Here's information on Bedloe's Island and a picture c. 1905

Another time-line of Bedloe's Island a.k.a. Liberty Island

As part of my eternal fight to reduce transactions costs to everyone, everywhere, through decentralized spontaneous orders.....

I am pleased to point out a new web site that has so much cool stuff you will spend an hour looking at stuff you need you didn't even know you didn't have.

How to be Web Smart

There is a BUNCH of cool stuff out there, sites that you will love. An excellent waste of a hot summer afternoon.

And this is no government database. It is a bunch of GREEDY, GRASPING entrepreneurs. They are doing this to try to make money.

It all makes me so happy.

Nomar Garciaparra tells Seth Mnookin about his sitdown with Red Sox Management shortly before he was traded:

"The meeting was, 'We want to know why you are unhappy,'" says Garciaparra, who has never before publicly [talked about] what happened that day. "And I go, 'Et tu, Brute?' Because that is all I've been hearing for the last couple of years: I'm unhappy, I'm unhappy. I go, 'Where are you getting this? What am I unhappy about?"

Yet according to Mnookin:

At one point during the 2003 season, Garciaparra had confided to friends that he thought management was instructing the team's grounds crew to rough up the dirt in front of his shortstop position so he would have a harder time fielding balls. Garciaparra believed this was done so he would make more errors, lessening his value before he was signed a new deal. He also told at least one person he thought the team was bugging his phone.

If the above story is true, it's hard to believe that you could be that paranoid about your relationship with your employer and be perceived as happy by those around you.

From the Boston Herald:

Memo to Boston Globe gay and lesbian Guild employees: Get married or lose your domestic partner benefits.

Globe staffers have been told that health and dental benefits for gay employees; domestic partners are being discontinued. Gay couples who want to keep their benefits must marry by Jan. 1.

A memo sent to the Globe's Boston Newspaper Guild members, and obtained by the Herald, states that Massachusetts gay Guild employees can extend their benefits to their partners only if they marry.

An employee who currently covers a same-sex domestic partner as a dependent will have to marry his or her partner by Jan. 1 for the employee benefits coverage to continue at the employee rates, the memo states.

The policy change at the Globe, which devotes extensive coverage to gay issues, opens a new can of worms in the Bay State as employers rethink their domestic partner benefits in the wake of the legalization of gay marriage in 2004.

Benefits for domestic partners were originally offered to gay employees because they couldn't legally marry, said Ilene Robinson Sunshine, a lawyer at Sullivan & Worcester.

Now that gay marriage is legal in Massachusetts companies that offer benefits to gay employees; partners risk hearing cries of discrimination from unmarried straight couples.

Let's get government out of the marriage game altogether. That is the way to be fair to everyone be they gay or straight (but probably not this guy).

Trudie (Tyler) says:

Two core groups of people are well-suited to be economists:

1. You math GRE score is over 800, you are totally focused, you love working long hours on your own, and you have good enough letters of recommendation to get into a Top Six or perhaps Top Ten graduate school. Note that white Americans from this category have been partially preempted by competition from foreigners.

2. You could be happy as an academic without much of a research career. Working at a teaching school is a rewarding life, albeit a poor one relative to your investment in human capital.

I think Trudie overestimates the human capital investment necessary to go to a teaching school or a mid-level state school. Sure, if you go to Harvard and you end up teaching at a branch of the Penn-State system you probably over-invested in human capital because you could have had the same job by going to West Virginia.

If, however, you want to teach economics and do a little research, the job market for economists is such that you can go to a lower-level program and get a tenure-track job at a fairly decent school. For example, look at the placements for WVU. Now I'm sure that many of the readers of MR would look down on teaching at a Gustavus Adolphus or a Penn State-Erie. But for someone who wants to teach economics and do a little research, those are good outcomes, especially relative to the investment in human capital. Note that Morgantown has a low cost of living and most of our students graduate in four years.

And if you are good enough to land a JPE, you can end up with a really good job for the Fed.

So for students interested in going to grad school because they want to teach economics and do a little research, know that you don't have to go to a top-ten program.

In the current issue of Newsweek, Stephen S. Roach of Morgan Stanley offers a critique of inflation targeting. He gets off to a weak start by attacking a straw man, the view that under inflation targeting “Presto – the economy is cured of any and all ailments.” Actually, the objective of CPI inflation targeting is much more modest: to cure the economy of one ailment, a CPI inflation rate higher than desired.

Does it work? Cross-country evidence indicates that inflation fell by more percentage points in the 1990s in the countries that targeted inflation. But (as Ball and Sheridan found) since those were the countries that began with higher inflation, it isn’t clear what caused what: the desire to bring about a larger drop in inflation may have caused the adoption of inflation targeting, rather than inflation targeting causing a larger drop in inflation.

Roach suggests that Greenspan’s inflation targeting was responsible for asset-bubble problems in the US economy. This is odd because (1) Greenspan had no explicit inflation target, and (2), as Roach recognizes, “Central banks, who have ultimate control over the flow from the liquidity spigot, are responsible for this dangerous state of affairs.” Under Greenspan, the Fed “slashed the federal funds rate to 1 percent and spurred the mother of all liquidity cycles.” In so doing, Greenspan was exercising his discretion, not following a rule. So it’s hard to see how any asset-bubble problems on Greenspan’s watch can be attributed to his (implicit) rule-following rather than to his discretion.

Roach does make a valid point: “A CPI-type price rule could compound the negligence of bubble-prone central banks.” Hayek and Robbins made a similar argument about Fed policy in the 1920s: despite CPI stability, credit expansion pumped up the asset price bubble that burst in 1929.

The remedy for this problem isn’t discretion; it’s a better rule (assuming we're stuck with having a central bank). In particular, a better rule would incorporate asset prices, directly or indirectly, rather than only consumer prices. An example of "directly" would be a gold standard, or a rule targeting an Alchian-Klein-type index, or a rule targeting an index of input prices. An example of “indirectly” would be a rule targeting a broad measure of per capita nominal expenditure (MV), as proposed by George Selgin, rather than only the CPI price level (P).

From the July 15, 1906 NYT:

• Making a mountain out of a molehill appeals to the real estate speculator.
  
• The people who write articles on how to succeed are not always able to sell them.
  
• A fellow never knows he is in love till the girl tells him.
  
• It is true that a woman promises to love, honor, and obey, but a man promises to endow her with all his earthly goods, so it's an even break.
  
• A man never hears the best things that are said about him, because he is dead then.
  
• Only a few of us can have our faces on banknotes. Most of us would prefer to have our hands on them anyway.
  
• There are no return tickets issues from the frying pan into the fire.
  
• The fellow who is looking for trouble frequently overestimates his capacity.
  

From the July 16, 1906 NYT:

The fanmakers of Valencia, Spain, have petitioned the Government in Madrid, begging for no reduction of the tax on imported Japanese fans, for should such reduction be made it would bring ruin and desolation to Valencia, where thousands of families exist on the fanmaking industry.

I know almost nothing about typography, so I found this article from Sunday's International Herald Tribune, "Quirky serifs aside, Georgia fonts win on Web," to be very interesting and informative. From the opening:

Log on to The New York Times's Web site, and you'll see it there. Just as you'll spot it on the Web sites of London's Frieze Art Fair, the architecture magazine Metropolis, the artist Damien Hirst, and on blog, after blog, after blog.

All of these Web sites use the same typeface - Georgia. Typefaces slip in and out of fashion like every other area of design, but right now Georgia is the most fashionable one on the Internet. "A few designers have mentioned that there seems to be a 'Georgia revival' going on," says Matthew Carter, the British-born, Boston-based designer who developed Georgia for Microsoft in 1996. "It seems a bit young to have died and been revived already."

Of course, I immediately logged onto the NYT website and found the font recognizable but pretty so-so IMHO. (I also discovered that Bruce Arena had been fired.)

Clicking back to the Tribune article, I finished reading it with zest. How often we take for granted all the talent and resources that go into producing things just so we can take them for granted. And how crucial spontaneous capitalist order is to supporting the innovation of things we value without even realizing it. It made me wonder in which font "I, Pencil" was originally published.

When designing my website I chose, with Kirznerian ignorance, to use Verdana. It just looked the cleanest. So I was pleased to read the story of this font in the Tribune article. The passage is also revealing of the many issues with electronic typography that readers can essentially take for granted.

By the mid-1990s, as more and more people were using Internet and e-mail, we were spending so long reading information on screen that legibility became a critical issue. Concerned that none of the existing digital fonts were easily readable, Microsoft commissioned a collection of screen-friendly typefaces to be given away free with its Windows software. [Matthew] Carter [who developed Georgia for Microsoft in 1996] was asked to produce two, a serif and sans serif.

As the most popular digital fonts at the time were sans serifs, he began with that. He started by analyzing why existing typefaces were so hard to read on screen, and worked out how to rectify the problem by focusing on the characters that are most easily confused - i, j, l and the number 1. Stylistically he made each one as clear as possible, by designing them in simple shapes with no superfluous details. He paid particular attention to the spacing between characters, having realized that this often caused confusion in other computer fonts.

The result was Verdana, which was launched by Microsoft in 1996 and given away free to millions of people with Windows.

I would shout two cheers for Microsoft except I'm posting this on IE7 Beta 3 and it is terribly buggy. So just one cheer for now.

Another curiosity. Recently while drumming up some faux letterhead to use in soft copy, I was drawn to Sylfaen. I searched it and found that it is popular in Latin, Greek, Armenian, Georgian, and the Cyrillic, among others. Perhaps that's because Slyfaen supports many of these languages' characters.

I perceive something bigger than style, fashion and legibility in the font wars. Each font is a collection of a particular set of ideas--a claim with which the talented and hard-working Matthew Carter and most typographers would probably agree. How widely a font is used represents a measure of success for the ideas embodied in it. Social critics (especially economists) like to say "ideas have consequences," but too few economists pay attention to how ideas propagate. Often, I think, idea propagation relies heavily on the subtle. I regularly read stuff from the New York Times, but only today did I bother to recognize and appreciate the font. How many dead fonts are there, lying as heaps of rejected, forgotten ideas?

On a final note, two questions.
1. Is there intellectual property in font design?
2. What font does Division of Labour use?
Comments open for awhile.

Apparently the North Georgia kangaroo farm is not the only silly entry on the government's list of terror targets. The list also also includes Amish Country popcorn in Indiana (maybe a dark side to Orville Redenbacher or a fear of suicide buggy bombers), the Sweetwater Flea Market near Knoxville (anthrax laden Velvet Elvis paintings?), and the Mule Day Parade in Tennessee. Here's a safe prediction--we have more to fear from the asses in Washington than anything that could happen at the Mule Day Parade. Rant complete.

From the July 13, 1906 NYT:

WASHINGTON - The Inter-State Commerce Commission to-day heard further testimony in its investigation of the oil industry and practices of alleged monopoly.

From the July 13, 1906 NYT:

The National Billposters' Association to-day decided to stop advertising Satan. Devils in all forms, whether with hoofs, horns, and tails or the more refined creations in evening dress are to be eliminated from advertising matter distributed by the association.

The members did not specify their objection to pictorial representations of the evil one, but will not post bills on which he figures.

There are so many similarities between the news of today and the news of a century ago. Perhaps it would be the same if I were reading the paper from 76 years ago or 123 years ago. Consider these two stories of horrible tragedy:

From July 11, 2006:

BALLWIN, MO. - Five children -- four of them siblings -- drowned during a church outing when they were caught in a river's current, apparently while trying to help a sixth child who was rescued, authorities and the victims' relatives said Monday....Witnesses said the children -- ages 10 to 17 -- were swept away in the Meramec River on Sunday evening.

From the July 13, 1906 NYT:

CEDAR RAPIDS, Iowa - Seven girls were drowned to-day in Cedar River, only three blocks from home, while wading. The smallest child slipped into a deep hole and in trying to rescue her six others were drowned. Ruth Klersey was the only one of the party to escape. The dead...ranged in age from 7 to 16 years.

I expect that this article by John McGinnis (Northwestern U. law school) in the current Policy Review will warm the hearts of most, if not all, loyal readers of this blog. Here's the abstract:

"This brief essay argues that that the trend to empiricism in the social sciences is a long run force for consensus in a democratic society. Because of the continuing computer revolution, this trend will become only more powerful in the future. Thus, although many pundits suggest we live in an intensely partisan age, the essay suggests that powerful forces will restrain partisanship and constrain even interest groups to focus on what works to achieve broadly shared objectives, like economic prosperity and improved education. The essay offers some examples of how empiricism has helped foster consensus in the past. The essay discusses how the rise of blogs and information markets help reinforce a culture of empiricism. It ends with suggestions about how public policy can support empiricism and thus itself promote consensus."

From the AJC:

DAWSONVILLE — Two hundred and fifty kangaroos hopping around in this rural, hilly outback of North Georgia are a prime, if movable, target for terrorists.

Or so claims a Department of Homeland Security database that identifies nationwide facilities that it considers ripe for attack.

Also from the AJC we have a crook who is both dumb and unlucky:

So three people go to the drive-up window at a bank and — the way police tell it — try to cash a personal check they stole in a burglary.

Yep, Barfield left his driver's license and Social Security card with the teller.

It seems hard to justify Zidane's actions during the WC finals. However, there are usually two sides to each confrontation. Short of Zidane having some serious personal problems, it is likely that he was provoked in some way. That said, the point of a team is to sacrifice your personal needs to that of the team - admittedly not the most libertarian ideal, but one that seems to work.

I haven't had a chance to go back and rewatch the match, but others suggest that Zidane had to deal with Materazzi pulling on his shirt, literally tweaking his breasts and other such antics. Whether Materazzi said what Zidane claims, perhaps we will never know.

However, colleague Dennis Wilson points out this YouTube clip of five Materazzi plays that might suggest that Materazzi has a worse reputation than casual fans in the States might suspect.

Warning: There is some relatively graphic contact depicted.

Starling Hunter, proprietor of the most interesting blog, "The Business of America is Business," has kicked off his "Carnival of Wal-Mart," feature and indicated it would appear on a weekly basis. I hope that's so. Check it out. Also, some background here.

Delta's Sky magazine asked readers for a list of the best BBQ joints in their states. Here's the list.

Looking at the four submissions for Ohio, I can't complain about City Barbecue being on the list. It's become a small chain now but they've maintained high quality and a certain shabbiness that is a necessary part of the BBQ experience. On the other hand Montgomery Inn in Cincinnati is AWESOME, but doesn't really qualify in my book as BBQ. I seriously love the place but it's apples and oranges to compare Montgomery Inn with a real BBQ joint.

Now if you're ever in Bowling Green, Ohio. (I know. Why would you be?) Go to Ebony's on Wooster Ave. This guy's got the best NC style 'cue outside of well NC.

I'll add to the minor discussion begun by Bob and Frank about the World Cup. Since I've played soccer for 25 years and been an economist for only about 10, I feel more qualified to speak here than in most of my previous posts.

First, I agree with Frank that the "flopping" is getting out of hand. Soccer is kind of the opposite of public policy, where an action's (intending to harm another player) initial effect (the foul) is usually much harder to spot than the secondary effect of that action (falling). Thus, most refs assume the cause occurred when they see the effect (including me when I was ref), even if the effect is staged. Of course, flopping is stupid too because the perceived benefit (possibility of a free kick) is almost always low compared to the cost (your teammate on the ground, unable to do anything for a few seconds).

Second, I congratulate Bob for granting the game some respect, one which most people do not do even if they've never played or even seen a game. I was thinking of which sport, soccer or the Golden Calf of football, engenders in its participants a sympathy for libertarian ideas:
--Football: coach tells me what to do in next play, I do it, return to coach and repeat. The only players that seem to exercise any creativity is the QB and the two or three guys who run with the ball.
--Soccer: coach gives me an outline what he wants me to do before the game, but rarely tells me what to do during it. I have to make my own decisions.
Football seems more a top-down autocratic system of government, while soccer seems more a dispersed-knowledge society of individiual decision-makers. The best teams, obviously, are those who can create a spontaneous order out of 11 players.

Third, even though Italy played a better team game during its run up to the final, I was rooting for France because of the amazing creativity demonstrated by Zidane in the two games prior to the final. Zidane's penalty kick during the final was even better; I thought the foul was weak, and that Zidane may have chipped his shot as a way of recognizing the weak call. Buffon just guessed the wrong way. Zidane's head-butt, though, was just completely inexplicable. My mom, brother, and I just sat there stunned for a few minutes. A decent comparison might be if you saw Milton Friedman on TV praising the current system of public education in the US: the polar opposite of your expectation. It's unfortunate that this is what he will be remembered for rather than his creativity throughout the later stages of the tournament.

From my eastern NC stomping grounds:

An old postcard proclaims Rocky Mount as the "Bar-b-cue capital of the world."

"Whenever the money becomes available, we see it as more of a tourism thing," said Pete Armstrong, Parks and Recreation director. "Eventually we want to capitalize on the barbecue thing."

Yup, tax money for pork park. Source here; HT Reason.

Perhaps the Ignorance term is superfluous?

This has been floating around for a few days, but no one else on DOL has mentioned it. Last week Ted Stephens, senator from Alaska, gave a speech explaining why he was voting against the then-pending net neutrality legislation. In that speech he gave what is likely to become a legendary explanation of what the Internet is - can someone cross check with Al Gore?:

I just the other day got, an Internet was sent by my staff at 10 o'clock in the morning on Friday and I just got it yesterday. Why?

Because it got tangled up with all these things going on the Internet commercially...

They want to deliver vast amounts of information over the Internet. And again, the Internet is not something you just dump something on. It's not a truck.

It's a series of tubes.

And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material.

Now, I am not sure where I come down on the net neutrality issue, and I am not even sure I understand it all. It sounds like there is a conflict between the "common carrier" notion of the Internet service provider and the ISPs desire/ability to price discriminate across end-users or intermediate good providers such as Google Gmail, etc.

Perhaps the issue is more complicated. And while it is not difficult to understand the government wanting/itching to get its hands on the net even more than it has thus far - even while the net is a grand example of how things can work with limited government intervention - with folks like Ted Stephens (with such deep understanding of the issue) writing/passing legislation, perhaps it is best to leave well enough alone.

Moreover, perhaps we should seriously reconsider the capabilities of our elected officials.

Here are some humorous comments about Sen. Stephens comments.

Watching the World Cup makes me wonder: Does FIFA stand for International Federation of Flopping Athletes? Seeing some of the best conditioned athletes in the world fall down in agonizing pain after the slightest of jostling and then, moments later, make a miraculous recovery after having a medic douse them with a water bottle sure gives that impression.

I think Cannes or the ESPYs should include a category for best acting in a flopping role.

I watched the big game on Sunday (that's the World Cup final for all you American readers) with co-blogger Frank and Ben Powell. We were in Cancun and the atmosphere among the locals was pretty exciting. I admit to having turned from being a big soccer hater to someone with a gruding respect for the game. But still wouldn't it be just as effective to use Roshambot to determine the winner instead of penalty kicks?

Also some stuff from God's sport (that's baseball for you goshderned feriners):

Brandon Dutcher points to a Moses bobblehead promotion that reminded me of the "Opening Day Genesis" and the hilarious "First Baseball Game" (I can find two bits of it here and here).

[I just received a worthy comment from Wilson Mixon: "Very interesting, but historically dubious. It would appear that baseball got lost somewhere along the way. Otherwise, why would Jesus have had to ask, "Where are the nine?" (Luke 17:17)"]

Today's Washington Post runs this story on the widening pay gap between low-skilled and skilled labor. Using BLS survey data, this accompanying graphic shows that, from lowest to highest, wage growth by wage quintile in the DC region between 2003 and 2005 was: 5.4, 6.9, 10.5, 12.4, and 8.5. The lengthy article explains:

Businesspeople cite shifts in the world economy that give educated workers leverage to negotiate for higher wages but make low-paid workers replaceable -- a disparity that is especially pronounced in a service economy like Washington's.

The region's economy is strong and businesses are expanding, hiring more software engineers, financial analysts, salespeople and other skilled workers, thus bidding up their pay. But companies are simultaneously finding ways to automate clerical tasks, move call centers to cheaper places and handle business online, weakening demand for less-skilled workers.

I have to applaud the Post for attempting an in-depth analysis of the market forces that explain the data. But it's a poor attempt. Their analysis is almost entirely demand focused. For example,

Many new technologies and ways of operating -- often aimed at cutting labor costs -- were in their infancy in the late 1990s. Now they are maturing, tamping demand for low-skilled workers.

Using Alfred Marshall's analogy, I teach my students that studying markets is like cutting paper with a pair of scissors. One blade is demand and one blade is supply. You can't cut paper very well with a one-bladed scissor, and today's Post analysis demonstrates this well. It neglects important dynamics in labor supply that affect wage-skill relationships.

First, there is no controlling for tenure in the labor force, or in the particular job surveyed. Tenure increases compensation.

Second, there is no controlling for human capital, either cross-sectionally within the survey's snapshot, or dynamically as many currently low paid individuals will accumulate greater skills and education, increasing their compensation over time.

Third, and a corrolary to the second point, there is no controlling for labor market mobility to higher paying jobs. Many of the individuals currently in the upper quintiles spent time in the bottom quintile earlier in their labor force years. The Post implicitly recognizes this, in the article's final paragraph:

[Kamal] Quarles, [a] shipping clerk frustrated by puny raises, isn't waiting for the economics to change. Foreseeing that package handling would grow only more automated, he enrolled in college. He just graduated and plans to look for a job with more promise. "This," he said, "isn't a career for me."

Ultimately the Post's analysis is limited by the cross sectional orientation of the data. Labor economists (which I am not) have for years turned to longitudinal studies to get a clearer understanding of labor markets. But that doesn't stop the Post from making quite a big deal out of itself.

The Post's analysis does not give a full picture of how income is distributed in the region, but it does offer a rough idea of how the benefits of the region's economic expansion are being distributed...

Because the analysis doesn't include labor supply factors that help determine wage profiles, this claim is almost completely false.

From the July 9, 1906 NYT:

WASHINGTON, Penn - The destruction with dynamite of the famous "Indian Altar Stone" on the farm of Joseph Horner, near Millsborough,has created intense indignation among scientists. Horner admits having blown the famous rock to pieces, and says he did it because parties were continually tramping over his farm to look at it.

The altar, as it was called, stood on top of a high hill on the Horner farm. It was covered with figures of men, animals, snakes, and strangest of all, a figure of a kangaroo, all chiseled in the rock. It was discovered a few years ago, and ever since the Horner farm has been a mecca for archaeologists, all of whom were puzzled over the kangaroo carving on the big rock.

Horner does not think he owes any apology to science for his act, but simply says it was on his own ground and he could do as he pleased with it. He objected to its being there, because people who came to see it trampled down his wheat.

Two immediate alternatives come to mind. First, perhaps the rock could have been removed from the farm and relocated to a library or university, a la the Rosetta Stone. Second, farmer Horner could have charged admission to the rock and turned a bit of a profit from the "luck" of having the rock on his property, a la Rock City on top of childhood home Lookout Mountain.

This instance sounds like a lack of imagination on the part of the farmer and a lack of courtesy on the part of the scientists qua society. This seems similar to property rights issues today.

From the July 9, 1906 NYT:

AUSTIN, Texas - J. J. Terrell [for whom Terrell, Texas is named?], State Land Commissioner, reports that he has sold 3,500,000 acres of public lands of the State in the last eight months. The prices ranged from $2 to $5 an acre. Between now and Jan. 1 1,500,000 more acres will come on the market.

The 3.5 million acres is 5,468 square miles. To put this in perspective, Delaware is 2489 square miles. However, the entire state of Texas is 268,581 square miles. Thus, the state land sale was approximately 2% of the state of Texas.

Greg Grandin writes in the New York Times:

Every year, nearly three million tons of harvested Mexican corn is left to rot because it is too expensive to sell.

How on earth could this be true? Does it mean that the mere cost of transporting the corn from farm to market exceeds the market value of the corn? (Seems impossible, given that Mexico pays prices that cover the cost of importing corn from the US.) If so, why did anyone bother to harvest the corn, and before that to grow it in the first place?

Comments are open in case anyone has a suggestion.

1. Former House Speaker Tom DeLay is still the GOP candidate on the November ballot for his old district in Texas. DeLay established residence in Virginia in an attempt to disqualify himself for the ballot. (Article I Section 2: "No person shall be a Representative ... who shall not, when elected, be an Inhabitant of the State in which he shall be chosen.") Texas Democrats sued, and a federal district judge ruled last Thursday that DeLay remains the on the ballot. Texas GOP is appealing the ruling to the 5th Circuit. The Democratic candidate is Nick Lampson, a former pol whose district was partially swallowed by DeLay's infamous 2003 gerrymander, which was recently upheld by SCOTUS. Saturday's Houston Chronicle ran a front page story in which DeLay hinted he might just run.

2. Meanwhile, the GOP's party infighting continues, largely over the Abramoff thing. Seems Dem's should be getting more traction out of this, but the current outlook for a change in party control isn't great. From the American-Statesman story.

Nathan Gonzales, a political analyst for The Rothenberg Political Report, said Democrats are in position to gain eight to 12 of the 15 seats they need to win back control of the House, in states such as Pennsylvania, Ohio and Connecticut.

3. An old friend, Eric Schansberg, is running as the Libertarian candidate in a close race in southern Indiana. The incumbent is a freshman GOPer, and the DEM is the 2004 loser trying to get his old seat back. Eric is a full professor at Indiana-Southeast where he's won several teaching awards, an adjunct scholar at the Acton Institute, and the author of several books including, Legislate Justice Not Morality, and Poor Policy: How Government Harms the Poor (sort of a newer Losing Ground and a great supplement for an applied public finance course). Eric was getting his Ph.D. from Texas A&M at the time I was an undergrad there. Along with Edgar Browning, Eric was my main mentor in undergraduate. I took two classes from him, and we spent many an hour gulping IHOP coffee while debating politics, economics, religion, sports, you name it. Eric is one of the persons of highest integrity that I personally know, despite the fact that he's running for Congress! :-). Beneath the fold is an email from Eric announcing his bid. I wish him all the best.

The normally careful Greg Mankiw shoots from the hip on the (in)justice of gambling:

In a comment on my previous post on gambling, Jacqueline Passey says:

"gambling is distributive justice, moving money from stupid people to smart people."

The utilitarian in me points out that Jacqueline gets things exactly backwards: distributive justice demands moving money from smart people to stupid people. Smart people have the potential to make a lot of money and thus have lower marginal utility per dollar, while stupid people have less money-making potential and higher marginal utility.

Several commenters have correctly noted that economic theory provides no basis for interpersonal utility comparisons (as Lionel Robbins explained back in the 1930s). But Mankiw doesn’t say “the economist in me,” he says “the utilitarian in me”. If he’s referring to “utility” in the Benthamite sense (net pleasure) rather than the choice-theoretic sense (preference-ranking), then Mankiw is really saying: A smart person gets less pleasure from his marginal dollar than a stupid person gets from his. Which is an assertion that has zero basis in economic theory, but at least it’s not as meaningless as saying that a smart person has less preference-ranking for his marginal dollar.

The really curious lapse in Mankiw’s argument is that “distributive justice” is not a utilitarian concept. (Rawls talks about “distributive justice,” but firmly rejects utilitarianism. ) So I’m a little puzzled. Perhaps when Mankiw writes “distributive justice demands …” he really means “the maximization of aggregate pleasure demands …”. But if he's taking aggregate pleasure maximization as his goal, then Mankiw's argument is subject to all the criticisms (nonoperationality, obliteration of moral side constraints) that Benthamism has rightly attracted over the years.

Start here:

End up here:

One year after starting out to trade one red paper clip for a house, our hero has been successful.

Here's the official One Red Paperclip site.

Here are my thoughts over at Heavy Lifting

From the July 6, 1906 NYT:

Last year 850,000 [immigrants] landed here, the previous greatest number having been 788,289 in 1905. It was in that year that Hungarians displaced Italians as the greatest contributors to the dilution of the Anglo-Saxon race....The arrival of Austro-Hungarians at the head of the list is unwelcome for several reasons. Their illiteracy and disregard of law are high, and they are among the races which settle in the East, only one-fourth going West. They are not skilled workers, contributing hardly anything but crude muscle to the country of their adoption. And worse yet, they do not assimilate any more than the Chinese. Part of this is due to their alienage being in higher degree than that of the arrivals from Western Europe, but more of it is due to a settled policy encouraged from home...There is but cool welcome here for those who emphasize their differences from us, and hold themselves aloof from our assimilating influences.

Perhaps the NYT of 1906 reflected the thoughts of its readership, just as the NYT of 2006 likely reflects the thoughts of its readership. Regardless, the article points out that fear of `them furners,' depicted so well in Gangs of New York (set during the 1850s-1860s), is not new.

Common Place, an online history journal, had a special issue in April 2006 concerning money. Full disclosure - I haven't read a single article yet.

Here is the table of contents:

• Joyce Appleby "Money, Money, Money"
• Jennifer J. Baker "Paper Money Gets Personal"
• Rudi Colloredo "Mansfeld Money of Moderate Size"
• Christine Desan "Money Talks"
• R. G. Doty "When Money Was Different"
• Eric Helleiner "North American Monetary Union?"
• Benjamin H. Irvin Benjamin Franklin’s "Enriching Virtues"
• Wim Klooster "Have You Heard the News About the Silver Fleet?"
• Michael O’Malley "Free Silver and the Constitution of Man"
• Mark Peterson "Big Money Comes to Boston"
• Malcolm Rohrbough "The California Gold Discoveries"
• Jeffrey Sklansky "A Bank on Parnassus"
• Mark Valeri "The Rise of Usury in Early New England"
• Robert E. Wright "Currency Unions Past and Present"
• Michael Zakim "Bookkeeping as Ideology"

Hugh Macaulay, a near-legendary member of Clemson's economics faculty for many years, passed away last fall. Yesterday I saw Bruce Yandle's eulogy for his friend and colleague for the first time. If you're a teacher, you owe it to yourself and your students to go read Bruce's words about a life so well-lived in the academy. (I'll resist the temptation to quote extensively from it, in the hope that you'll read the whole thing.)

A new PR: 19:03 (16/320 overall; 16/203 men; 2/28 men age 35-39)

I've been away from the office and computer for most of the past week and will be away for most of the next two weeks. A few items that caught my attention:

1. Tournament incentives are tricky things. NASCAR is tinkering with its championship points system. Maybe it'll become an annual affair like the BCS.

2. The national media have finally caught wind of a particularly sordid murder two years ago in Rome. I knew this was coming; I'm just surprised it's taken so long. (HT: Kara)

3. A Times (UK) article predicts that a new airfare tax to combat global warming (insert laugh here?) will cause airfares to double. I doubt it; I suspect that the demand for air travel is sufficiently elastic that European airlines will not be able to pass much of the tax along to consumers.

4. For an example of rent seeking behavior described by co-blogger Mike Munger, here's a bit on flex fuel fuzzy math courtesy of the ethanol lobby. (HT: Wilson)

5. As a refuge from all the idiocy about losing manufacturing jobs, The Economist reports the U.S. manufacturing sector is doing quite well. (HT: Wilson again)

6. From the wacky minor league baseball promo department (previous entry here), we have the California team that gave out bobble couches and had a silent innning in honor of Tom Cruise.

Greg Ransom asks in exasperation: “What explains the open borders view of many economists?” I think the answer is straightforward: the same beliefs that explain their free trade view. Like goods, people should be free to move to where they produce the greatest value (consistent with respecting property rights).

Ransom quotes at length a blog entry by Steve Sailer that rails against the recent “open letter” on immigration written by Alex Tabarrok (and signed by your truly, among hundreds of other economists).

Sailer tries to infer that well-known economists who didn’t sign the letter must reject its contents. That’s just silly. There are many other possible reasons for not signing, like simply not having seen the letter, or having no firm opinion on the issue. [ADDENDUM: A correspondent suggests that some economists may have refused to sign the letter because they found its policy recommendations too vague, or because they didn't like the way it mixed positive and normative claims.]

Sailer opposes letting low-IQ people into the country, because high IQ is reportedly correlated with high GDP per capita. He claims:

Libertarian economists are particularly reluctant to allow any mention of differences in IQ—because if we all just assume that everybody is equal, well, that sweeps a lot of unpleasant problems under the rug.

But that’s just not true. Note that Charles Murray, the most prominent discusser of differences in IQ in recent years, is a libertarian. Bryan Caplan, to cite a prominent libertarian economist, has discussed the importance of IQ differences quite a bit on his blog, e.g. here. Caplan has importantly pointed out here that the benefits of free immigration, like the benefits of free trade, are greatest to the extent that immigrants (or trading partners) have different comparative advantages from us. Brain-workers gain especially from the immigration of muscle-workers.

Based on Greg Mankiw and Paul Krugman mentioning that their grandparents were immigrants, Sailier charges that “family nostalgia and ethnocentrism are probably the biggest drivers of many economists' pro-immigrationism.” For the record, my own ancestors immigrated to North America before there was a United States. As the old joke has it, they were lucky that the immigration rules weren't so strict back then.

Sailer urges economists to recognize that "Families matter." He doesn’t seem to recognize himself that the importance of families strengthens the case for making immigration more free. When immigration is illegal, it is young single males who make the risky and strenuous journey across the border from Mexico. Only when immigration is legal can entire families come. Sailer rips economists for supposedly “citing data on legal immigrants to argue for amnesty for illegal immigrants.” He himself commits the error of citing the problems created by illegal immigrants to argue against legal immigration.

Independence Day-inspired articles from:

Europe:

Americans have never lost the vital understanding that freedom has to be indivisible in order that man may lead a virtuous life. Democracy and freedom of expression represent only the political and moral-cultural fields of life. There is a third important field of social life: economics. In this field the Americans have adopted a system that allows citizens the greatest possible economic freedom and severely restricts the power of the government. It is called capitalism, which to most Americans is something positive, while to most Europeans it appears deeply repulsive.

and Venezuela:

The US has its independence day today and Venezuela has its dependence day tomorrow. With its $11,000 billion economy at $40,000 per capita and with only 10% of its families affected by poverty and with as much economic freedom as exists on earth, the US should celebrate its independence today. With its $100 billion economy at $5,000 per capita and with almost 75% of its families affected by poverty and with a decline in economic freedom more rapid than almost anywhere on earth, Venezuela should not celebrate its independence tomorrow.

This is neat. Track the tour via a Google Maps extension.

Many insist that the U.S. is "too young" to understand how the world works. Perhaps, if the way the world works is to rely on various forms of authoritarianism. The system comprised by the Founding Fathers - ensuring, to the greatest extent ever tried, life, liberty, and the pursuit of happiness - has had an amazing track record in its short history. Sure, there are several demerits on the tally sheet of the U.S., but compared to the rest of the history of the world, it really isn't a stretch to suggest that no other system is its equal.

I argue that it is our liberty which, in part, explains why many of the problems of the past are also the problems of the present. The moment we see many of the problems of yesterday solved by the government programs of today, take the pulse of liberty.

More here

Unlike the earlier appointments of Randy Kroszner and Kevin [not: David] Warsh, last week’s appointment of Frederic Mishkin to the Federal Reserve Board of Governors is completely unsurprising. Unlike Kroszner before his appointment, Mishkin's writings about monetary institutions have stayed within the forty yard lines of the debate. As I noted in my Econ Journal Watch article about the Fed’s impact on research in monetary economics, 31 of 32 articles in the 1997 edition of the supplemental reader to Mishkin’s market-leading money and banking textbook were drawn from Federal Reserve publications. From 1994 to 1997 Mishkin was Executive Vice President and Director of Research at the Federal Reserve Bank of New York. In 1999 Mishkin co-authored a book with current Fed chairman Ben Bernanke (and two others from the NY Fed, Thomas Laubach and Adam Posen) in favor of inflation targeting, which they characterized not as a strictly binding rule but as “constrained discretion”. As a member of the Board, we can expect Mishkin to vote consistently with Bernanke.

I'm back from Zürich, where I crammed a semester's worth of material from The Theory of Monetary Institutions into fifteen hours of lectures (3 hrs a day x 5 days) at the Swiss National Bank. It was somewhat remarkable to find that I could fit 90% of the message into 33% of the usual time. How much any audience can absorb at such a pace is another question. But I did get some good questions.

Though it has offices for hundreds of banks’ Swiss affiliates, Zürich has no skyscrapers. It’s a charming old city with pedestrian cobblestone streets, trolleys running everywhere, a popular lakefront, and a river flowing through.

The real price of food in Zürich is high, and not only for American tourists with weak dollars. The people are notably trim and fit. Based on the law of demand, I think there may be a connection.

I was supposed to leave my hotel key at the front desk when I went out, and ask for it when I came back. I had room 512. In German, fünfhundert zwölf is possibly the most difficult three-digit number for an American to pronounce. Try saying it one time fast. Fortunately the hotel staff spoke flawless English.

I memorized and used phonetic phrasebook German when the occasion arose, like buying a train ticket to Luzern. Problem was, if I was asked a question in German, I was hopeless. The most useful phrase then turned out to be: “Sprechen sie English?”

One of the easiest questions I got at the central bank: “So, as a “free banker,” do you get many invitations to speak at central banks?”

File this in the "things don't change" drawer? From the July 3, 1906 NYT:

In a statement made for the Democratic minority makes a comparison of the expenditures provided for by this Congress of $880,183,301, with the expenditures of 1898, the first year of President McKinley's Administration, when the figures were $528,735,079, a difference of $351,448,22. Commenting on this showing, he says:

"This growth in appropriations sustains the contention that the Republican Party stands for extravagance in public expenditures in order to us that extravagance as a cloak for their more objectionable purpose of maintaining a high protectionist tariff to favor the trust combinations of manufacturers of the country.

"A reduction of expenditures, they well know, wold compel a commensurate reduction in taxation, and to that extent a lowering of the Chinese wall of protection that now surrounds the great body of consumers, who constitute the larger portion of our population and compel tribute from them to the favored classes.

"Much of this extravagance grows out of the practice prevailing with the present Administration of appointing commissions to do what Congress ought to do and what Congressmen are elected for and paid for, thus delegating the powers constitutionally belonging to Congress to others who have no particular relations with or responsibilities to the public, and not render an accounting to the taxpayers of this country.

Perhaps the majority of people have rather low opinions of Congress because the rhetoric hasn't changed in 100 years?

A sneak preview, for those interested, of my EconLib essay on rent-seeking.

And, as always, an acknowledgement to Russ Roberts. He is a completely heartless editor, but what a terrific soul.

Here is the essay.

From the July 1, 1906 NYT:

Under the law compelling corporations and individuals to file their legislative expenses, several important statements wer filed to-day with the Secretary of State.

The Allied Real Estate Interests of the State of New York certified that it expended $24,722.94 in connection with legislation. Of this amount, the statement says, $18,722.30 went for salaries of temporary and permanent employees and $5000 was paid to Lawrence Viller of New York, its Second Vice President, who represented the association before the legislature and the Governor.

The City Club of New York certified that it paid Lawrence Veiller, its Secretary, $102.82 for legislative services.

The Brooklyn Heights Railroad certified that it expended $166.65 for services before the legislature.

The 59th Congress ended having allocated approximately $2 billion. This is the first time such money has been allocated, and the NYT editorial comments recognize the large nominal spendnsuggests that while for the first time. EH.net puts U.S. nominal GDP at $30 billion. Therefore, without the income tax and with society not yet fully vested in progressive government, the federal government spending is about 6.6% of nominal GDP. The 2005 Economic Report of the President suggests 2005 nominal GDP was $12.5 trillion and federal outlays totalled $2.77 billion or approximately 22% of GDP.

My university has made the first wave of personnel and program cuts to deal with its budget woes. The headline cut was the elimination of the 18 month old New Center, a downtown professional development center that also housed the MBA program. The New Center had lost $800k and $500k in its first two years of operation and thus contributed in a small but not insignificant way to the $4.8m and $5.4m(p) operating deficits of those years.

The business school dean (full disclosure: she is also my boss but I have no connection to the New Center or the MBA program) claims the Center is on track to make a significant amount of net revenue in the third year of operation. Of course, now they cut the program.

Question for discussion: Is the university guilty of sunk cost reasoning?