again, the property rights push created by the Kelo backlash seems to have legs. It's spilled over into regulatory takings as well, as Reason's Leonard Gilroy writes in a nice op-ed.

Eminent domain becomes politicized under a broad public use standard. This, of course, creates rent seeking oportunities between developers, policymakers, and bureaucrats, which means inappropriate uses of eminent domain. Hercules, California, is the most intriguing example of this. After Kelo, critics groaned about the corporate welfare effect. Indeed, Wal-Mart, Costco and other big box retailers have a sketchy history of getting cities to threaten and use eminent domain on their behalf. Why wouldn't Kelo mean even more of the same? Hercules, however, turned the tables. Wal-Mart bought the land, but the city said 'we're not that kinda people' and seized it. So eminent domain can cut the corporate welfare pie, but it can also empower central planners to pursue anti-growth visions. On a majority vote of a city council, eminent domain can be used for any purpose. That's too much power.

Economic development doesn't need eminent domain. The Castle Coalition compiles some good examples here. See also Randy Holcombe and Sam Staley's 2001 book, Smarter Growth, and the 2002 Independent Institute book, The Voluntary City. You can find plenty more where these came from.

So with a ban on development takings, we avoid rent seeking and smart-growth waste without loss of growth (unless you really want to argue hold outs are a major problem). We're also making sure not to rely on politicians' promises to self-limit the power they have (as I discussed yesterday).

It's now up to state statutes and courts to limit that power. Georgia seems to have it right with the law that took effect there in April. It narrowly defines "public use" and "blight," adds procedural costs to a local government wanting to use eminent domain, and, most importantly, prohibits development takings. A different approach is to make government pay more, like Kansas' law requiring double the average assessed value in compensation. Kudos to the Reason Foundation's model statutory language, which has had an impact. As for the state courts, Michigan overturned Poletown two years ago, and Ohio's high court has the chance to do something similar this fall with Norwood v. Horney.

Like I said, it's still too early to see how far the pendulum will swing, but it's seemingly got a lot of momentum. Taking eminent domain out of economic development. That's a good thing. The U.S. going down in the World Cup. Not so much good.


Posted by Edward J. Lopez at 12:21 PM in Economics  ·  Comments (0)

June 21, 2006
An Argument in FAVOR of Killing the Estate Tax

From a letter to the NYT (scroll down) by an Atlanta financial planner:

As a financial adviser, I spend much of my time helping clients decide how to handle their estate tax liability....

It's not that hard to structure an estate to avoid the tax. That's what the thousands of accountants, lawyers and financial planners do.

From my perspective, the estate tax is purely optional. So repeal is unnecessary except for the uninformed, the unfocused or those people who are unwilling to pay their financial planning team a little more to make the tax go away or be reduced.

I owe someone a hat tip on this one, but I don't remember where I saw it.

ADDENDUM: Speaking of the estate tax, here's Aeon Skoble's Freeman article on Bill Gates, Sr. and Warren Buffett's support of the tax.

Posted by E. Frank Stephenson at 04:06 PM in Misc.  ·  Comments (1)

How the Government Spends Your Money

Testimony presented to the house committee on Homeland Security yesterday revealed that Fema paid housing assistance to people who had never lived in a hurricane-damaged property - including at least 1,000 prison inmates - and made payments to people who were living in free hotel rooms. In one instance it paid out on a property damage claim from a cemetery in New Orleans - to a person who had never lived in the city. In another it paid compensation for a vacant lot.

"Fema paid over $20,000 to an inmate who used a post office box as his damaged property," Gregory Kutz, the GAO's director of audits, told the committee.

During the audit investigators filed their own bogus claims and used other undercover methods to discover that most of the improper payments occurred because Fema failed to verify the identity of those making claims, or to confirm their addresses.

In the largest instance of abuse by an individual, Fema made 26 payments to someone who submitted claims for damaged property at 13 different addresses in Louisiana, Mississippi, and Alabama, using 13 different social security numbers. Only one of the social security numbers was valid, and a search of property records revealed that the individual had never lived at any of the 13 addresses. In addition, only eight of the addresses actually existed.

Fema also paid rental assistance to people who were already enjoying luxurious hotel accommodation - footing an $8,000 hotel bill in Hawaii for someone who simultaneously received $2,358 in rental assistance.

Fema debit cards also turned out to be an easy mark for those bent on fraud. Among some of the charges the GAO found unnecessary to satisfy legitimate disaster needs were $3,700 on a diamond watch, earrings and ring, a one-week all inclusive holiday in the Dominican Republic, $200 of Dom Perignon champagne, fireworks, $1,000 for a Houston divorce lawyer, and a considerable amount for adult erotica.

Story here--better take your blood pressure pills before reading it. I also bet little has changed in "The Land of 10,770 Empty FEMA Trailers."

Posted by E. Frank Stephenson at 03:54 PM in Misc.

Teaching Economics to Fifth Graders

Article here. In my classes here at Berry and in my IHS lectures, I have used a trading exercise like the first one in the article. I think I might try lessons 3 and 4 in the upcoming semester. With a little thought, it's probably possible to modify lesson 3 (the one about savings) to show the harmful effects of taxation or insecure property rights.

HT: Wilson Mixon

Posted by E. Frank Stephenson at 03:42 PM in Economics

Cartoon on the Profit Motive, Competition, and Entrepreneurship

Aeon Skoble points the way to a cartoon with lots of nifty economics. The cartoon does seem a bit too happy about taxes but at least it's clear that wealth (and the resulting ability to pay taxes) is created by the private sector.

Posted by E. Frank Stephenson at 02:45 PM in Economics

Kelo One Year Later: Part 3

Kelo may have given the green light for economic develoment takings, and lots of local governments may have stomped on the gas, as I blogged yesterday.

But an opposing force is the spotlight and backlash effect, which is constraining policymakers. After Kelo, even the hint of eminent domain for economic development drew media attention, creating policymaker fear of negative publicity and voter unease. Developers relying on eminent domain also face declining goodwill and possibly greater legal costs since property owners are more educated about eminent domain and have a broader support network.

Thus, it should be no surprise to see many local officials shying away from, and even pledging never to use, eminent domain except as a last resort. Of course, they have always made the last resort promise, but places like San Jose, CA, and Riviera Beach, FL, are taking great pains to really, really promise.

It is also no surprise to see state legislatures acting strongly on eminent domain. With this much exposure on a topic that has become so sensitive, voters are unlikely to have memory problems come time for re-election bids.

Here's a current breakdown of the state laws, courtesy of the National Conference of State Legislatures. As of June 15, 2006, eminent domain measures have been considered in 43 of the 44 states whose legislatures have convened. Bills have passed in 27 state legislatures, and have been enacted in 18 of those, vetoed in three others, and await governors’ signatures in the rest.

Most of the legislation restricts eminent domain for economic development takings, with exceptions like transferring property to common carriers (Kansas) or public utilities (Maine). Many of the laws attempt to more carefully define public use or purpose as not strictly economic development (Minnesota), and others sharpen meanings of blight to mean detriment to public health and safety (Alabama). Also, most of these laws feature procedural changes such as requiring approval by the local government’s oversight body (Utah), greater than fair market value for residential takings (Indiana), and more public notice (West Virginia). In Connecticut, which is working to reconcile House and Senate bills, lawmakers there intend for whatever law passes to be retroactive and therefore stop the New London project.

If the spotlight and backlash effects outweigh the green-light effect, such that land-use policymakers end up with lesser eminent domain powers, this will result in better land use decisions. That will be the topic for tomorrow's post.

Posted by Edward J. Lopez at 12:07 PM in Economics  ·  Comments (2)

Markets in Everything--$100 Hamburger Edition

A hundred bucks might buy you more than six dozen burgers from McDonald's, but the the swanky Old Homestead Steakhouse will sell you one brawny beef sandwich for the same price.

Boca Raton Mayor Steven Abrams could barely speak between bites as he devoured the 20-ounce, $100 hamburger billed as the "beluga caviar of sandwiches."

The burger debuted Tuesday at the restaurant in the Boca Raton Resort and Club, where a membership costs $40,000 and an additional $3,600 a year.

At about 5 1/2 inches across and 2 1/2 inches thick, the mound of meat is comprised of beef from three continents — American prime beef, Japanese Kobe and Argentine cattle.

Full story here. Maybe the eminences on Capitol Hill who know the right price for everything should order an FTC investigation of price gouging. HT to MR for the markets in everything concept.

Posted by E. Frank Stephenson at 10:16 AM in Economics

June 20, 2006
Internalizing spillovers

Chocolate maker Nestlé plans to acquire diet food maker Jenny Craig. Seeming irony duly noted here.

Will this acquisition dampen or amplify the variance of Nestlé's profits? You might think that chocolate bars and Jenny Craig are either-or. But doesn't an increase in chocolate sales promote (with a short lag) an increase in diet food sales?

Posted by Lawrence H. White at 03:22 PM in Economics

CADPI sighting in Dallas

My working paper with Dennis Coates concerning the net tax effects of hosting mega-events, mentioned below, was picked up by the local ABC affiliate. While the news article puts a different spin on our results than we initially intended, I suppose any press is good press.

Text and video here. Apologies to my coauthor if I butchered things.

My wife says I look older in the video, one colleague said I look heavier, and another suggested that I am starting to sound like a Texan. Perhaps all three are correct?

I am perplexed about the mayor's comment at the end of the story: "he's [the mayor] not worried about the study because the stadium has already spurred an economic growth."


Posted by Craig Depken at 11:52 AM in Economics

Kelo One Year Later: Part 2

Kelo has had two profound effects on land-use policymaker incentives. First, the Court has given the green light on economic development takings, so long as there is a development plan with a democratic process governing the decisionmaking (these are not real constraints because they amount to reporting requirements that are easy to meet--or, more appropriately, very difficult to show not being met). So the decision encourages local policymakers to do more central planning. This has serious knowledge and incentive problems that bring about inappropriate and abusive use of eminent domain.

A few examples of post-Kelo boldness:

1. In Hercules, CA, the city council on May 23, 2006, unanimously voted to seize property acquired by Wal-Mart, in order to prevent the retail giant from opening a store in town.

2. In Yolo County, CA, the government has claimed eminent domain on a 17,300 acre ranch whose current rightful owners plan to develop small segments while conserving the rest. The city has no plans for the large tract, but wants to preserve it and retain the water and mineral rights.

3. In Riviera Beach, FL, the mayor bent the state's open meetings law to rush a deal with the city's master developer, in which the city promises to use eminent domain on properties whose owners refuse to sell. The rush was to sign the contract before Florida's governor could sign legislation restricting eminent domain for economic development. Riviera Beach signed their deal a day before the governor signed the legislation.

4. In Los Angeles, the city has condemned dozens of business properties around the famous intersection of Hollywood and Vine streets to allow a private developer to build a luxury "W" hotel, condos, retail and restaurants. The city’s redevelopment agency said developing the area is impossible without eminent domain.

5. In New Jersey, a state whose high court has yet to rule on economic development takings, the Department of Transportation has seized 17 acres of working farmland from Harvestone Farms, a 154-acre patchwork of fields in a traditional NJ farming region. The state needs the farm land to offset loss of wetlands because of road construction over 50 miles away in Sussex County.

6. In March 2006, Long Beach, California began condemnation procedures on the Filipino Baptist Fellowship to allow developers to construct condominiums. The building was labeled blighted so the property could be taken by eminent domain.

7. In Sand Springs, OK, the predominantly black Centenial Baptist Church is on property that private developers have earmarked for big box. At the government's price, the church cannot afford to relocate. What's curious is the use of eminent domain to acquire the church property when there is plenty of land on which to develop and nearby chain stores that do generate tax revenue are not being targeted.

8. Daytona Beach, FL, was given permission by the Florida circuit court to acquire three beach front properties to make way for a retail complex. The city attorney stated that the Kelo decision was a factor in the case because it allows for cities to take private land.

9. One week after Kelo, Oakland officials evicted a tire shop and adjacent auto repair shop, whose owners had been resisting eminent domain, to pave the way for a new housing high rise. “The city thinks I cause ‘economic blight’ because I don't produce enough tax revenue,”' the tire shop owner said. “We thought we’d win, but the Supreme Court took away my last chance.” The auto shop owner added, “the cost of buying or leasing a new site is prohibitive. The money the city offered me does not cover it.”

10. In Memphis, city planners see a river front development plan ripe for eminent domain. The head of the redevelopment agency remarked, “[Kelo] definitely gives the city more tools in its tool box for dealing with the legal issues surrounding that piece of property.”

Kelo's second order effect is the spotlight and backlash, which will be the topic of my post tomorrow.


Posted by Edward J. Lopez at 11:39 AM in Economics  ·  Comments (3)

Lack of endowment at U of C c. 1906

From the June 20, 1906 NYT:

The University of Chicago to-day lost five members of its Faculty, who resigned, it is said, because of the lack of sufficient funds to guarantee their salaries.

The professors are I. Thorstein Veblin of the Chair of Political Economy, Oliver J. Thatcher, Medical History; Alexis Carrol, and C.C. Guthrie of the medical department, and Charles A. Houston of the history department.

One hundred years later, the U of C has an endowment of approximately $3.6 billion.

[Aside: How is Veblin/Veblen's name actually spelled? Perhaps the NYT has a typo? In Google, "thorstein veblin" yields 480 hits whereas "thorstein veblen" yields 274,000. I am assuming that the Thorstein Veblin refered to is who wrote Theory of the Leisure Class.]

Posted by Craig Depken at 10:14 AM in Misc.

Open Letter on Immigration

The Indpendent Institute's Open Letter on Immigration (authored by MRs Alex Tabarrok) has been signed by 500+ American economists and other scholars (including 5 DoLers: Frank, Mike M, Larry, Ed, and me) , including five Nobel Laureates, plus more than 40 scholars from other countries.

Media release for the Open Letter.

The Open Letter, followed by the complete list of signatories:

Posted by Robert Lawson at 07:26 AM in Economics

June 19, 2006
Also back from an IHS seminar

Like co-blogger Frank, I spent last week as a lecturer at an IHS student seminar. But I was a “guest lecturer,” giving only one talk (“Instead of Central Banking”). Except for the cafeteria food I couldn’t eat (I’m supposed to be on a low-salt diet, and they served pizza every day), it was great fun to interact with enthusiastic students and fellow faculty (Neera Badhwar, Steve Horwitz, Mario Villarreal, Craig Yurish, David Mayer, guest lecturer David Kelley). The students included one from Capital U. whose blog used to be on our blogroll.

The seminar was at Bryn Mawr College, just outside Philadelphia, where the big story last week was the hubbub over a sign at a local cheesesteak parlor, Geno’s Steaks. The sign reads: “This is America. When ordering, please speak English.” The city’s Human Relations Commission has filed a formal complaint over the sign’s offensiveness – story here. Paradox: if a patron can’t speak English, how can he be offended by the sign?

Next week I'm off to Zurich, to give a week's worth of lectures at the invitation of the Swiss National Bank. It just goes to prove that central banks have more money to spend than they know what to do with -- no doubt because they print the stuff. Which will be one of my lecture topics.

Posted by Lawrence H. White at 11:16 PM in Misc.

Kelo one year later: Part 1

Do you remember where you were a year ago? Ah, the summer of '05. CNOOC wanted Unocal, the gas pump wanted an arm and a leg, Hollywood wanted bigger box office numbers......and SCOTUS wanted your house.

Actually, the Supreme Court didn't really want to take your house. It just didn't want to prevent state/local governments from forcibly buying your home and turning it over to folks who might create jobs or tax revenue with it. Either way, the Kelo v. New London case struck a cord with the man on the street, and property rights quickly became the most controversial issue of the 2004-05 SCOTUS term (even more so than medical marijuana, P2P, or the 10 Commandments).

The criticism came from all sides. Almost every major newspaper in the country ran editorials disagreeing with the decision (except the New York Times, which loves eminent domain). Even the Washington Post called it "quite unjust."

Andrew Sullivan said “Is this an unfree country or what?” Will Collier for Vodkapundit.com wrote, “property rights have ceased to exist in the US,” and Tibor Machan lamented, “individual rights are legally dead.” Tyler Cowen simply summed it up with “this is just awful.”

The Institute for Justice said Kelo opened the floodgates.

Perhaps the biggest chicken little claims came from the Kelo minority. Justice O'Connor's dissent argued that the 5-4 majority opinion effectively deleted the words "for public use" from the Fifth Amendment. In his dissent, Justice Thomas characterized Kelo as releasing a “boundless use of the eminent domain power.”

One year later, we know that the sky hasn't fallen. While the decision itself profoundly broadened the authority of land-use policymakers, it also shined the spotlight on takings cases everywhere and unleashed a popular backlash. In response, almost every state legislature has considered limiting eminent domain for economic development, and so far such laws have passed in 18 states.

So is Kelo the end of private property? Or do the spotlight and backlash effects outweigh the floodgate effect? If so then the discussion takes on a profoundly ironic twist. Could Kelo be the best thing that ever happened to property owners?

This question is the subject of a new paper I've co-authored with one of my graduate students, Sasha Tota. We survey developing events at the state and local levels since Kelo, and discover that the spotlight/backlash effects seem to be winning out so far. The decision turns 1 year old on Friday. I'll blog the rest of the week to tackle this question piece by piece, and by Friday I'll post my outlook for property rights and eminent domain. Comments...?

Posted by Edward J. Lopez at 02:52 PM in Economics  ·  Comments (4)

New working papers

Two new working papers roll off the line, each will be presented at the upcoming Western Economic Association meetings. Those in SD can see me in action in session #067 on July 1 8:15AM. I post the abstracts here and the papers can be downloaded from my research page. Comments are always appreciated, but I note that both papers are about 75% completed.

Mega-Events: Is the Texas-Baylor game to Waco what the Super Bowl is to Houston?

with Dennis Coates

This paper analyzes the total sales and sales tax revenue impacts on host communities of a variety of professional and collegiate sporting events. Using monthly data describing 126 jurisdictions in Texas from January, 1990 through April of 2006, the analysis finds that regular season games in the NBA, NFL, NHL, and MLB have widely disparate effects. IN the NBA and NFL, regular season games are net losers of revenue, whereas NHL and MLB games generate additional revenue. Collegiate regular season football games are revenue generators for small cities and towns home to Division IA and Division IAA football, but cities that are home to teams from the old Southwest Conference or the new Big 12 conference do not gain revenues from home contests. Moreover, hosting an NCAA post-season bowl game is not a net tax revenue generator. Finally, the Super Bowl generated over $2 million in tax revenues for Houston, by far the largest revenue boost of any of the events in our data. Given the estimated amount of money Houston spent hosting the event, it seems the Super Bowl might have provided a net gain to the city treasury.

The Impact of Stadium Announcements on Residential Property Values: Evidence from a Natural Experiment in Dallas-Fort Worth

with Carolyn Dehring and Mike Ward

We investigate the impact of a potential new sports venue on residential property values, focusing on two sets of announcements in 2004 during the National Football League's Dallas Cowboys search for a new host city in the Dallas-Fort Worth area. We find that residential property values near a proposed new stadium in Fair Park in downtown Dallas increased, consistent with the hypothesis that these residents are the most likely to reap an amenity benefit. At the same time, property values fell throughout Dallas county which would have paid for the proposed stadium. These patterns reversed when the stadium proposal was abandoned. Subsequently, three announcements, each of which increased the certainty that Arlington would partially fund the construction of a new stadium, all had a deleterious effect on residential property values in Arlington. In aggregate, these effects corresponded to an approximate 1.5\% decline in average property values in Arlington relative to the surrounding area. This decline is almost equal to the anticipated household sales tax burden, suggesting that the average amenity effect of hosting the Cowboys in Arlington is not significantly different from zero.

Posted by Craig Depken at 12:35 PM in Economics

The Searchable Bard

Google duplicates the Project Guttenberg with a site dedicated to Shakespeare.

Posted by Craig Depken at 12:04 PM in Culture

Back from IHS

I spent the past week teaching an IHS seminar at Princeton. It was the fourth year I've taught for IHS. Although previous seminars went well, I think this year was the best of the four I've done. Some thoughts on the week:

1. We had a great group of students, including at least one DOL reader. One is a writer for capitalistchicks.com. Another is co-blogger Brad Smith's daughter; she posed some great questions and, not surprisingly, advocated for freedom of political speech. There were two Swedish students who are strong advocates of liberty and strong critics of their country's social welfare nanny state. Their country needs more people like them because it is now running a 15% unemployment rate and "rotting from within."

2. In one of my lectures, I discussed the work of Hernando de Soto and other thinkers on the importance of favorable institutions for economic growth. Here's a bit about de Soto on NPR (HT Wilson Mixon); a great example of the kind of growth killing regulations I included in my talk is this story about it taking nearly 20 years of legal wrangling for a firm in India to fire a worker who slept on the job.

3. In one of his lectures, historian Rob McDonald had an example of bootleggers and Baptists. He argued that the early 19th century ban on slave importation was supported by both northern abolitionists (Baptists) and southern slaveholders (bootleggers b/c they thought their existing slaves would become more valuable). Here's another example of bootleggers and Baptists (scroll down to the section labeled "Suffer the Little Children"; HT Wilson Mixon).

4. In our closing session on Friday, there was a question about income inequality. The Economist has an article on the topic; I've only skimmed it so I may not agree with all of it. (HT: Wilson, of course.)

5. In the Q&A after one of my lectures, I was asked which "Monopoly" piece I would be. I still don't have a good answer--I think I was often the horse with rider when I played the game as a child, but there was no good reason such as Adam Smith used to like riding horses. Russ Roberts has a fun post on the lousy economics of the game (thanks to Bryan Caplan for the reminder).

6. One question I didn't have time to answer after one of my talks is whether I think prosperity equals happiness. I don't (at least not once one gets above some sort of subsistence level of prosperity), but I think prosperity and happiness both arise from human freedom. More details here.

7. It was good to see my former students Sam Bulow, who now lives in Princeton, and Mini-Me, who has recently received a nifty promotion.

Thanks again to the students and IHS staffers who made last week a great experience. As always, I'm honored to work alongside great instructors like Rob McDonald, Elizabeth Hull, Howie Baetjer, and Aeon Skoble.

Posted by E. Frank Stephenson at 10:53 AM in Economics

On workman's comp c. 1906

From the June 18, 1906 NYT:

The [man] had the job of poking his head through a hole at the end of a short target range, and submitting to a bombardment of baseballs by any one who chose to pay 5 cents for three throws. He was supposed to dodge the balls. This feature of the circus proved popular, and few persons visited the circus without taking a try at the dusky animated mark. The [man] had a sort of head protector for the more sensitive parts of his cranium, but on one occasion, when a particularly husky young man threw a ball with great speed, the protector slipped and the [man] received a blow that laid him out and sent him to the hospital tent for treatment. He was so badly hurt that he resigned the job, and that part of the circus was discontinued.

There were rumors that the man had died of his injuries, but that had not been confirmed. The custodians of the Bayonne Hospital, for which the circus was held, wonder if they will be liable for the man's injuries.

Posted by Craig Depken at 12:04 AM in Culture

June 16, 2006
On the price of baseball c. 1906

This is from the June 16, 1906 NYT:

BASEBALL, POLO GROUNDS TO-DAY 3:30 PM Giants, Champions, vs. St. Louis. Adm. 50c.

From EH.net, fifty cents in 1906 is approximately $10.81 in 2005 CPI adjusted dollars.

The point? In 2004, the average per-game season ticket prices for Major League Baseball cost $19.82. That doesn't seem too bad of a price increase over the course of one hundred years.

Posted by Craig Depken at 03:33 PM in Sports

Judge Alex Kozinski: Hot Libertarian?

The July print edition of Reason interviews (no link yet) Alex Kozinski, federal judge on the 9th Circuit Court of Appeals. Reason argues that a series of famous dissents from both liberal and conservative majorities "has earned him a reputation as one of the most libertarian judges in the country." Yet Kozinski argues for broad state powers and attenuated individual rights in many situations, especially where there is a security threat. The interview is far reaching and a good read. I was particularly drawn to the dialogue on Kelo v. New London.

Reason: What did you think of the Supreme Court's ruling in Kelo...?

Kozinski: I was really surprised by all the uproar over Kelo. I just can't imagine how it could have come out any other way.

Reason: You don't see a problem with government dispossessing people--

Kozinski: They were paid for it. They were not dispossessed.

Reason: But they didn't want to be moved. They didn't want to be paid off. You don't see a problem with government taking away private property, not for a public use like building roads, but for other private uses?

Kozinski: What's the difference between taking property for public roads or anything else? Do only public automobiles travel on public roads? I don't understand why it's a problem. If the government thinks the city will benefit by having a road there instead of having your house so that people can drive their private cars on it, then it has to make that decision. Who owns the road really doesn't matter. What matters is that it makes it easier for other people to get from point A to point B using their private vehicles for private purposes. You could say "but it's my house and my private purpose is more important than your private purpose." But we live in a society.
When you have people living in such close proximity, someone has to decide the question of whether you get to use your house for your purposes or whether other people use it to drive to work or other people use it to run a business, and it is not completely up to you. You are objecting to Kelo because property was taken for privately owned businesses. But the businesses provide services to lots of people. so if the city thinks there should be a private business instead of a private house, it has to make that decision. If you want to decide on your own, you can go live in a forest.

Reason: And you're comfortable with government making the decisions in the way that it does?

Kozinski: I don't see who else could make them. Would you rather have courts make those decisions? The Constitution clearly says that the government can use its eminent domain power to take away property.

Reason: Is there any limit to when and how the government can take property?

Kozinski: It has to pay for it. And it has to go through the normal process of government to make a decision and follow the due process.

Elsewhere in the interview Judge Kozinski says he was influenced by Milton Friedman and Adam Smith while studying economics as a UCLA undergraduate. One could search a long time for that influence in Kozinski's Kelo argument, which seems to wholly ignore the price system as a rationing device. If a society would be better off with a business on the site of your house, then it's the job of that business to come pay you for your property. (I believe that's how Milton Friedman might put it.) Kozinski seems to think the only entity capable of paying someone for their property is the government, and then only because the framers included just compensation in the 5th Amendment.

A few more notes:
1. Property may not flow to its highest valued uses through private transactions when the seller has a very high sale price. As Richard Posner argues, land heterogeneity and reloaction costs can cause owners to have a high "idiosyncratic value," which may exceed developers' willingness to pay even though they have a better use for the land. In practice, however, there often exist sufficient gains from exchange that owners can get the market value of their home (qua home) multiplied several times over. Here are a series of examples in one town embroiled in the eminent domain issue.

2. There is also the well-worn hold out problem. See the incomparable Bruce Benson, arguing in The Independent Review that even roads do not necessarily justify eminent domain, even in the presence of a hold out problem.

3. Here is SC Justice Thomas arguing that "The Takings Clause is a prohibition, not a grant of power."

4. Actually the residents in the Kelo case, Susette Kelo and others, are still in their homes in Fort Trumbull, CT. Due to legal wranglings and forthcoming state legislation, they will likely get to stay.

5. As for Kelo itself, next Friday is Jue 23, the one year mark of the infamous ruling.

Kozinski's lighter side is alluring. Asked what he thought of Romanian communism, which he lived through until emigrating at age 12, he told Reason:

I was a very committed communist when I was there. I believed in communism, and I thought it was the wave of the future. When my parents applied to leave, I thought it was a good thing because I'd be able to educate the workers of the West that they were being enslaved by capitalist exploiters. When we arrived in Vienna, I discovered bubblegum and chocolate. These things were nonexistent in Romania, and I immediately became a capitalist. I was easily bought off.

Maybe it's his charm, but according to federal judiciary "tablog" Underneath Their Robes, Kozinski is up there with Chief Justice Roberts and 6th Circuit Jeff Sutton in the "Superhotties of the Federal Judiciary" ranks. Well, well. Comments?

Posted by Edward J. Lopez at 11:46 AM in Law  ·  Comments (4)

Libertarian Professors...

Comprehensive Listing of Libertarian Professors

Posted by Robert Lawson at 10:07 AM in Politics

June 15, 2006
Memo to self: Never make predictions.

Like most economists I know, I get irritated when people ask me what's going to happen to interest rates, the stock market, or "the economy". I usually mumble something about that (i.e., macro) not being my field. You can tell from the look on their face, they're thinking, "well, sheesh, you're supposed to be an economist, what good are you?!" If I'm feeling frisky, I say something like, "If I knew what was going to happen to [fill in the blank] I'd be rich and in any case I certainly wouldn't be giving that information away to you for free." That usually shuts 'em up.

But the real truth is that I'm really bad at making predictions. On the very few times I've placed a bet in Vegas on a sports game, I have always (yes always!) lost. I know it's basically a 50-50 shot (factoring in the odds/points) but I don't have a good record. I mean it's like 0-6.

So yesterday, I decide to go do a 5.2/10.4 mile "prediction run" sponsored by the Toledo Road Runners Club. A prediction run is one in which you try to predict your running time (obviously you run sans watch). I decided to run the 10.4 mile version. The beauty of a prediction run is that you don't have to race it. Thinking the course would be on some rough trails (the run was at "The Oaks" a fantastic Toledo metro park with lots of trails some of which are pretty rough), I figured on a nice easy 8 minute/mile pace--83 minutes. It turns out the run was on nicely manicured wide and flat trails and some bike paths. And I ran with a fellow (who I've run with a few times) who's pretty good. So we settled into a nice 7:30 pace. Bottom line: he came in 5 seconds off of his time and I came in over 4 minutes off (faster) my prediction.

GRRR. It's bad enough that I can't predict interest rates or who's gonna win the NCAA Championship Game (curse you UCLA!), but I can't even predict how fast I'm going to run a simple run.

Posted by Robert Lawson at 09:06 AM in Sports  ·  TrackBack (0)

June 14, 2006
Statistical discrimination in advertising

From AdAge Daily comes a story about claims of racism in the marketing industry. The story outlines a number of various claims, ranging from a lack of high-executive African Americans, to advertising firms not contributing to black philanthropy groups, to claims that not enough money is spent on advertising that specifically targets the black population.

In a rather bizarre couple of paragraphs, we read the following:

More than 20% of consumers who have bought a Chrysler 300C are black, yet far less than 20% of the vehicle's ad budget is being spent to target blacks directly.

Marketers believe ads placed in and on general-market media reach blacks, but Mr. Graves and others contend that's not the case. Said GlobalHue's Mr. Pugh: "We've proven the net worth of [the black] segment. They know our buying power. Clients don't want to pay for it."

The first paragraph sounds like a rather strange claim of statistical discrimination. Why should Chrysler advertise to those who already purchase their product? Why should African-Americans want annoying ads targeted directly at them?

This sounds like the Becker-Murphy (1993, Quarterly Journal of Economics) argument that advertising might complement consumption. In this case, the argument would be that African Americans drive Chryslers and viewing advertising directed towards them (perhaps showing African-Americans driving Chrysler 300s?) actually increases their utility. The lack of such advertising, conversely, reduces their utility. I am not sure I have ever bought the B-M argument totally, but I know that I get a bigger kick out of VW ads than, say, Kia ads - and I drive a VW. However, I also get a kick out of Hummer ads and I don't drive a Hummer.

Having read a few articles concerning this brewing issue in the advertising industry, it seems that there is less concern that African-Americans in Atlanta or Detroit are not receiving their "just" amount of targeted advertising (doesn't that sound bizarre?), than a general undercurrent that not enough money is being spent on advertising generated by marketing firms owned by African-Americans.

There are any number other reasons for this, including overt "racist" behavior. However, could such discrimination prevail over such a long time without competitive pressures, whether from other marketing firms, the consumers, or the advertisers themselves, making it infeasible? Becker's argument about the costs and benefits of discrimination would seem to pertain in this case.

Posted by Craig Depken at 12:00 PM in Economics  ·  TrackBack (0)

June 13, 2006
New Baby Congrats to Josh

For those who haven't heard, I got this by email from Josh earlier today.


Things are fine here. My wife just had a baby. Bennett Friedman Hall.
Mom and baby are doing well.

An inspired, auspicious name. Congratulations, Josh!

Posted by Edward J. Lopez at 05:01 PM in Misc.  ·  TrackBack (0)

Presidential campaigns. c. 1906

From the "things never change" file, the June 13, 1906 NYT (as well as the NYTs from several days earlier) report on the Democrat party's debate on who will run for president in 1908. The early straw polls and state party resolutions have W. J. Bryan in the lead with several other names being bandied about.

From the June 13, 1906 NYT:


Austin, Texas - A resolution indorsing (sic) W. J. Bryan for President was offered at the meeting of the State Democratic Executive Committee here last night, but was withdrawn after a heated discussion.

Those who opposed its adoption declared that Senator J. W. Bailey stood a good chance of being a candidate for President, and that in view of this position Bryan should not be indorsed (sic).

My point is that it seems it has never been "too early" to start the next presidential cycle.

Posted by Craig Depken at 11:33 AM in Politics  ·  TrackBack (0)

Presidential travel c. 1906

From the "things do change" file is this editorial comment from the June 13, 1906 NYT:

There is nothing indirect or underhand in the way President Roosevelt takes to secure an annual appropriation for himself and his successors to meet expenses incurred in travelling....The travel for which this appropriation of $25,000 [$541,000 in 2005 CPI adjusted dollars] a year is asked is not that of a private gentleman, but that of the President and his special guests. While it cannot be said to be strictly necessary in the performance of specific duties imposed by law, it is, nevertheless, a public function, for the certain and substantial advantage of the whole people, tending to foster the spirit of nationality and to form in the mind and heart of the public that sense of personal knowledge of the head of the common Government which counts in the creation of intelligent patriotism.

That was from the first two paragraphs. The world and the nation was arguably very different one hundred years ago, and the evidence lies in the language with which the editorial continues:
The essence of the office of President is its National character. The President is the sole representative of all the people. His duty is to all and, in due proportion, to each. He is the one official of whom every citizen, no matter where he dwells, no matter to what party he belongs, or what his origin may be, can say: "He is mine." To see and hear this singular representative unquestionably deepens the sense of National unity, of solidarity, as nothing else can. If he makes his journeys as President, at the public expense, his public function is emphasized and its influence is made more definite. It seems to us almost too plain for argument that this change in our arrangements for the President is entirely proper.
In many ways the editorial applies today, although there are a considerable number of people who adamantly refuse to admit that the current president (now or recent past) is/was their president. Perhaps the closest Pres. Bush came to the national unity/solidarity ideal was immediately after 9-11? If this is true, does this suggest that national unity is not inspired by a person or a party but by the very ideas that underlie the grand experiment?

Something to think about.

Posted by Craig Depken at 11:28 AM in Politics  ·  TrackBack (0)

Teacher pay c. 1906

Perhaps it was an earlier and more simple time. Perhaps the teachers hadn't been unionized and therefore the issue wasn't that important. Perhaps teachers in 1906 were truly underpaid and "deserved" a living wage. Perhaps there hadn't been so smany demands/pleads/promises for teacher raises at the time.

Regardless, the June 10, 1906, NYT has a seven line article that made it on PAGE TWO!!

Washington, June 9 - The Senate today passed a bill increasing the salaries of teachers in Washington. It makes an increase of about 14 percent. and reorganizes the school system. A School Board of nine members is provided for and it is required that three of them shall be women.

What are the chances that today a 14% teacher raise, the reorganization of an entire school system, and the creation of an oversight School Board would merit only seven lines on page two? Could it be that the issue hadn't been politicized? I don't know the quality of the Washington DC schools in 1906, but the lack of yapping over the issue is impressive.

Posted by Craig Depken at 11:17 AM in Economics  ·  TrackBack (0)

Vietnam Iraq

John Derbyshire at NR writes about the war in Iraq,

One reason I supported the initial attack, and the destruction of the Saddam regime, was that I hoped it would serve as an example, deliver a psychic shock to the whole region. It would have done, if we’d just rubbled the place then left. As it is, the shock value has all been frittered away. Far from being seen as a nation willing to act resolutely, a nation that knows how to punish our enemies, a nation that can smash one of those ramshackle Mideast despotisms with one blow from our mailed fist, a nation to be feared and respected, we are perceived as a soft and foolish nation, that squanders its victories and permits its mighty military power to be held to standoff by teenagers with homemade bombs—that lets crooks and bandits tie it down, Gulliver-like, with a thousand little threads of blackmail, trickery, lies, and petty violence.

I agree a lot with this. But how naive is he? Sheesh.

All along I was against the invasion--simply because I figured we'd get stuck there and would face massive unintended consequences. To be clear, I had no problem in principle with invading Iraq. They deserved it. My objections have always been prudential.

It's a tired (and not entirely apt) comparison but it looks like we've gotten ourselves into another Vietnam. The military conflict is very different of course but the politics is very similar. Now that we're there, what do we do now? It looks like we can't win and heck we can't even define what it means to win.

Meanwhile our troops bleed, we fritter away scarce resources, and back home we re-energize the radical "anti-war" left.

[HT: Paul G.]

Posted by Robert Lawson at 08:53 AM in Politics  ·  TrackBack (0)

June 12, 2006
Maybe if he opened his eyes when he swings...

he'd hit the ball better. On the other hand when he hits it, he really hits it.

The stats on Toledo Mudhens player Mike Hessman: G 49 AB 165 R 18 H 22 (including 7 doubles and 11 home runs) BB 27 SO 54 SLG .376 AVG .133

Posted by Robert Lawson at 12:46 PM in Sports  ·  TrackBack (0)

June 11, 2006
Skype hype

I've just downloaded and tested sykpe.com's program for making phone calls on the internet. The sound quality is really amazingly good--better by far than my cell phone. It sounds like the other person is in the same room.

The software download is free; skype to skype calls are free; skype to regular phone calls are free in the U.S. through the rest of the year; and skype to regular phone calls outside of the U.S. are cheap. You can also get a skype phone number so that regular phones can call you on the computer but there is a fee for this.

This will come in handy when I'm travelling abroad and my cell phone won't work. I'll be able to call home from anywhere I can get a decent internet connection--which is just about everywhere nowadays.

Posted by Robert Lawson at 05:44 PM in Misc.  ·  TrackBack (0)

June 10, 2006
Happy Birthday DP

This weekend marks the the 115th "birthday" of Dr. Pepper soda. Star-Telegram story here and the oldest bottling plant in Dublin, the fastest growing town in Texas [get it?].

The Dublin plant is unique in that it produces DP with the original cane sugar recipe.

Posted by Craig Depken at 10:59 AM in Culture  ·  TrackBack (0)

June 09, 2006
Self Serving Study of the Month

From this BBC story:

Italian researchers say eating pizza could protect against cancer.

Researchers claim eating pizza regularly reduced the risk of developing oesophageal cancer by 59%.

The risk of developing colon cancer also fell by 26% and mouth cancer by 34%, they claimed.

I'm sure scientists in South Georgia are busy proving that eating Vidalia onions cure all sorts of cancers.

Posted by Craig Depken at 09:14 PM in Science  ·  TrackBack (0)

June 08, 2006
Is it counterfeiting when there’s no real dollar bill in that denomination?
The U.S. Secret Service confiscated bogus $1 million bills printed as religious tracts from an evangelical ministry, saying the handbills too closely mimic real money. … But ministry founder Darrel Rundus said he doesn't understand how he can be accused of counterfeiting a bill that does not exist. The highest denomination of U.S. currency is the $100,000 bill.

Story here.

Posted by Lawrence H. White at 07:06 PM in Economics  ·  TrackBack (0)

On ticket scalping

Around this time of the year, what with the NBA Finals, Stanley Cup Finals, and - this year - the World Cup, ticket scalping becomes a favorite topic of discussion amongst the media, cultural critics, and the socially sensitive. After all, why spend four thousand dollars on a basketball ticket when that could help feed a family of four for a year?

Ticket scalping is not a bad thing, any more than buying e-bay at $20 and selling it at $30. However, the social/media perception and characterization of the ticket scalper is definitely less favorable than the millionaire next door.

There are many who seek to ban scalping of tickets, either locally near the arena or generally. The arguments for doing so range from allegations of unfair price gouging, event promoters warning about counterfeit tickets, and politicians claiming that ticket scalping restricts attendance to certain events to an elite. However efforts to stop arbitrage through legislation is difficult at best. As long as e-bay and stubhub and other ticket exchange sites exist - either in New York, Dallas, or the Cayman Islands - it will be be difficult to stop those who have tickets to sell from contacting those who want tickets.

Moreover, it is not immediately clear that banning ticket scalping makes tickets any less expensive (at the ticket window) - see my paper concerning anti-scalping laws. [shameless plug]

I suggest we ignore the stories about $500 or $1500 tickets and jump to the extreme - so any media types can credit DoL for this one. Scanning e-bay this morning I came across the following auction:

In case you can't read the fine print, the auction is for 4 tickets to tonight's (Thursday's) Game 1 and the seats are evidently right down on the floor next to the visiting team's bench. Price per ticket? The Buy-it-now option has it at $17,500 per ticket. That's a brand new Ford Fusion.

As an interesting homework question for my Sports Econ students this semester, I was looking up ticket prices for a potential Game 7 in Dallas. There is an auction for 8 tickets in the rafters (face price $18) on sale for $68.75 per ticket. That's a 382% markup before the series even starts.

I would think those tickets would likely go for $400 (at least) if the Game 7 actually happened. My hunch is fed by tickets for tonight's Game 1 in similar sections being offered for about $300 each.

My currently-under-reconsideration paper on anti-ticket scalping laws [yet another shameless plug] suggests that ticket brokers place little residual value on tickets they cannot sell. Perhaps from the prevailing ticket price for the potential Game 7 we can determine what the broker thinks the odds of a Game 7 will actually be.

If there are only two states of the world: Game 7 occurs and ticket value is $400, or Game 7 does not occur and the ticket's residual value is $2, then the $68.75 per ticket would imply an expected probability of Game 7 occurring of

400xprob + (1-prob)x2 = 68.75
prob = .1677 or 16.77%.

If the ticket might sell for $600 with the same residual ticket value if Game 7 doesn't occur, the $68.75 per-ticket price implies a probability of 11.11% that Game 7 would actually happen.

It is likely that the tickets for Game 7, even in the rafters, would sell for a considerable premium over a Game 1 ticket as a Game 7 ticket is guaranteed to determine the champion, and Dallas Mavericks fans have been waiting a while for the chance to see their team in the finals. Does this mean that the broker puts even less probability on the event occurring?

I went to Tradesports.com and found the current options for Miami winning a potential Game 7 is bid at 9 and for Dallas winning a potential Game 7 is bid at 21.1. pic here. Colleague Mike Ward has convinced me that the sum of these bids is the expected probability that a Game 7 will occur (thanks MW). This would put the expected odds near 30% (give or take 5%?).

I am tempted by the arbitrage possibility, but then my financial advisor would likely be unhappy.

[Update: A closer look at the e-bay auction for the 8 tickets indicates that if Game 7 is not played, the broker offers a full refund less delivery fees and pay-pal fees. Does this make it a riskless play on the part of the consumer? If the broker is willing to give a full refund if the game is not played then why not hold on to the tickets until Game 7 actually occurs or there is a higher probability of
Game 7 actually happening?]

[Update #2: The financial advisor wonders if the broker is offering to redeem the face value of the ticket while keeping the premium.]

[Update #3: After the first two games of the series, perhaps the broker knew more than I gave him/her credit for. The Heat seem to have no answer at the moment, making a Game 7 less likely.]

Posted by Craig Depken at 01:20 PM in Sports  ·  TrackBack (0)

June 07, 2006
I was too scared to post this yesterday

As the number of the beast (Rev 13:17-8), 666 holds a special place amongst things scary. Yet June 6, 2006 went by without spooky mention here on DoL. As a logophile, I think that's a missed opportunity because the fear of this number has a name. Folks, the word of the day (for yesterday) is "hexakosioihexekontahexaphobia," which means "I have to rest my tongue now." That's a whopping 14 syllables packed into 29 letters. Wow! And you know what I just realized? When you add 29 to 666, you get 695, which is what I paid for my lunch buffet yesterday! Ahhhhhhhhhhhhhhhhhh!!!!!!!!!!

On a calmer note, WikiPedia has some cool mathematics of the number 666. For example, I didn't know that 666 is an "abundant number," or that 666 is a prime reciprocal magic square based on 1/149 in base 10. Most curiously of all, the Roman numeral for 666 contains every Roman numeric symbol for 500 and less in the exact reverse order.

BTW, hexakosioihexekontahexaphobia does not appear to be an official English word. It has entries on answers.com (here) and urbandictionary.com (here), but not on Merriam-Wesbster Online or dictionary.com. My Webster's unabridged is back in California so no word from that source either...

Anyway, happy June 7th everyone. Glad you made it.

Posted by Edward J. Lopez at 10:06 AM in Culture  ·  TrackBack (0)

What Detroit Can Learn From Bangalore

From Reason:

Bangalore, a Third World city beginning with nothing, has experienced meteoric economic growth, while Detroit, once a formidable industrial powerhouse, can’t crawl out of its economic rut. If Detroit wants to boom again, it could learn some lessons from Bangalore. The factors that made India the world’s economic basket case after it obtained its independence from Britain in 1947 are precisely what have stymied Detroit’s resurgence: excessive bureaucracy, destructive taxes, and bad labor laws. While India has yet to address the last, it has attacked regulations and taxes with a vengeance, with results Detroit’s leaders should note.


Posted by E. Frank Stephenson at 09:48 AM in Economics  ·  TrackBack (0)

June 06, 2006
Ayn Rand U?

From the Durham Herald Sun (via the Locker Room):

OXFORD -- Plans for a future institution of higher learning here are beginning to surface in more detail ...

Founders College has submitted an application projecting a fall 2007 start and an enrollment of 500, said Michelle Howard-Vital, associate vice president of academic affairs for UNC General Administration.

Eric Daniels of Durham filed the request, Howard-Vital said. She identified Daniels as a faculty member at Duke University. The Duke faculty directory lists him as a visiting professor in the sociology department.

As proposed, Founders College would offer an associate of arts degree and a bachelor of arts in liberal arts.

According to Howard-Vital, the institution would be maintained and operated by The College of Rational Education, which is a North Carolina non-profit corporation.

The College of Rational Education, in papers filed with the state secretary of state, identifies its agent as Gary Hull of Durham. Hull's name also appears on similar documents identifying what is called Founders College Education Inc.

Attempts to reach him for comment Monday were unsuccessful. It wasn't clear whether he is the same Gary Hull who also is listed as a Duke faculty member. A Gary Hull listed in the Duke faculty directory teaches sociology.

The College of Rational Education, in papers filed with the secretary of state's office, said its purpose includes applying the philosophy of the late Ayn Rand.

Howard-Vital is part of a staff that reports to UNC system President Erskine Bowles and works with the system's Board of Governors, whose 32 voting members would have the final say in approving Founders College.

What's up with having the government colleges approve new private colleges? Seems like a conflict of interest. And two Randians in Duke's sociology department--who knew?

ADDENDUM: It turns out that there is an interesting history behind Duke's Randian sociologist. From FIRE:

At Duke University, the administration shut down a website after Professor Gary Hull posted an article entitled "Terrorism and Its Appeasement" that called for a strong military response to the terrorist attacks. FIRE took Professor's Hull's case to the print and broadcast media. Shamed by widespread publicity, Duke reinstated Hull's web page, but required him to add a disclaimer that the views expressed in the article did not reflect the views of the University. Duke has never before required any other professors to add such disclaimers to their web pages. That institution's double standard is now out in the open.

Duke's Disclaimer

"Terrorism and Its Appeasement" — I, Gary Hull, personally believe this article expresses an important and intellectually serious position that students have the right to read. Although the article contains particular recommendations I may not agree with, it is nonetheless an intelligent and comprehensive analysis of terrorism, in general, and of the terrorist attack on America, in particular. (The posting of these opinions does not reflect the endorsement of the Department of Sociology or Markets & Management Studies Program at Duke University.)

Posted by E. Frank Stephenson at 11:30 PM in Misc.  ·  TrackBack (0)

On the effect of The Cup

Cup time is always exciting - although in the past the U.S. population didn't care that much. The 2002 Cup generated the germ of what was once a promising project but has since shifted to the back-burner: what impact does the cup tournament have on national income growth rates and do these rates significantly differ across different types of countries. If they do differ, and the rest of the world takes the month off every four years while the U.S. chooses not to - how much could this account for the per-capita income difference between, say, Brazil and the United States? Over the course of fifty years, or twelve cups, the "negative compounding" that the one-month fiesta might induce could be significant.

Well, I don't have the answer to that particular question, but we can take a look at some preliminary results. I regressed the one-year change in log real GDP (essentially a real GDP growth rate) on five continental dummy variables (South America is the reference continent), a dummy variable for those years when the world cup occurred, a dummy variable that takes a value of one if a country qualified for the world cup, additional dummy variables for how far the country made it in the world cup, and a dummy variable that takes a value of one if the country hosted the world cup, using a GLS procedure that allows for heteroscedasticity and country specific autocorrelation across countries.

The data describe an unbalanced panel of 146 countries from 1951 through 2000 and were obtained from the Penn World Tables and combined with world cup data that we gathered.

dlnrgdp | Coef. Std. Err. z P>|z| [95% Conf. Interval]
africa | -.0054362 .0027153 -2.00 0.045 -.0107581 -.0001143
asia | .0134052 .002869 4.67 0.000 .0077821 .0190284
namerica | .0074735 .0029221 2.56 0.011 .0017462 .0132007
eur | .0135593 .0026013 5.21 0.000 .0084608 .0186578
oceania | .0035837 .0039538 0.91 0.365 -.0041656 .0113329
worldcupyr | -.0031483 .0011778 -2.67 0.008 -.0054567 -.0008398
qualifiedwc | .002958 .0033245 0.89 0.374 -.0035579 .009474
secondround | -.0015984 .0045547 -0.35 0.726 -.0105255 .0073287
roundof8 | .0045202 .0056684 0.80 0.425 -.0065898 .0156301
roundof4 | -.003048 .0073198 -0.42 0.677 -.0173945 .0112986
finals | -.0062801 .0117451 -0.53 0.593 -.0293001 .0167398
winnerwc | .0064542 .0140176 0.46 0.645 -.0210197 .0339281
hostwc | -.0056349 .0093987 -0.60 0.549 -.0240559 .0127861
_cons | .0147723 .002353 6.28 0.000 .0101606 .019384
The parameter on worldcupyr suggests that in the years of the World Cup, the average nation's annual growth in real GDP falls approximately one third of one percent!! However, it doesn't seem to matter how far a particular country makes it in the tournament. Additionally, hosting the tournament might have a negative influence on real GDP growth, although the effect is not distinguishable from zero.

Before everyone jumps up and down, this is a preliminary result. The major limitation in this specification is that the impact of the world cup is assumed to be constant throughout the 50 years of the sample, but it may be the cup has more of an impact today than it did forty years ago. Furthermore, it is assumed that the impact of the cup tourney is the same across all countries - large, small, rich, poor, north, south. The original question posed at the beginning of this post hypothesizes that the impacts are different. As I said, I hope to eventually find the time to turn attention to this idea.

Hopefully, this will plant a flag without promoting a scoop. More below the fold.

Read More »

Posted by Craig Depken at 10:32 PM in Sports  ·  TrackBack (0)

Stadium Economics and the World Cup

From Fox Sports:

For the 2002 World Cup, FIFA gave Japan and South Korea $100 million apiece. The money helped defray the costs of 10 expensive and relatively useless stadiums.

The Koreans spent $2.5 billion on new stadiums, most of which were in rural areas far from Seoul. Even though some of those venues became the home of pro soccer or baseball teams, any of that action is a far cry from the World Cup. Reports projected the stadiums would rarely be filled once the soccer tournament was done.

Japan, not wanting to be outdone by South Korea, invested more than $4 billion on stadiums, including one in Nagoya that FIFA chose not to use for any World Cup games. According to a study by Clint Waltz at Troy University in Alabama, only two of Japan's 10 arenas would pay for themselves over time.

Full story here.

Posted by E. Frank Stephenson at 10:04 PM in Sports  ·  TrackBack (0)

Consumer sovereignty and Indian food in America

Tiger Raj, fictional owner of an Indian restaurant in New York City:

Nobody has done Indian food right yet – for the American palate. … So I study leftovers on every plate. Every day I make slight changes in the menu. That way, my customers get what they want. Almost no hot pepper, bland by your standards, but I tell them it’s “a subtle mix of Oriental spices”. They like hearing that. And everything is dished out separately – no mixing. The way we usually prepare Indian food is too chaotic for the average American eye and palate. It saturates the senses. Of course, that’s exactly its beauty – for us. Here, though, they have a different concept of beauty.

From Sanjay Nigam’s novel Transplanted Man, p. 229.

Posted by Lawrence H. White at 09:33 PM in Economics  ·  TrackBack (0)

Libertarianism and religion

It always confuses me somewhat when proponents of either libertarianism or religion argue that belief in the other is impossible. Randians seem to believe that religion is, not necessarily an opiate of the masses, but just superstition. Christians seem to believe that libertarians and capitalists are cutthroat and uncaring profiteers, using deceit and power to materially gain at the expense of customers, workers, the environment, etc.

I've cited it before, but my former place of employment, the Acton Institute, is a good example that these two beliefs can coexist in a mutually beneficial way. A case in point is the most recent article by the Institute's President, Fr. Robert Sirico. An excerpt:

Only a few decades ago, we saw a political left that celebrated wealth for all and sought redistribution precisely so that people would no longer experience radical material deprivation. Now that it is increasingly clear that the means toward that end is markets and freedom—the democratization of the means of production, not forced redistribution, it seems that the left is more attached to its statist means than its material ends...

Still others become very upset that wealth is not shared equally by all. This is a dangerous conviction because it can only lead to the celebration of expropriation. We need to realize that material equality should not be a policy goal; what we should seek is the universal increase in material well-being, even when its benefits are inequitably distributed. All of human experience and study suggests that there is only one means for bringing about this ideal: the market economy within a strong juridical framework that protects the right to property and life.

Posted by Tim Shaughnessy at 12:21 PM in Economics  ·  TrackBack (0)

June 05, 2006
Incentives Matter: Two Buck Jacques Edition

NPR reports on a 100 million gallon surplus of French wine and--just as economists would predict--the glut is caused by agricultural price supports. It brings to mind the Iowa ski hill of corn. Listen here; I might add to the post once a transcript is available via Lex/Nex.

UPDATE: The transcript is now on Lex/Nex. Here's part of the conversation between NPR's Adam Davidson and French wine consultant David Skalli:

DAVIDSON: The U.S. is becoming the world's number 1 wine market. If the French don't learn how to talk to Americans, Wagner says, those surpluses won't be going away. French wine consultant, Skalli, says it's the agricultural policies of France and the European Union that caused this problem. The French and EU government set a price for any wine that cannot be sold.

Mr. SKALLI: A lot of people are even playing this kind of game, saying, well, they're going to have to buy it, so, well who cares about the quality of the wine.

DAVIDSON: Skalli says some French vineyards know their wine will never reach the marketplace. They grow the grapes, harvest them, and make wine - all the while knowing they'll sell it as government surplus. The government plans to turn that surplus wine into cheap brandy or even fuel. They might make a few pennies back for every dollar they spend. It's not an efficient system, Skalli says, but it's not going to go away any time soon.

Posted by E. Frank Stephenson at 07:49 PM in Economics  ·  TrackBack (0)

Expert rates a bird flu pandemic unlikely

Tyler Cowen is worried about the bird flu. So worried that he started a blog (now dormant) devoted entirely to it.

Gillian Air, influenza virus expert and Professor of Molecular Biology at the University of Oklahoma, writes today in the Oklahoman (registration required) that fears of a bird flu pandemic are overblown. Here are the money quotes:

An avian influenza pandemic might produce good ratings for a made-for-television movie, but in reality the risk to the majority of people is almost nonexistent right now. …The facts do not point to an impending pandemic.

… Although the virus has met many prerequisites for the start of a pandemic, it still does not have an ability to spread efficiently among humans.

…The picture in Indonesia strongly suggests that there is a rare gene in the human population that makes some humans susceptible to bird flu while the vast majority are either resistant to the infection or get a very mild infection.

Posted by Lawrence H. White at 07:17 PM in Science  ·  TrackBack (0)

Rottenberg Retrospective

The new JPE has Allen Sanderson and John Siegfried's retrospective on Simon Rottenberg's 1956 article "The Baseball Players' Labor Market." Sub required; abstract below:

Fifty years ago this Journal published Simon Rottenberg's "The Baseball Players' Labor Market," the first professional journal article in sports economics. In this retrospective we review some of his insights and analyses with regard to competitive balance, constraints on payroll and freedoms to contract, revenue sharing, territorial rights, and the supply of talent. We also note subsequent industry developments Rottenberg could not have anticipated and identify where he was ahead of his time.

Posted by E. Frank Stephenson at 05:09 PM in Sports  ·  TrackBack (0)

Incentives Matter: Chinese Divorce Edition

From the LA Times:

RENHE, China — Farmer Yan Shihai was happily married for more than 30 years. Then late last year, seemingly out of the blue, the 57-year-old grandfather and his loving wife got a divorce.

Within months, all three of his adult children and their spouses also split up. So did almost every other married person in Yan's village of 4,000 — an astounding 98% of Renhe's married couples officially parted, according to the local government.

It was as if a spell had been cast over this once-quiet rural community in the Chinese heartland. Everybody suddenly seemed to have fallen out of love. The oldest among them were in their 90s and barely able to move. The youngest had just tied the knot. Some had babies.

But instead of tension or tears, the couples waiting in line at the local registry to end their marriages were practically jolly. They believed they were taking advantage of a legal loophole that allowed them to get an extra apartment.

Posted by E. Frank Stephenson at 04:16 PM in Misc.  ·  TrackBack (0)

The Management Myth

From The Atlantic:

Most of management theory is inane, writes our correspondent, the founder of a consulting firm. If you want to succeed in business, don’t get an M.B.A. Study philosophy instead.

Full story here; hat tip Wilson Mixon.

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

Business, Takings, and Skyscrapers
It is probably no accident that the new 46-story headquarters, with its geometric form, latest technology and green design elements, stands atop the medieval-style cast-stone husk of a six-story Hearst Magazines office built in the 1920's.The profile-raising new tower, like its occupant, is a melding of newfangled and nostalgic — a throwback to the future.

That's today's NYT in a story on Hearst Corporation's new Midtown Manhattan headquarters. Hearst is a private media conglomerate with too many familiar brands to list. The company paid cash for the building, $500 million.

Here's an interesting passage and the best grandiose, Randian quote I've read in a while:

[Hearst CEO Victor] Ganzi, a civic-minded accountant and Harvard-trained lawyer, joined the company as its general counsel in 1990. He was brought up in Queens, and his family has owned half of The Palm chain of steakhouses for close to 80 years. Colleagues say Mr. Ganzi is possessed of a photographic memory, and he speaks in precise rapid-fire bursts.

He agreed to a rare interview, given all the curiosity about the company's new tower, yet he declined to meet in person or to pose for a photo. When asked why, he quickly replied into the telephone: "It's quite simple. Don't take this the wrong way: I've enjoyed talking to you but it doesn't make the Hearst Corporation another dollar."

Now that's the kind of corporate social responsibility Milton Friedman can love.

There is, of course, the larger issue that Hearst is not publicly traded, and therefore skirts a lot of regulations, especially onerous command-and-control reporting under SOX 404. Like at least one other private conglomerate discussed on DoL, Hearst is turning this to a comparative advantage in making profit-generating moves without wrestling perceptions and biases among public investors/regulators. According to Time Warner's CEO Richard Parsons, Ganzi and Hearst are "able to think beyond quarter-to-quarter and my sense is they've been very deliberate and thoughtful about building a business that will be around for a long, long time."

Efficient markets: still recovering from Enron/Tyco/etc. hangover.

Nor is Hearst a government, such as the City of San Jose, whose new Richard Meier designed city hall carries the same $500 million price tag but....uhm.....18 stories instead of 46.

Meanwhile, the Times' own new 46-story skyscraper is under construction (16 blocks away from Hearst's new digs, in Gail Wynand's own Hell's Kitchen) on property that the State of New York acquired by eminent domain. No word on the 55 businesses that were kicked out to make way. Here is why the New York Times Loves Eminent Domain.

Posted by Edward J. Lopez at 09:38 AM in Economics  ·  TrackBack (0)

Happy 283rd Birthday to Adam Smith

Adam Smith
b. June 5, 1723

[Link to my first blog post on Smith's pin factory example.]

Posted by Robert Lawson at 08:43 AM in Economics  ·  TrackBack (0)

June 03, 2006
Nude Campaigning?

Ed recently posted on a particularly nasty bit of negative campaigning. I wonder if this item from today's Rome News-Tribune amounts to nude campaigning:

Carlie Edna Steadman, 65, address listed as 1012 Avenue B, was arrested by Rome police Thursday evening on a misdemeanor public indecency charge. Callers had alerted authorities that Steadman had been sitting on her front porch in the nude, according to reports. She allegedly dressed herself and was taken to the Floyd County Jail, where she again stripped while in the booking room. Steadman is running as a Republican County Commission candidate against GOP incumbent John Mayes.

Although some say there's no such thing as bad publicity, I think John Mayes's re-election just got a bit easier.

Posted by E. Frank Stephenson at 11:36 AM in Politics  ·  TrackBack (0)

June 02, 2006
Too big to fail?

The Bank of China, the largest government-owned commercial bank in China, had a successful US$9.7b share offering yesterday in Hong Kong. Which is remarkable, considering that experts believe the bank is insolvent (i.e., its balance sheet would show a negative net worth if its nonperforming assets were marked to market). Investors must be betting that the Chinese government won’t let the bank fail.

Posted by Lawrence H. White at 06:59 PM in Economics  ·  TrackBack (0)

Zimbabwe's central bank struggles to keep up with its own inflation

The Mail&Guardian Online reports:

Zimbabwe's central bank will issue a new Z$100 000 banknote after inflation topped 1 000% last month, one of the world's highest rates, a state daily reported on Wednesday.

The new banknote, worth US98c, will go into circulation on Thursday and will hold tender until December, The Herald newspaper said.

The biggest note in circulation, and it's only worth 98 cents!! And that's today's value -- at the current rate, it'll be worth less than US 10 cents a month from now.

Posted by Lawrence H. White at 06:36 PM in Economics  ·  TrackBack (0)

50 Greatest Libertarian Songs

As Bob Lawson noted a few days ago, John Miller of National Review has run a piece on the 50 Greatest Conservative Rock Songs. Click the link for the whole list, but here are the top 5:

1. The Who - Won't Get Fooled Again
2. Beatles - Taxman
3. Rolling Stones - Sympathy for the Devil
4. Lynard Skynard - Sweet Home Alabama
5. Beach Boys - Wouldn't it be Nice

You can read Miller's article for commentary on why he chose the songs he did. Several of them are libertarian in orientation (e.g. the aforementioned Taxman, Rush's The Trees and Red Barchetta), but many are more traditionally conservative. Some of those songs, though, such as the Raiders anti-drug anthem Kicks (#19), dwell heavily on the idea of personal responsibility. But The Night They Drove Old Dixie Down (#37), or Wake Up Little Suzie (#40) are more about traditional conservative values.

Omitted entirely from the list is my favorite libertarian pop hit,

Read More »

Posted by Brad Smith at 05:02 PM in Culture  ·  Comments (6)

How to cook a frog: immigration version

I agree with Bob's May 16 post on the normative side of border enforcement: "using force to stop people from migrating is morally repugnant." While there are some virtues in the "comprehensive reform" currently whittling through Congress, these are eclipsed by the unseemly and ineffective fences, machinery, troops, and guns that come with. Indeed today, California's governor "reluctantly" signs an order for California national guard troops to be sent to help INS patrol the border (story).

We're cooking this frog nice and slow. Before we know it the U.S.-Mexican border might look a lot like Berlin's erstwhile wall as Bob suggested.

Amid all this, The Independent Institute is organizing an open letter from economists to executive and legislative branches. A couple excerpts:

The current debate over immigration is a healthy part of a democratic society, but as economists and other social scientists we are concerned that some of the fundamental economics of immigration are too often obscured by misguided commentary.

Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy.

Immigrants do not take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.

The letter includes a handy list of references for further reading, too. I hope reason bubbles to the surface along with politics in this whole process. I have added my name to the open letter, and encourage economist readers to do the same.

Posted by Edward J. Lopez at 03:57 PM in Economics  ·  TrackBack (0)

Quick Hits

1. The WaPo reports that Jeffrey Maier, the kid who interfered with a ball hit by Derek Jeter in the 1996 playoffs, is now a successful college baseball player who is likely to be drafted in the upcoming mlb draft. If he ultimately makes the big leagues and faces the Orioles, I wonder if they'll plunk him. Odder still--maybe the O's will draft him.

2. USA Today reports that Britain will have a knife amnesty program in an attempt to reduce the occurrence of stabbings. You know what's coming next--a knife buy-back program. A better way of reducing stabbings would be to legalize concealed carry.

Posted by E. Frank Stephenson at 02:56 PM in Misc.  ·  TrackBack (0)

Wanted: University CEO

As expected:


President Theodore L. Fredrickson announced his retirement today, effective immediately effective June 30, ending a career that has spanned nearly four decades in higher education. The university’s Board of Trustees has named Provost Denvy Bowman as interim president. In addition, Associate Provost Steve Bruning has been named interim provost.

Read More »

Posted by Robert Lawson at 01:57 PM in Misc.  ·  TrackBack (0)

Negative Political Ads

I'm never impressed/persuaded when (just about every election cycle) I hear/read that political advertising has reached a new low. But this one raised an eyebrow:

If elected, my opponent will probably just die on you.

That mailer from Modesto Republican and Assembly hopeful Bill Conrad -- suggesting his opponent and heart-transplant recipient Tom Berryhill might reject his new organ before serving out his term -- struck many observers as a new low in ``going negative.''

Story here.

Posted by Edward J. Lopez at 12:33 PM in Politics  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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