I'm pleased to announce that my former colleague Wilson Mixon has agreed to join our little corner of the blogosphere. Many readers and co-bloggers know Wilson from his many years of involvement with APEE.

Also on the administrative front, I'll be adding Greg Mankiw's blog to our blogroll.

Baseball Prospectus has a nifty Monte Carlo simulation of baseball teams' probability of making the playoffs. Of the DOL gang, it looks like Larry will have the best oppotunity to see playoff baseball--the Cards are estimated to have an 80% chance of making the playoffs. Bob's Reds rate about 29%; Craig and I are pretty much out of luck--the Rangers have a 2.5% chance and the Braves a 3.5% chance. I think BP repeats the simulation daily to reflect games of the previous evening.

From the AJC:

A California Korean grocers group is suing former U.N. Ambassador Andrew Young and Wal-Mart Stores Inc., alleging libel over Young's derogatory comments about small grocery stores in urban communities.

Young resigned as head of a Wal-Mart advocacy group Aug. 18 after saying Jewish, Korean and Arab grocers "ripped off" blacks by overcharging them for "stale bread and bad meat and wilted vegetables."

The suit, filed in Los Angeles County Superior Court last week by Paul Park, the president of the California Korean American Grocery Retailer Association and his group, seeks $7.5 million in general and special damages and an unspecified amount in punitive damages.

Young's comments were not only false, according to the suit, but they injured the reputations of Korean American grocers, hurt their sales and therefore also damaged the association.

Eugene Volokh, a law professor at the University of California, Los Angeles and an expert in libel law, said the plaintiffs are not likely to succeed.

"As a general matter, you can sue if someone makes false statements about you personally," Volokh said.

"You can sue if someone makes false statements about a small group of people, including you," he continued. "But when statements are made about a very large group, no particular member of that group can sue for libel."

Wal-Mart didn't make the statement, Andy Young did. I'm wondering if this is really about taking a crack at Wal-Mart's deep pockets.

SAT scores have been released; Georgia's score fell 3 points but moved up from 50th to 46th in the rankings.

Here is Gov. Perdue's policy advisor when scores were announced in 2005 (quoted from AJC via Lex/Nex):

The good news is that Georgia's SAT scores continue to improve across the board under Gov. Sonny Perdue's leadership. Our average score went up another six points this year, with three-point gains on both the math and verbal tests. This improvement exceeded the national average.

The bad news is that Georgia was so far behind other states when Perdue took office that our gains have not yet translated into a substantial jump in the national rankings. Decades of bureaucratic mandates and micromanagement of our education system by Democratic regimes led us off a cliff. It's going to take some time to climb back up the mountain.

The governor's philosophy has always been that if we do the right things to raise scores, then the ranking will take care of itself. This year's scores prove that his strategy of raising awareness of the importance of the test while providing the resources for adequate test preparation has us on the right track. Granted, our scores aren't where the governor wants them to be nor where the public expects them to be. But this year's improvement serves as positive reinforcement that the measures that we have taken are paying off.

Now here's Gov. Perdue commenting on the 2006 scores:

“I’m extremely proud of our progress this year, but rest assured, we will not stop working until Georgia is at the top of the list in SAT scores,” said Governor Sonny Perdue. “Georgia’s improving ranking paints a more accurate picture to the global business community of the strength and quality of Georgia’s students. It demonstrates that our students are working harder, achieving more and becoming better prepared for their futures.”

Notice this year's spin is all about the ranking with no mention of the scores. Last year, when scores were up but the ranking was not, the spin was all about the scores. To be fair, the SAT has changed this year so that may sway the scores a bit.

Robert Samuelson invites Congressional Democrats to put-up-or-shut-up regarding Wal-Mart:

"Congress should just buy the company and then legislate good behavior. Wal-Mart executives 'talk about paying [workers] $10 an hour,' Sen. Joseph Biden told a rally in Iowa, according to the Times. 'How can you live a middle-class life on that?'

"Well, if $10 is too little, the government could order the Department of Wal-Mart to pay more. How about $15 or $20? Similarly, if Wal-Mart's health insurance is inadequate, Congress could command more coverage."

Other recent defenses of the company include Rich Lowry and Jonah Goldberg on NRO; and Michael Strong on Tech Central Station. Strong roughly estimates that Wal-Mart may be "single-handedly responsible for bringing about 38,000 people out of poverty in China each month, about 460,000 per year."

(Just after I posted this, I noticed that Frank had already highlighted Strong's article. This additional nod shouldn't hurt, though.)

Update: One more -- Richard Vedder and Bryan O'Keefe in The Washington Times: "Take Mr. Biden's comments. Contrary to his claims, there is enormous economic evidence that Wal-Mart's has helped poor and middle class consumers--in fact, more than anybody else. Our own data analysis shows Wal-Mart is concentrated primarily in smaller, rural counties with a per capita income far lower than other retailers, like Costco. And, unlike the picture painted by labor activists, when the Wal-Mart moves in, good things happen. Looking at 25 small towns where Wal-Mart opened stores in 2002, we found employment growth was much stronger in 'Wal-Mart communities' than in other areas.

"Other academics have reached similar conclusions about Wal-Mart's positive effects for the poor and middle class. University of Missouri economist Emek Basker shows Wal-Mart's presence tends to lower prices by varying amounts, perhaps nearly 10 percent in the long run.

"Respected Massachusetts Institute of Technology economist Jerry Hausman argues that consumer welfare gains are even larger than those estimated by Mr. Basker, probably in excess of 20 percent of sales."

Here's some more good news: Vedder and O'Keefe have a book forthcoming from AEI, titled The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy.

The August 30, 1906 NYT announces Cornell's football schedule:

1. Colgate at Ithaca
2. Hamilton at Ithaca
3. Oberlin at Ithaca
4. Niagra at Ithaca
5. Bucknell at Ithaca
6. Bowdoin at Ithaca
7. Princeton at New York
8. Western University of Pennsylvania at Ithaca
9. Holy Cross at Ithaca
10. Swarthmore at Ithaca
11. Pennsylvania at Philadelphia

There aren't a lot of 21st century football powerhouses on this list, but then we are talking about 1906. At the time many of the so-called Northeastern Independents were at or near the pinnacle of football prowess.*

How did the Big Red fare? Here are the season-end results:

       date      visitor   visitscore       home      homescore
 9/29/1906      Colgate           0        Cornell          0                 
 10/3/1906     Hamilton           0        Cornell         21          
 10/6/1906      Oberlin           5        Cornell         25             
 10/10/1906      Niagara          6        Cornell         23             
 10/13/1906     Bucknell          6        Cornell         24                
 10/20/1906      Bowdoin          0        Cornell         72                
 10/27/1906    Princeton         14        Cornell          5  
 11/3/1906   Pittsburgh           0        Cornell         23              
 11/10/1906   Holy Cross          6        Cornell         16                 
 11/17/1906   Swarthmore          0        Cornell         28               
 11/29/1906      Cornell          0   Pennsylvania          0                

Cornell finished the season with a 8-1-2 record, scoring 237 points to its opponents' 37. The Wilson retro-rating system puts Cornell fifth in the country after Yale (#1), Princeton, Harvard, and Penn State.

Out of 64 teams playing in 1906, the Northeast Independents (UMass, Holy Cross, Amherst, Williams, Dartmouth, Army, Colgate, Brown, Syracuse, Cornell, Harvard, and Yale) had an average Wilson retro-rating of 692 versus an average rating of 519 amongst the 52 other teams (statistically different with P=0.001).In 1906, the average retro-rating rank amongst the Northeast Indpendents was 17 with all but one (UMass) above the median rating.

* My original language was unintentionally misleading: "There aren't a lot of household names on this list." I was referring to the football dimension and not general name recognition. HT: Co-blogger Larry White. Larry also points out that "Western University of Pennsylvania...is now known as the University of Pittsburgh," which the historical score data reflects.

Larry's post below reminded me of this quote from the Man himself

The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or more properly speaking, for the ease of the masters.

From this TCS Daily article:

Whether we handle WalMart and the attendant issues as intelligent adults, capable of reasoning, or we do so as whining three-year-olds with all the attendant knowledge of incentives, utopian wishes and economic consequences such a three-year-old might possess is, indeed, one of the important questions facing the country.

Stuart Taylor has this excellent column at Slate, on the alleged - and it now appears almost certainly false - rape of a stripper by members of the Duke Lacrosse team. It's a story of dishonest, politically ambitious prosecutors; crooked cops bent on making the evidence fit the crime, ideologically driven academics, and mostly, the shameless, ideologically charged reporting of America's most influential newspaper. It's long, but well worth a read - a real life Bonfire of the Vanities.

Richard Vedder blogs (hat tip to E. Frank):

When asked why [university faculty] teach so little, we reply "teaching is only a small part of our duties." But who decided that? The donors to universities? State legislatures? No. The universities themselves have decided to downplay instruction in order to do what the faculty wants ….

As my former colleague Dwight Lee has been known to say, if you want to know for whose benefit the universities are run, observe who gets the best parking spaces. (Not the students but the administrators and faculty.) At Wal-Mart, by contrast, they ask the employees to park away from the building.

I don't really know what this means, about CNN.com visitors or whatever, but the "QuickVote" on CNN.com's homepage has the following question:

Who would win a debate on world issues between President Bush and Iranian President Ahmadinejad?

Results as of 10:45am are

Bush 36% 244 votes
Ahmadinejad 64% 426 votes

Apparently Iran's prez wants to debate W, "so Iran can voice its point of view on how to end world predicaments." I'll just take a stab at this, but I'm betting that, from Mahmoud's point of view, the primary way to end all the world's predicaments is to stiff-arm the residents of a certain Middle Eastern Jewish state into the Mediterranean.

So says Michael Strong. An excerpt about Wal-Mart's effect on reducing poverty in China:

Wal-Mart might well be single-handedly responsible for bringing about 38,000 people out of poverty in China each month, about 460,000 per year.

There are estimates that 70 percent of Wal-Mart's products are made in China.[3] One writer vividly suggests that "One way to think of Wal-Mart is as a vast pipeline that gives non-U.S. companies direct access to the American market." [4] Even without considering the $263 billion in consumer savings that Wal-Mart provides for low-income Americans, or the millions lifted out of poverty by Wal-Mart in other developing nations, it is unlikely that there is any single organization on the planet that alleviates poverty so effectively for so many people.[5] Moreover, insofar as China's rapid manufacturing growth has been associated with a decline in its status as a global arms dealer, Wal-Mart has also done more than its share in contributing to global peace.[6]

How can this be, given the vast and growing literature documenting Wal-Mart's faults? We have seen workers in the factories of Wal-Mart's suppliers complain on tape about being forced to work long hours under terrible conditions. Certainly no one should be forced at any workplace. And yet even articles documenting Wal-Mart's faults often mention other facts that ought to be considered before coming to too quick a judgment concerning the overall impact of the corporation. In a Washington Post story titled "Chinese Workers Pay for Wal-Mart's Low Prices," documenting abuses of workers at Wal-Mart suppliers in China, the authors point out that:

"China is the most populous country, with 1.3 billion people, most still poor enough to willingly move hundreds of miles from home for jobs that would be shunned by anyone with better prospects."

If we care about alleviating global poverty we need to take this fact seriously. Without Wal-Mart, about half a million of these people each year would be stuck in rural poverty that is, for most of them, far worse than sweatshop labor.

HT: Wilson Mixon

Filed in the things don't change drawer is the 1906 movement to reform spelling in American. Teddy Roosevelt passed an executive public order [to the Public Printer] last week ordering all government documents to be printed with the new English spellings, including tho for though, altho for although, stopt for stopped, and so forth. Andrew Carnegie has thrown some money at the project, but in the end it will die.

In the August 29, 1906 NYT is an article announcing that Webster's Dictionary would not include the new spellings simply because Roosevelt said so. The company had this to say:

"English is a lively enough language without a wholesale change such as that which is now being agitated. Snipped particles, like `stopt' for stopped are particularly undesirable, and hideous, and will not come into good use for a long time."

How long? Perhaps until text messaging? What was that, 2003 or 2004?

In another article there is concern that Congress will try to block the President's move by requiring that Congressional documents be printed using standard English with the President's/Executive branch documents being printed in reformed English. This leads to the following concern:

[I]t may easily produce a vexatious mix-up in requiring two sets of employes at the printing office. It will be practically impossible for one set of men to follow both styles alternately without making frequent blunders in each, and two sets of men means two sets of salaries.

As an aside, you might notice that there seem to be typos in the 1906 articles I pull from. There might be some typos, but fortunately for me many of what seem to be typos are accurate. For example, employe and to-day and per-cent are typed as they were spelled in 1905/1906. Thus, it is apparent that English does evolve and "reform" although it is interesting that the President of the United States would attempt such a reform unilaterally (consider if Bush tried to change nuclear to nucular and strategy to strategery? Although some of these Bushisms are already creeping into the language even if only in jest.)

The simplified spelling movement is still rolling along.

More here
More here
More here
More here

Heck, with my bad primary education you would think I'd be a life-time member.

An amazing letter to the editor in the August 29, 1906 NYT:

We had an earthquake that scared us all up to our full capacity to be frightened, followed by a conflagration which devoured all the business section and about one half the resident section, reckoning in point of population, (not area.) The loss of life will never be known, I might say three thousand, or again five thousand. Each would be simply a guess. The property loss likewise may have been $500,000,000 or again $700,000,000. I don't know, nor does any one else. Discomforts were plenty; actual suffering not at all. My family and I dined off a can of corn, eaten cold out of the can, this being our sole dish the evening after the earthquake...I carried wood and water, cooked in the streets, stood in the bread line for four hours, and with thankful heart received, in the shape of two hard-boiled eggs, my share of the millions the country at large had contributed.

But all this is forgotten, the fact being that we are all too busy to think of it...All the weakkneed gleaners have fled; leaving the ever-springing crop of those who remained. Everybody here is busy. Personally, I hear no one discussing the safety of the city or its advantages or disadvantages as a place of investment...I have found nobody who is worrying himself over the question as to the opinions of outsiders...

I am doing all the business I can take care of...Whether there are 70,000 people here of 350,000 I don't know, but I do know the business is here, which is the thing of interest. And it must not be forgotten that the good-will of thousands of firms went up in the fire, and the business of to-day is anybody's who goes after it. I don't believe in the history of the country there has been such an opportunity for a new house as exists to-day in San Francisco...

That is the great advantage of this city to-day. The population has been winnowed and the chaff is scattered to the four winds of heaven. The present population of San Francisco is not worrying about its future. We haven't time at present to take much interest in daily chronicled facts that this one or that will erect a class A building. We are not worrying over the fact that the rehabilitated Palace Hotel will have five or seven gilt angels at it pinnacles. We are occupied in making money in one-storied shacks at present, and will turn our thoughts to putting our surplus into class A buildings later on.

Wow. And this not five months after the SF earthquake. Something to think about amidst the carping sure to fill the airwaves today and the rest of the week.

Fox ran a special report on the cost of college Sunday evening. Newt Gingrich was the host and it featured economists Richard Vedder (read his take on the program here) and James Heckman. Although the show raised some good points (e.g., the mandatory fees racket for sports and student clubs, the possibility that government subsidies are actually driving up college costs, the use of TAs instead of professors to teach classes at research schools, and the extravagent spending on things like climbing walls that are not related to instruction), I found it generally disappointing. Discussion of the good points was mostly superficial in order to focus on the anecdotal examples at the core of the program.

Two especially maddening points:

1. High and/or rising costs were repeatedly cited, but it was unclear whether the figures were sticker prices or prices net of various forms of financial aid. (I suspect the former but it was not clear.) There's a big difference since many colleges discount 40% or more (on average, not for every student) off of the sticker prices. Would one reach the same conclusion that college is expensive and getting more so? Probably, but either way it's more appropriate to use the net number which more closely corresponds to what students actually pay.

I though the show was on sounder ground when it pointed out that colleges' price discrimination regime was premised on requiring students to provide detailed family financial information via FAFSA. The form is required of students seeking federal aid (e.g., Pell Grants) but is it also required of students seeking only institutionally funded aid? In a related vein, how much of the rising cost of college can be traced back to mandates from accrediting agencies or government?

2. One of the students profiled in the show was a young woman from New York. Her family claimed it would be unable to afford college even though it had a family income of $135k. Sure NY is an expensive place to live and a tax hell, but there was no evidence that the family had done any substantial saving in anticipation of the daughter going to college or that she had considering more than the two colleges (UMass Amherst and SUNY-Albany) discussed in the program. I found this student's situation to be an unconvincing example of difficulty affording college and found myself muttering "cry me a river" during most of her portion of the program.

From an interesting article in the most recent Journal of Economics and Finance.*

Who were the ten most published authors from 1954 to 2003 in American Economic Review, Econometrica, International Economic Review, Journal of Economic Theory, Journal of Political Economy, Quarterly Journal of Economics, Review of Economics and Statistics, and Review of Economic Studies?

Answers below the fold.

Read More »

To put it mildly, the vintage base ball community has been fairly cold to the idea of the new Vintage Base Ball Federation previously blogged about my Mike. (A taste of the responses I've seen floating around the listservs is pasted below the fold.)

I have nothing against people making money with vintage base ball. Doing well and doing good are not incompatible. Also, I have nothing against marketing the game aggressively. My first reaction was, "Great, vintage base ball is going to get some attention here."

But after reading more about it, my thinking was, "Oh no..."

I have a problem with the idea of using "hyrbid" rules from the 1860s to the 1880s. In the last decade the vintage base ball movement has worked very hard to research and portray different time periods as accurately as possible. To combine some aspects of early 1860s base ball (for example, a ball caught on one bounce is an out) with 1880s base ball (for example, the use of gloves) is simply inaccurate.

Of secondary concern, I am not thrilled with the general thrust toward more aggressive competitiveness in vintage base ball. Winning is good. But one of the main attractions of vintage base ball for both players and fans is that it eschews the worst aspects of modern life. There are few insults in vintage base ball worse than calling someone a "softballer". I realize that in real life the relatively genteel game of the 1850s gave way to the more aggressive game of the 1880s so it does matter what era you're trying to recreate. But I do hope the game remains a game for people interested at least as much in history and accuracy as in winning.

Read More »

The Association of Private Enterprise Education has a new Cafepress store. Here's APEE's invisible hand inspired logo:

Some disappointing language from the August 27, 1906 NYT:

The economic effect of concentration of ownership is even more beneficial than the industrial. A runaway market for products is as harmful as a runaway market for stocks, and similarly productive of paralysis from exhaustion after the debauch. The greatest restraining factor in the iron market at present is the influence of the leading interest, which is supplying its customers at schedule rates, and discouraging exaction of premiums by others. Yet sentiment is alleged to be all against the trusts. Is it so in fact, or in restless imaginations?

From the August 27, 1906 NYT:

There is considerable agitation at the present for the radical restriction of immigration, actuated, as freely admitted, by a desire to thwart the demoralizing influence of foreign labor in the commercial and manufacturing centres of the country....The permanent benefits derived by this country from foreign labor, foreign brains, and foreign capital, aside from the patriotic devotion displayed by foreign-born citizens of this country in times of peril, must certainly be fresh in the memory of those who now seek the exclusion of their brethren. To whom do you owe the Monitor, and can you soon forget the Irish Brigade at Fredericksburg?

From the August 26, 1906 NYT:

None are so blind as those who have no object in view.

Many a man would rather be on the level than climb upward.

Home is what we make it, and some fellows never make it until about 4 A.M.

When prosperity is with us the pessimist goes ahead announcing that this is positively the fare-well appearance.

It's the man who sticks to water that drinks like a fish.

Sitting on a young man's knee isn't a positive sign that he can support a girl forever.

Even marriage doesn't take the conceit out of some men.

The fellow who courts trouble generally ends up marrying it.

There wouldn't be so many sinners if people struggled to get into heaven as they do to get into society.

The August 26, 1906 NYT has a lengthy interview with "one of the most prominent men interested in football at West point," who otherwise remains unnamed, concerning the new rules put in place for the 1906 season (set to start in four weeks). Here are a few snippets:

The forward pass, which was advanced as so potent a factor in opening up the play, I do not believe will be very prominent. The pass is too uncertain, requires too much accuracy in handling the ball, something that was extremely difficult under the old rules to make it of great value. Its moral effect, in keeping the opposing side on the qui vive of expectancy watching for its appearance, will be of greater value than the pass itself. I believe you will see few passes and unimportant gains made with them when made....

The change which I regard as most important in opening up the play is the on-side kick. When a ball is free to be secured by either side when kicked it is obvious that it introduces the greatest possibilities for forward passing imaginable. For instance, if a forward pass is desired the pass much be made to certain prescribed men, and must be cleanly handled or lost. The same end is gained by simply kicking the ball a short distance ahead of the scrimmage line and allowing any man on the kicking side to secure it...The consequence of this must be the spreading out of the defense to meet such plays and the consequent weakening of the line of defense...I believe the ten-yard rule would have been ruinous without this one change...

It was the little meannesses, the direct attempt to annoy and inflict distracting pain, that those who understood the game best sought most to avoid. I think the mere separation of the two lines by the length of the ball will almost entirely correct this evil, together with the restraint of another official...

I am not one who believes that you will see the grand game die. I believe that its virility and innate value will pull it through its serious sickness and that the coming season will see it restored to all its old-time popularity and power. As for styles of play, let me say the team that builds up the best defensive system will be the successful team, not the one with the strong offense.

This came to me from my friend, Mike Stroup, and I reprint with permission:

Some of us follow the careers of fantastic athletes. Others admire movie superstars. “Different” people like me admire incredible jazz musicians. Maynard Ferguson, jazz trumpeter extraordinaire, died this week. He was 78.

I cannot condone his typical sixties “experimental” lifestyle. Nor can I really relate to his devotion to Far Eastern religious beliefs. However, I can certainly embrace his tremendous talent as a band leader, jazz arranger and amazing trumpet player. Maynard also selflessly supported music education in High Schools, giving many free seminars for disadvantaged student musicians and raising money for supplying musical instruments to poorer public schools.

Back when I was playing saxophone in High School jazz band, I remember laying on my bed and playing Maynard’s LPs on my stereo. I would stare at the ceiling, enjoying the wonderful artistry of Maynard’s band and marveling over the incredibly high notes that he projected over his entire orchestra. Maynard effortlessly reached these high notes with such force that no other contemporary trumpet player could touch him. To play this instrument so strongly at those lofty heights takes tremendous breathing control techniques that he attributed to his ardent devotion to yoga.

Have you heard of the Stan Kenton jazz orchestra? This popular band of the late fifties and early sixties toured world-wide to great critical acclaim. Maynard got his start there, playing lead trumpet (Yes, LEAD!) at age 15—a mere teenager! Despite Ferguson’s young age, Stan Kenton called him the best trumpeter in the world. I have to agree.

In his early 20s, Maynard finally broke out with his own jazz orchestra, putting together some amazing jazz talents that you’ve probably heard of: names like Chuck Mangione, Bob James, and Chick Corea. Just like Kenton gave Maynard his shot, Ferguson’s band also gave these fellow musicians their footholds in the jazz world before they each became jazz greats in their own right. In the sixties, Maynard’s jazz orchestra was a showcase for his superb talent when he was at the peak of his form. From that point on, however, his career would take a gradual, downhill slide from that lofty peak. Yet, he would still remain a great musician throughout his career.

When jazz became less and less popular in the 70s (remember the rise of disco as a music genre? many of us are trying to forget it…), Maynard felt financial pressure to become more commercial. He sought mainstream recognition in order to retain record contracts with the big name recording studios. The jazz purists howled, but what is a starving musician to do? Do you remember the screaming trumpet on the jazzy version of the song “Gonna Fly Now,” which was the theme song from Sylvester Stallone’s movie “Rocky,”? That was Maynard’s trumpet screaming at you. He earned a Grammy nomination for that song. Soulless and overtly commercial, perhaps, but it still showcased his awesome talents. And the tune was darn catchy, too. Guilty pleasures, I suppose.

He later returned to the pure jazz scene, touring the world with small combos into the 80s and 90s. He then fell into relative obscurity during this past decade. I saw him in concert once during that twilight time, late in his career. I longed for the tight control and ultra-high notes that once emanated from his horn, but it was just not there. The spirit remained but the chops were too old. Once in a while, a few of his solos briefly warbled into the stratosphere and brought a smile to my face. For at that moment in time I was transported back to my old bedroom, all filled with high school angst and a tremendous admiration for this magnificent trumpet player. He played a large part in instilling in me a love for jazz at an early stage of my life.

Goodbye, Maynard. The world of jazz will sorely miss you.

Don Boudreaux and others (see his post for links) are chewing on Malcolm Gladwell's assertion that our system of employer-provided medical insurance hurts our international competitiveness. Don raises several objections; I offer another.

Studies show that employees bear most of the burden of employer-provided benefits. Hence if government health care somehow relieved businesses of providing medical insurance for their employees (ignoring for the moment the taxation necessary to fund the program), cash compensation would rise and there would be little change in total labor cost and firms' "competitiveness."

Keep your eye on this site, set for public launch soon. Disclosure: I am an advisor to the Exchange.

Excerpts from a news item via Drudge:

A restructuring of how Wynn Las Vegas manages its casino soon will leave many dealers there a little lighter in the wallet.

Starting Sept. 1, table game supervisors will share in the tips earned by dealers, a move gaming industry insiders said is unheard of along the Strip.

A widening disparity between the wages earned by dealers and casino floor supervisors caused the Strip casino to alter the structure of its table games division, Pascal said.

Starting next week, pit bosses and floor supervisors will be known as "casino service team leaders." Their responsibilities will cover the operations of specific table games, including game protection and customer service. The new plan will be phased in over several weeks.

Pascal said that Wynn Las Vegas dealers are the highest- paid dealers in the city, averaging about $100,000 per year in salary and tip earnings. But the employees supervising dealers average about $60,000 a year in salary, Pascal said.

"Because of our property, that disparity has gotten wider," Pascal said, citing Wynn's emphasis on high-end play as one reason its dealers' tokes are larger than most Strip properties. "There was no incentive in the division to advance and grow.

"Everybody wanted to become dealers," he added.

Dealers who split tips by shifts now will share those tokes with team leaders and supervisors, who also will receive a boost in base salary.

The result, Pascal said, will be dealers earning an average of $90,000 annually while supervisors will be paid $95,000.

Whew, not a good week for my adopted home state of Louisiana. One story that you have probably heard, and two that you probably haven't.

1) Re-elected New Orleans mayor Ray Nagin, when asked why his city still hasn't been cleaned up (an Atlanta Fed publication says that 86% of debris caused by the storm on private property still remains) said "You guys in New York can’t get a hole in the ground fixed and it’s five years later. So let’s be fair." Which reminds me of just about every other time I've heard pleas for fairness in public debate. When all outcomes of a group are equal to the worst performing member of that group, it is labeled "fair." It's been my experience that comparing your position with others, instead of with a goal you set for yourself, usually is stifling. Instead of figuring out how to fix his city, Nagin finds a worse situation, points to it, which enables him to continue to sit around.

2) A white school bus driver in Coushatta made nine black children sit in the back of the bus, saying that the front of the bus was for white kids. I guess you can take solace in the fact that instances like this are so rare that, when they do happen, they make the news. Wonder if the driver has a Confederate flag flying at home. I know, I know, the South didn't fight to keep slavery. State's rights and such, yup. And Al Qaeda hates us because we have troops in Saudi Arabia, not because we're not Muslims.

3) And, rounding out why you shouldn't want to move here (thanks, Baton Rouge pols!), Louisiana came in not 48th, not 49th, but dead last in a Forbes ranking of the best states for business. Virginia came in first. Too bad there isn't a hole in New York we can blame this on. Our neighbor, Texas, is number two on the list, so you'd think some spillover effects of good governance might occur, but I've noticed that Louisianans like corrupt politicians because it gives them something to laugh at. Like when you voted for the loser for prom king because you wanted to laugh at me! er, I mean him.

From the August 25, 1906 NYT:

Judge James Nixon of the Americus City Court and a former member of the Georgia Legislature ate broiled crow to-day to settle an election wager which he made with Judge Paschal.

Nixon was a supporter of Clark Howell for the nomination for Governor and agreed to eat the crow if Hoke Smith should defeat Howell. Hoke Smith won.

Paschal gave a dinner and invited hundreds of people to see Nixon pay the wager. A crow was killed and broiled and Nixon ate all of the meat, but had no appetite for the other viands on the table.

I wonder how the political discourse would change if we could go back to having our esteemed leaders literally eat crow.

This Chicago Trib story reports that:

Couples will decide to have smaller families, he [Mayor Daley] said, if they cannot afford to send all of their children to college.

Hmmm. Perhaps some will make the reproductive decision on this margin. My thoughts center more on the cell phones, designer clothes, first cars, proms, and who knows what else, that my girls will cost me long before college enters the picture.

The reporter lets the cat out of the bag in the second full paragraph of the story (tsk, tsk, tsk):

And if the federal government doesn't address the problem, he said, the United States will be unable to compete in the global marketplace.

Riiiight...the federal government needs to address the "problem." Got it.

I am not an expert on Wal-Mart, I prefer Target, but this fastblast struck me as either brilliant strategy or the response to a previous shakedown.

In an unprecedented push, Wal-Mart Stores has hired a gay-marketing shop, joined the National Gay & Lesbian Chamber of Commerce and begun discussions with activist groups about extending domestic-partnership benefits to its employees.

The move might (ought to?) be a net positive benefit, but in today's world one wonders how many decisions are being made in the second, third, fourth best world. On the other hand, WalMart is down only a penny this morning, which according to the ocular estimator version of the event study doesn't seem like much.

Now that the astronomers have purged Pluto from the planetary club - shock to the astrologers, I am sure - I wonder what would be purged from economics if it were put to a vote?

My votes:

Keynesian stimulus
Most of what Marx/EnglesEngels (see, I read the comments!) wrote

That's my short list after fifteen seconds of thought.

Jim Bouton, who came down a couple of years ago and gave a great talk at Duke about his then new book, Foul Ball, has a new project. (He doesn't get tired of projects).

The Vintage Base Ball Federation (VBBF) was officially launched yesterday.

Got some pretty decent coverage, at several places.

Congratulations, Jim, and good luck.

Since several of the boys here at DoL are VBB participants, I thought I would blog this up.

(Full disclosure: Jim B has been very supportive of my run for Governor of NC, and has agreed to write the foreward for the resulting book. He is a big believer in participant observation, which he is certainly good at himself. Now, I'm not saying he would VOTE for me; he just loves encouraging other people to do weird stuff. I am going to have to work to make that book even half as good as either Ball Four or Foul Ball. And, I was using the latter book in class; a very fine textbook on local land use from a public policy perspective)

(Nod to my man Martin, who is complicit in nearly everything)

Missouri is not the only state trying to pick winners and losers. From today's Rome News-Tribune:

CARTERSVILLE — Despite the successes of 2006, economic development professionals say improved business incentives are needed for Georgia to remain competitive at attracting new jobs and investment.

They pitched their wish list Wednesday to a business incentives study committee for the state House of Representatives at the first of several meetings the committee has planned to gather ideas for the upcoming legislative session.

Topping the list were requests to expand existing tax breaks and increase the available funding of discretionary incentives — or grants and loans the state can offer for site preparation or other project costs for a new or expanding business.

Cullen Larson, executive director of the Georgia Economic Developers Association, brought suggestions such as allowing job tax credits and other types of tax credits to be applied toward a company’s payroll taxes. The credits now can be applied only to corporate income taxes, an area where some companies have no tax obligation or a tax obligation too small for the tax credit to be beneficial.

Hey, how about some tax credits for me? After all, I owe BOTH payroll and income taxes. Kidding aside, the last thing we need more tax credits to complicate the tax code and reward politically favored behavior. And it is especially perverse for an existing business to have some of its tax dollars go to subsidize a potential competitor.

Assorted tax credits, grants, and loans aren't the only schemes being used here. One of the newest "economic development" rackets in Georgia is Tax Allocation Districts (TADs)--developers get their taxes frozen at the value of the property at the beginning of a project because the incremental increases in taxes that would come from rising property values are rebated back to cover developers' construction costs. (Background here, albeit from a pro-TAD perspective.) But I shouldn't be so dismissive--my better two-thirds and I are thinking of adding a screen porch and outdoor fireplace to the McMansion. Maybe we should get our house declared a TAD.

This looks to me like an improvement over current US policies in Iraq ...

Don asks, "Why do so many people who weigh in on this issue make such fantastically illogical "arguments" in favor of raising the minimum wage?"

Answer: They have to resort to illogical "arguments" because, based on available evidence* (e.g., here), there are no logical arguments in favor of higher minimum wages. Of course, Don's well aware of this; I'm sure his question was merely rhetorical.

*Moreover, even if the evidence suggested that higher minimum wages helped poor people, such laws would be an affront to individual liberty.

In previous posts (e.g., here), I've expressed doubt that half of bankruptcies are caused by medical bills. A new study from AEI finds that "nearly 27 percent of filings are a consequence of primarily medical debt, while in approximately 36 percent of cases medical debts co-exist with primarily credit card debts."

From the NYT:

THE recent gyrations in oil prices offer a textbook illustration of how financial markets and commodity markets interact.

Oil prices are notoriously volatile, particularly when times are tense in oil-producing countries — just about all the time these days. So when BP announced this month that it might have to suspend as much as 8 percent of the nation’s oil production because of corrosion in pipes on the North Slope of Alaska, the price of crude oil immediately shot up by 3 percent and wholesale gasoline prices simultaneously increased by about 2 percent.

But why? Even if it will cost more to produce gasoline in the future, gasoline being sold today was made with cheaper oil. This must be a rip-off, right?

Actually, no. The reason behind the quick price change is a phenomenon known as storage arbitrage.

ATSRTWT.

From the Houston Chronicle:

With gas prices hovering around $3 per gallon, more parents are sending their kids to school on the bus this fall, and school districts across the nation have noticed the increase in ridership.

"The more the prices go up, the less riders get to school on their own and they go with our buses," said Doug Geller, assistant director of transportation for the Clark County School District in Las Vegas.

In Las Vegas, ridership has risen to about 45 percent of the district's more than 320,000 students.

Similar story here.

From Forbes.com a list of the drunkest cities in the country, although dictionary.com has no entry for the word "drunkest."

I suppose Forbes means the cities with the most drunk populations - can a city be drunk?

Here's the top five:

1. Milwaukee
2. Minneapolis-St. Paul
3. Columbus, OH
4. Boston
5. Austin, TX

I'm not sure if I am buying the list. New Orleans is ranked 24th and tied with Tampa? Dallas is ranked 27th and Savannah GA isn't ranked at all? Washington, DC is only 20th? Hmmm...

As a follow up on Frank's post concerning party schools, I wanted to mention my pride that my alma mater (UGA) is gaining on the party school dimension even as we gain on the academic and intercollegiate football dimensions. However, I not the considerable inflation in drink specials. In the late 80s and early 90s the drink specials ranged from penny drinks through nickels and quarters.

A little tidbit from the August 23, 1906 NYT suggests that Princeton might have been near the top of the list of party schools 100 years ago:

The Woman's Christian Temperance Union has taken a step in the right direction in its decision to attempt the reform of the students of Princeton University...It is well known that smoking, which I believe is the more prevalent of the vices mentioned, retards and stunts the growth, and may very possibly be responsible for the lack of athletic supremacy referred to.

From the August 23, 1906 NYT:

In the room in the Gerard lodging house...where he had lived for twenty-six years in apparent poverty, William E. Whitaker, 50 years old, died last night of acute kidney trouble. Though he always lived with utmost frugality and in a seemingly hand-to-mouth fashion, when his effects were searched three bank books showing deposits in his name in as many banks to the amount of $7,411 were found.

According to the good folks at EH.net

In 2005, $7,411.00 from 1906 is worth:

	$160,297.19	using the Consumer Price Index	

	$128,343.49	using the GDP deflator	

	$706,066.18	using the unskilled wage	

	$860,997.75	using the nominal GDP per capita	

	$2,982,550.37	using the relative share of GDP

It seems every fall there is at least one article that lists the differences between the freshman class of this year and the freshman class of, say, 1987 (mine). As we roll into the new fall semester (we start next Monday), here's another - it includes 75 items. Wow things are changing fast!!

Here's the top eleven:

1. The Soviet Union has never existed and therefore is about as scary as the student union.
2. They have known only two presidents.
3. For most of their lives, major U.S. airlines have been bankrupt.
4. Manuel Noriega has always been in jail in the U.S.
5. They have grown up getting lost in "big boxes."
6. There has always been only one Germany.
7. They have never heard anyone actually "ring it up" on a cash register.
8. They are wireless, yet always connected.
9. A stained blue dress is as famous to their generation as a third-rate burglary was to their parents'.
10. Thanks to pervasive headphones in the back seat, parents have always been able to speak freely in the front.
11. A coffee has always taken longer to make than a milkshake.

I included #11 because a) it is true and b) it represents the 85th seal of the Apocalypse.

The list seems a bit strained at times as I remember getting lost in the old big-box stores such as Treasure Island and K-Mart and I wonder how many freshman (and non-freshman) even know who Manuel Noriega is and why we care(d).

[Update: Frank Stephenson emails me: "I was going to add a comment that my colleague Gary Roseman brought to my attention—items 1, 2, 4, and 6 (and perhaps others down the list)—are not literally correct. While a child the age of, say, your cutie with the DOL bib doesn’t know or remember much, she would have been alive while GWB is president. The same can be said of the items on the list."]

I came across this "how to" tip describing how to air condition your home for free. Well, not really. It basically comes down to digging a large hole, insulating it very well, and then filling it with snow/ice over the course of the winter. It's an interesting concept - one that was used in the very beginning of air conditioning (Biltmore or some other "estate" had a similar setup in the late 1800s) - but doesn't seem worth the trouble.

I haven't checked all the math, but assuming it is correct, the author suggests about 1 million pounds of snow/ice would do the trick (for three months worth of air conditioning). Total dollar savings? Estimated to be $1,500.

Let's see - I can pay $1,500 to avoid shoveling 1 million pounds of snow/ice?*

Sold.

* Or I can live in North Texas where there is no snow to speak of.

It certainly seems that way. This paper finds a strong relationship between the timing of government benefits being paid (e.g., the first of the month) and drug-related hospital admissions. Another installment of your tax dollars at work.

You knew it was coming--Andrew Young's bigoted rant about Jews, Koreans, and Arabs has now been blamed on Young's working for Wal-Mart. From News and Observer columnist Barry Saunders (with a HT to the Locker Room):

I love Andy Young and what he has fought for, and am heartsick that more than 50 years of working to make the world a better, more inclusive place could be obliterated because of his ardor in defending a gluttonous retail behemoth.

It is because of my deep love and respect for Young that I dedicate this song to him. Maestro, hit it:

When a man loves a Wal-Mart

Can't keep his mind on nothing else...

He'll attack Jews, and A-rabs, too.

He'll give up all his comforts, sleep out in the rain

If Wal-Mart says that's how it ought to be.

If Wal-Mart plays him for a fool

He can't see it, he's the last one to know.

It can bring him such misery.

When Andy Young loves a Wal-Mart

He can see no wrong

He won't set foot in no Korean's store.

Yes, when a man loves a Wal-Mart

Spend his very last dime

Just to buy a pair of new BVDs.

Let's hope Wal-Mart paid Young enough to compensate for his damaged reputation or to help mend relations with the groups he maligned.

While Bob's alma mater again made the top party school list, Craig's alma mater is apparently trying to catch up. From today's AJC:

Parents and educators are doing a double-take at a coupon book advertising alcohol specials and bail bonds being handed to University of Georgia students at a pair of Athens bookstores.

The booklet, which includes discount coupons and ads for alcohol specials such as $1 drinks at one bar, a free order of nachos with the purchase of a pitcher of beer at another and 20 percent off at Double "O" Bonding, an Athens bail bonds company, was included with textbook purchases.

The old alma mater, Ohio University, (sniff) still makin' me proud. We're #6! We're #6! We're #6! ....

An article about Charlie 'Lefty' Trudeau's vintage base ball bat making business. Charlie plays with me on the Ohio Village Muffins and also for the Columbus Capitals. If you're in the central Ohio area, come see us and about 25 other clubs play all day on Saturday and Sunday of Labor Day Weekend at the Ohio Village.

Interested in Freedom?

Win a place at a conference in Nairobi on Freedom entitled

The Institutional Framework for Freedom in Africa

25th – 28th February 2007

www.mpskenya2007.org

This competition is open to Africans, living in Africa of 30 years old or less on 31st December 2006.

Participants must submit an essay of between 1000 - 1500 words on one of the three following titles which are taken from the condensed version of The Road to Serfdom by Friedrich Hayek

• "The more the state ‘plans’ the more difficult planning becomes for the individual"

• "Private Property is the most important guarantee of freedom"

• "Competition is the only method of co-ordinating human effort which does
not require the coercive or arbitrary intervention of authority"

Entries must be submitted on an email attachment no later than 31st October 2006 and the results will be posted on the web site www.mpskenya2007.org before January 14th 2007. Everyone submitting an essay by 31st October will receive a free copy of the CD “Ideas for a Free Society”.

The authors of the best two submissions will receive a fully funded invitation to attend the Mont Pelerin Special Meeting in Nairobi, February 25th – 28th 2007. Hotel and registration fee paid, sharing a room possibly, economy class flight plus $500.

Entries should be submitted to: tuned@ippanigeria.org

David Nicklaus’ column in the St. Louis Post-Dispatch today contains this nugget:

Missouri Gov. Matt Blunt … announced last week that one of the state's most lucrative business-incentive programs is off-limits to any biofuel plant that's not majority-owned by Missouri farmers.

"There's no question that the greatest impact on local economies comes when local citizens own and operate the plants and keep the profits at home," said Mike Mills, deputy director of the Missouri Department of Economic Development.

Mr. Mills -- not to be confused with REM’s bass player -- is wrong. The local economy generates the greatest real income when its participants are allowed to take advantage of trade, to import whatever is cheaper to buy than to make at home and to export whatever fetches a higher price away from home. (Adam Smith pointed this out a while back.) That includes equity shares for biofuel plants. The logical implication of Mills' position is complete autarky.

"Business incentive programs" of course means subsidies. If Mr. Mills had said that the greatest contribution to buying votes for the incumbent comes when state subsidies go exclusively to state residents, he would be making an honest point. But the Missouri economy -- the wellbeing of the taxpayer -- would be better served by simply eliminating the subsidies.

I submitted this letter to the editor of the WSJ today:

To the editor:

Hendrik Van den Berg (Letters to the Editor, August 19-20) correctly points out that all taxes are not equally distortionary, but he completely misses the big picture that wasteful spending is the underlying cause of the tax pain being inflicted. Rather than accepting the government’s “immense need for revenue,” the relevant question is whether government should continue to levy any sort of taxes to fund bridges to nowhere, welfare for wealthy farmers, or pills for senior citizens. Government schemes and boondoggles, be they funded by the most distortionary or the least distortionary form of taxation, are the true source of taxpayer misery.

E. Frank Stephenson
Associate Professor of Economics
Berry College
Rome, GA 30149

From the August 18, 1906 NYT:

Within the twenty-four hours ended at 6 o'clock last night, fifty-one permanent buildings were started in this city and seventy-seven building permits were issued. The street railway companies report that their business is now equal to 90 per cent. of the traffic handled before the earthquake.

Let's remind ourselves of what's happened in 1906. On April 18, 1906 a massive quake destroyed much of San Francisco proper and the outlying areas were also dramatically hit (Here's a pic of city hall and more information here). In the aftermath of the disaster, cities and states vied with themselves to send relief aid and cash. The private sector immediately started the clean-up, including the evil capitalist pig-dog railroads.

This little story on the four month anniversary (122 days later) reports that the rebuilding of SF is well apace. Would that we could do the same for New Orleans twelve months later.

The lack of any ongoing information/coverage on what is happening in New Orleans (which is either a function of a lack of interest, a lack of action, or a lack of scandal) is, in my opinion, a national disgrace.

From the August 18, 1906 NYT:

Gompers, with his counsel, appeared at Washington to advocate a bill prohibiting the Federal Courts from issuing injunctions in any case between employer and employe, except to prevent irreparable injury to property or to a property right. But its atrocity consisted in the proviso that "for the purposes of this act, no right to carry on business of any particular kind or at any particular place, or at all, shall be considered or treated as property, or as constituting a property right."

In other words, a mob, according to Gompers, should be permitted without molestation or interruption by the courts, to put out of business any employer who had incurred the displeasure of "organized labor." It is perhaps the most outrageous, un-American, and anarchical project of law ever submitted to an American Congress. After explaining to Gompers, gently but firmly, how infamous the proposal really is, as a denial of essential human rights the claim of which upon the courts for protection is older than the Constitution, and as well established as any other principle in law or equity.

Advertising Age reports on a sweeping legal decision against big tobacco concerning the sale of "lights" and "ultralight" cigarettes. Specifically, it seems one U.S. District Court Judge Gladys Kessler has decided that the cigarette companies cannot sell light cigarettes. I take this to mean that instead of "Camel Lights" the cigarettes will be called something else that all smokers will associate with "Camel Lights" but that the title does not convey.

From the article:

Judge Kessler's 1,742-page decision -- the order was another 18 pages --included sweeping limits on tobacco makers. Among them:

the use of the terms "low tar," "light," "ultra light," "mild" and "natural" are banned;

for two years, big tobacco is required to buy full-page corrective advertising monthly in the Sunday editions of more than two dozen major newspapers with the schedule alternated so the ads appear at least weekly;

major tobacco makers are ordered to run 15-second corrective TV spots once a week during prime time for a year;

packaging and in-store signs must carry new corrective advertising.

What exactly is a 15-second corrective spot? What exactly is corrective advertising? What exactly has been the harm? Is anyone going to read a 1700 page legal opinion? (here it is if you want to try)

Read More »

Lots of good stuff to blog today--or maybe I just don't want to finish my syllabi for Monday.

In The Freeman, I wrote:

Consider the calls for reducing class sizes in government schools. Proposals at both the state and federal levels have called for class-size reductions in an effort to boost student performance. Typically, such proposals have implicitly assumed that teacher quality will remain constant when hundreds or thousands of additional teachers are hired to lead the smaller classes. This assumption is mistaken.

Now we have this in the Macon (GA) Telegraph:

It could cost Bibb County schools as much as $500,000 just at the elementary level to hire 10 teachers and add class space to satisfy the state's new class-size reduction mandate, school officials said Thursday.

Superintendent Sharon Patterson said Bibb has 17 elementary classrooms across the system with more students per room than allotted under the new law, and are now required to move the extra kids into new classrooms.

Another concern for school officials is where to find certified teachers during a state teacher shortage. The school system already had about 12 teacher vacancies at the first day of school, according to school officials.

"I'm concerned about taking children away from certified instructors and putting them in rooms that don't have certified teachers," said board member Bob Nickels. "If you don't have a teacher available you have to take a sub, who's not qualified."

BTW, teacher certification probably has little to do with true teacher quality but that's a topic for another day. The important point is that there is not an infinite supply of equally skilled teachers. It just might be better to have more kids in a class with a better teacher than to divide the students into smaller classes with inferior teachers.

Andrew Young's endorsement of Cynthia McKinney seemed a bit odd since Young has a reputation as something of a statesman rather than a rabble-rouser. Judging by comments in today's AJC, the McKinney endorsement does seem in keeping with Young's view of the world:

In an interview published in Thursday's Los Angeles Sentinel, Young was asked to comment on whether he is concerned that Wal-Mart causes mom-and-pop stores to close.

"Well, I think they should; they ran the 'mom and pop' stores out of my neighborhood," the Sentinel, a newspaper serving the African-American community, reported. "But you see, those are the people who have been overcharging us — selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they've ripped off our communities enough. First it was Jews, then it was Koreans and now it's Arabs; very few black people own these stores."

Of course, it's likely that the left-of-mainstream media will mostly give Young a free pass (there doesn't appear to be anything on CNN.com as of this writing) unlike the treatment of Lott or the recent treatment of George Allen. All such comments are repugnant, not just the ones uttered by Republicans.

ADDENDUM: An email from a friend reminds me that Young will definitely get some flak from the left-of-mainstream media--they'll go after him for saying something positive about Wal-Mart.

I suppose technically AP Economics Writer Martin Crutsinger does not need The Diff, but he is similarly challenged by math. To wit:

Consumer inflation accelerated in July, reflecting a big jump in gasoline and other energy prices. In evidence that the economy is slowing, industrial output in July slipped to just half the June pace.

The Labor Department reported Wednesday that its closely watched Consumer Price Index rose by 0.4 percent last month, double the 0.2 percent increase in June. While energy costs had fallen in June, they rose by 2.9 percent last month, the biggest increase in three months.

Meanwhile, the Federal Reserve reported that output at the nation's factories, mines and utilities increased by 0.4 percent last month, just half of the 0.8 percent gain in June.

Fortunately industrial output in July did not slip "to just half the June pace." Instead the rate of growth of industrial output fell by half from 0.8 percent to 0.4 percent. So output actually increased in July, albeit at a slower rate of increase than June, rather than falling in half. A big difference, no? BTW, a bit of common sense and casual observation would have been useful here--if output really did decrease by half then it would have been abundantly clear from unemployed workers, fewer trucks on the highways, and the like.

HT: WSJ's "Best of the Web Today"

From The Economist (which really ought to know better):

Gross overcrowding has led to a sky-high recidivist rate.

Geez--you think just maybe it could be the other way around? Perhaps it's a sky-high recidivist rate leading to gross overcrowding. (HT: WSJ's "Best of the Web Today")

There's lots of chatter around the old blogosphere about Austan Goolsbee's NYT column. An excerpt:

If Stanford can hatch world-famous companies around Palo Alto, politicians assume, their colleges can, too. But with so many trying to spin universities away from their traditional academic focus into engines of economic development, it is worth considering whether investing in local universities can achieve that goal.

This strategy is based on the view that research done by professors can form the basis for local start-up companies and that the graduates of the university can supply the entrepreneurs and employees.

But advocates should remember an old maxim of economic development: Beware of investing in things that can move. As it turns out, graduates and research ideas both tend to move around a lot.

Subsidizing teaching is problematic as a development strategy because graduates frequently move out of state.

A study by the economists John Bound, Jeffrey Groen and Gabor Kezdi of the University of Michigan and Sarah Turner of the University of Virginia, “Trade in University Training: Cross-State Variation in the Production and Stock of College-Educated Labor,” found little evidence of people staying in places because they went to college there.

Given the mobility of college graduates, I'm wondering if the optimal state stategy for economic development* become not spending lots of resources creating graduates but instead creating an environment (e.g., tax code) for attracting them. I think it might, though I have not read the Bound et al. paper.

*Although I've used the term here, I normally cringe at the phrase "economic development" because I associate it with the mercantilist complex of corporate welfare, development incentives, and the like.

Advertising Age reports on a new "trend" (or rather an attempt) to place advertising on the lowly conveyor belt in the checkout line:

"Conveyor belts have never been on anybody's radar screen for marketing," said Frank Cox, president-CEO of EnVision Marketing Group, a Little Rock, Ark., firm with a patented system to print digital, photo-quality ads directly on conveyor belts. "But a store with eight to 10 checkout lanes, well, you're talking about 100 square feet of wasted ad real estate."

I wonder how effective the advertising will be. If the conveyor belt is empty, by definition there is only one person standing in front of the conveyor belt - the clerk. If there are more people standing in front of the conveyor belt, i.e., customers, they are likely unloading the buggy of goodies and covering the advertising with Cream of Mushroom soup and such.

This might explain why the test runs have generally failed to attract a national advertiser and instead it's the local real estate agent and insurance agents who are buying space on the conveyor belt. Yep, nothing says "Let me sell your house" than seeing my real estate agent travelling the conveyor circuit.

The NCAA has released the rules changes for the 2006-2007 football season. Many are reasonable and others are questionable. The main upshot seems to be a) reduce the amount of time it takes to play a game and b) decrease the odds that a bad call can make the difference between a lucrative post-season berth, a not-so-lucrative post-season berth, or no post-season berth.

Major rules changes:

Kicking tee reduced from two inches to one inch. The hope is this will reduce the number of touchbacks. Note that this could also increase the number of injuries.

Clock will start when the kicker kicks the ball rather than when the receiving team touches the ball. The rationale is to reduce the length of the game. Note that this will change strategy a bit and we may see a lot more squib kicks.

All Division IA conferences are allowed to use instant replay, although instant replay is not mandated. However, it would seem a conference not using instant replay when other conferences are will put themselves at a potential fiscal disadvantage. Hence, instant replay is a form of the prisoner's dilemma and all conferences will use instant replay.

Posted by Craig Depken at 11:18 AM in Sports

Tullock insults

Alex at MR blogs about being insulted by Gordon Tullock. Here' my story:

I am presenting my first paper at my first economics conference (the Southern Economics Association I think). It was a chapter or something from my dissertation and the empirical results were, um, how shall I say this, underwhelming. After going through the model and somewhat apologetically presenting my results which didn't show what the model predicted. Gordon says to me, "That's ok, Bob, a lot of other people haven't found that result either."

Posted by Robert Lawson at 09:31 AM in Economics

August 16, 2006

The next generation of DoL

Frank was kind enough to send Cate a DoL bib from the CafePress collection. The quality is excellent and the size is perfect for a three week old to grow into.

Posted by Craig Depken at 08:00 PM in Economics

More on abolishing the Fed

In response to my comment at Greg Mankiw's blog, “Reasonable” asks:

What's the possible advantage of completely removing any remaining discretionary Central bank control over the money supply, compared to establishing a conservative Central Bank committed to following a monetary rule?

My answer: Abolishing the central bank makes the commitment not to inflate/devalue more credible. Friedman’s worry – a reasonable one, I think – is that the central bank won’t in fact be committed to following a monetary rule. I’d grant you that OECD central banks that have adopted inflation targeting have stuck to it surprisingly well, even if not flawlessly. In other countries commitment is more of a problem (for elaboration see this article).

The last case I know of a Central Bank who gave up all control over the money supply was Argentina, and look where that took them. And don't come back and tell me it's that the Argentines didn't follow a 'pure' enough model.

My reading of the Argentine experience is different. The adoption of the convertibility system gave Argentina a longer stretch of decent money than it’s had before or since. But Argentina didn’t in fact give up all control over the money supply – its “currency board” was “unorthodox” in several ways. (On this see Kurt Schuler’s article.). Fundamentally, Argentina retained a central bank with the option to devalue. And the government exercised that option, even though there was no good reason to think it would help – and in fact it didn’t help. Devaluation only pushed the economy deeper into crisis.

We saw similar mass movements in the US in the late 19th century rise up over similar issues (which is arguably why we got a Fed several years later).

The US got a Fed because we had banking panics. We had banking panics because we had a perversely regulated banking system. Contrast Canada: no geographical restrictions on banks, lighter note-issue restrictions, consequently no panics and no clamor for a central bank in the late 19th century.

So what conceivable advantage is there in your scheme (reduce 'inflation' in the US!?) to give up this small degree of discretionary power and risk playing around with politics that severe, other than this starry eyed nostalgia for a 'golden' past?

A more credible commitment to stable money.

Posted by Lawrence H. White at 03:40 PM in Economics

Baseball Lawsuit c. 1906

In the August 16, 1906 NYT is an interesting article describing how :

the New York National League Baseball Club [the NY Giants] brought suit against the Chicago National League Baseball club [the Chicago Cubs] for $3,500, alleging damages to that extent on account of the forfeited game of Aug. 7, when Umpire Johnstone was refused entrance to the Polo Grounds and gave the game to Chicago. Manager McGraw of New York wanted the game to be played with player from each of the teams as umpires, but the Chicago manager refused to agree to this, and the Ne York management now declares the club is damaged to the extent of the club is damaged to the extent of $3,500....The damages are said to lie in the loss of gate receipts.

Wait a second. New York bars an umpire, the game is forfeited to Chicago, and New York sues Chicago for damages?

Going back to the Aug. 8, 1906 NYT, here's what evidently happened.

Johnstone umpired a game between Chicago and New York on the previous day [Monday, Aug. 6] and ordered "Manager McGraw and Third Baseman Devlin out of the game. McGraw and Devlin received their notices of official suspension yesterday [Aug. 7] , and the action against Johnstone by the local club came immediately after...The New York Club officials refused to admit the umpire to the grounds, and he promptly declared the game forfeited to Chicago by the customary score of 9 to 0...Police Inspector Sweeney had requested the New York Club not to allow Umpire Johnstone to enter the grounds, as after threats against him it might precipitate a riot...For a time 8,000 spectators massed in front of the entrances and would not leave the grounds. Many of them were appeased with the announcement, however, that all reserved seat checks and rain checks would be good for any other game this season, and a subsequent announcement was made...that money would be refunded on all checks upon presentation at the office of the New York Club...

It seems that McGraw argued that if there was to be any forfeit it should have been the Cubs that forfeited to the Giants. This was because, according to the rules at the time, if an umpire was absent or unable to perform his duties, an agreed-upon individual chosen by the home team could substitute. McGraw claims he had a substitute ready to go at 5 minutes before 4pm (the start of the game) and the Cubs were the ones who walked away. Therefore, the Cubs should forfeit.

One wonders if this means that if the Cubs had forfeited the refunds would not have been offered by the Giants.

Back to the $3,500 claim, the price of admission to the Polo Grounds in 1906 was $0.50. This would imply an actual gate of 7,000 people versus the estimated 8,000 people (assuming all tickets were redeemed for a refund or another game). The attendance figures available in the Retrosheet.org game logs from 1906 indicate an average attendance at the Polo Grounds in 1906 of 7,200 with a standard deviation of 3,000 (albeit on only eight games).

Posted by Craig Depken at 01:11 PM in Sports

Abolish the Fed and freeze the base: Milton Friedman

In a recent letter to Greg Mankiw, posted today on Mankiw's blog, Milton Friedman writes:

Nothing that I have observed in recent decades has led me to change my mind about the desirability of a monetary rule which simply increased the quantity of money at a fixed rate month after month, year after year. That rule would get rid of the mistakes and that is probably about all you could expect to get from a monetary system.

Even better would be to abolish the Fed and mandate the Treasury to keep highpowered money at a constant numerical level.

This is consistent with what Friedman has been saying since 1984.

Regarding the base freeze proposal, Mankiw comments:

I would have thought that the experience of the 1930s argues against such a rule. If I recall correctly, most of the decline in the monetary aggregates during that period was attributable not to high-powered money but to inside money and the money multiplier. If we abolished the Fed and kept high-powered money constant, it seems that a similar set of events could potentially unfold.

Do we need to keep the Fed around because the money multiplier might collapse again? Mankiw is right that the money multiplier declined sharply in the 1930s, but why did it? The proximate cause of the collapse in the 1930s was bank runs and fear of more bank runs. The underlying reason for the bank runs was geographic and note-issue restrictions that make US banks unnecessarily fragile. There were no bank runs and no money-multiplier collapse in Canada in the 1930s, which had neither restriction. Fortunately we no longer have the geographic restrictions in the US. We still have note-issue restrictions. Friedman’s brief letter neglected to mention an important adjunct to his base-freeze proposal that he has elsewhere mentioned, which is that shifts in the public’s demand to hold currency could be accommodated by letting commercial banks freely issue currency redeemable for base money. With well-diversified note-issuing banks, a collapse of the money multiplier would not occur.

Posted by Lawrence H. White at 12:48 PM in Economics

Freako-smackdown

Ariel Rubenstein does a nice smackdown (.pdf) of the