WLTX.com reports:

According to Senator Obama, “Wal-Mart is making a large profit and they don’t have foreign competition. What they are doing though is driving wages down significantly for not only workers at Wal-Mart, they’re also driving down wages for competitors."

Hat tip: Greg Mankiw

A few comments, based on the simplest principles of economics:

1. Wal-Mart’s large profit comes from combining resources – for which they pay competitive prices -- in a way that substantially enhances their value (turns them into higher-valued outputs). Good for them. Making a large profit isn’t a cause for scorn. Absent a legal monopoly privilege, making a large profit is the sign of a large contribution. Making losses is the thing to scorn.

2. Wal-Mart doesn’t have foreign competition? Wal-Mart is a retailer. What would “foreign competition” mean – Target is owned by a European firm? K-Mart is owned by an Asian firm? IKEA is owned by a Swedish firm? (Oh wait – it is.) Wal-Mart faces plenty of competition. There’s no artificial barrier against anyone entering the business of putting up a big-box store.

3. Wal-Mart is driving down wages? Consider the following thought experiment. Wal-Mart closes its doors and lays off all its 1.7 million employees. Would those employees then move to higher-paying jobs? Presumably they work at Wal-Mart because it offers them a better package then other jobs available to them. Would ex-Wal-Mart employees swamping the hiring counter make wages at Target rise? Hardly. By hiring millions, Wal-Mart bids up wages.

Incentives Matter: Road Trip Edition

"Americans drive less for first time in 25 years." Why? "Higher gas prices cut not only sales of SUVs, but also time spent on the road." Of course, plenty of luddite urban planners want gas to be more expensive so we all can live in high rises downtown next to the crack dealers.

12 Days of Christmas are more and more expensive. Hopefully since the Dems are in control, maids-a-milking can finally get paid a living wage. And who knew swans were so expensive?

Finally, at least Bush is doing something right this year. After causing all those hurricanes last year (with tons of help from capitalist pigs), "the 2006 Atlantic hurricane season ended with a whimper rather than a bang on Thursday, without a single hurricane hitting U.S. shores." But, maybe I shouldn't give him any credit. Since, after hurricanes or other disasters, plenty of people unknowingly committing the broken-window fallacy claim that the disaster will help the economy through repair purchases and rebuilding efforts. So, if there were no hurricanes this year, then Bush effectively robbed all of those would-be rebuilders. That's why global warming is good; more global warming = more storms = more rebuilding = prosperity, so buck the trend and get that car back on the road!

In the Nov. 30, 1906 NYT is this little ditty:

The Emperor has approved the resolution adopted by the Council of Ministers fixing twelve hours as a working day, including two hours for meals in all industrial establishments. This law will become operative six weeks after its promulgation.

Don Boudreaux poses a sensible retort to those who oppose trade that is not "fair": They should "ask themselves if they would trust government with the power to distinguish 'fair' from 'unfair' speech and to suppress or penalize all speech declared to be 'unfair.'" I'm sure Don meant this as a legitimate rhetorical question. Unfortunately, though, many do wish to limit speech that is not "fair" and doing so was enshined in the Fairness Doctrine (1959 - mid1980s). Many, Fairness and Accuracy in Reporting among them, would welcome its revival.

While Richard Dawkins makes a name for himself today criticizing religion and those who are religious (Youtube clips here), Bernard Shaw had similar comments 100 years ago. In the Nov. 30, 1906 NYT:

Bernard Shaw lectured to-night in the Essex Hall, in connection with the Guild of St. Matthew, his subject being "Some Necessary Repairs to Religions." Mr. Shaw said we had a great many pressing social problems to solve, but lacked a religion which would impel us to tackle them.

The Socialism presented by those able middle-class Jews, Marx and Lasalle, was a demonstration that the workingmen were being robbed of 50 per cent. of the proceeds of their labor, but it was found that people would not make a revolution for 50 per cent. Men were always cowards. If they were not afraid they would not be constantly be getting run over. The more intelligent and sensitive a man was the more cowardly he was.

Those are some tough words in just the first two paragraphs of the story. Yet, the third paragraph is even tougher:

If the great congregation of cowards called the human race were to be got to disregard their own safety and interest, they must be made religious. A religious man was not one who belonged to the Church of England or who did not...[n]or was he a man with a special creed. A religious man was one who had sure knowledge that he was here, not to fulfill some narrow purpose, but as an instrument of the force which created the world and probably the universe. Religion made a man courageous, and if he was not intelligent it made him extremely dangerous. In the absence of religion a coarse man had the most courage, but with religion the most fragile and sensitive became enormously courageous.

The WaPo has a clever article by economists David Harrington and Edward Sayre on the responsiveness of organ donations to financial incentives. An excerpt:

Medical schools routinely pay for the cremation or burial (often with elaborate memorial ceremonies) of the people whose bodies were donated to them for medical research and student training. In contrast, it is against federal law to offer any compensation for transplant organ procurement, including paying for organ donors' funeral expenses. This creates a bizarre asymmetry in the treatments of organ and whole body donations.

Given the current cost of funerals, the savings from donating bodies to medical schools can be substantial. This is especially true in states with funeral industry--protective regulations that are intended to keep out low-cost competitors. Those states provide us an opportunity to test empirically the effects of compensation on whole-body donation and, in turn, to extrapolate whether there is any merit to the criticisms of organ donation compensation.

If potential whole body donors respond to financial incentives, then we ought to see more body donations in stringently regulated states where funeral prices are higher. That is, in fact, what the data show. The number of body donations in stringently regulated states is 7.6 bodies per thousand deaths and only 3.2 bodies per thousand in unregulated states. This is powerful evidence that people react to financial incentives in making whole body donation decisions. We estimate that high funeral prices in the 38 states with stringent funeral regulations increase the number of donations by 8,400 bodies per year. It stands to reason that financial incentives would also raise the donation of transplant organs.

The IOM's rejection of such proposals rests on the argument that offering modest compensation would be perceived by organ donors as sullying their gift. But the empirical data on whole body donation discredit the IOM's argument; the families of whole-body donors often proudly highlight their gifts in obituaries, despite their receiving the financial benefit of not having to pay for a funeral.

The empirical data also discredit the IOM's argument that financial incentives would not increase the supply of transplantable organs. Surely if funeral service payments increase the donation rate of whole bodies, similar compensation would increase the donation rate of transplant organs.

Part of the transcript from an 11/28 segment of the public radio show "Marketplace":

SARAH GARDNER [the reporter]: Big business can't agree on greenhouse gas regulation. Many utilities are dead set against caps on CO2. But others are begging the government to set some limits.

DORSEY: We're just trying to get the certainty for planning.

GARDNER: Brent Dorsey is with Entergy, a major power company based in New Orleans. Entergy broke ranks with its own trade association when it came out in favor of carbon regulation. And it's not because it wants to save the world. Entergy is the country's second-largest generator of nuclear power. That doesn't emit CO2 so if carbon is taxed or capped, it could put nuclear at a competitive advantage. But before Entergy invests in more nuclear plants, company execs wants that "if" resolved.

DORSEY: Until there is certainty in terms of regulation, decisionmakers are going to be faced with either flawed decisions or wrong decisions.

GARDNER: Some companies, like the Aspen Skiing Company, want CO2 regulated because they believe climate change will destroy their industry. Others, like GE, are investing heavily in green technology and may profit from carbon regulation. And then, says regulation critic Marlo Lewis, there's Wall Street.

MARLO LEWIS: Y'know if you're a trader, whatever the commodity is, whether it's pork bellies or stock or carbon credits, you make a percentage on the sale or the purchase of every trade that you handle. And so you have, unsurprisingly, companies like Goldman Sachs, that are really enthusiastic about a cap and trade program.

From the NY Post:

THE K-K-Kramer scandal murdered Michael Richards' career - but it's doing wonders for sales of the latest "Seinfeld" DVD.

Season 7 of the popular sitcom is outselling the Season 6 set (released on the same day last year) by more than 75 percent, and more than 90 percent over season 5 at some online DVD retailers, according to TMZ.com.

So says David Frum in a public radio piece on increasing college prices and decreasing student learning.

Robert Samuelson (Globalization Makes an Easy Scapegoat) gets to the heart of the "fair trade" nonsense:

We may be about to shoot ourselves in the foot -- or maybe the chest -- on trade. ... We are dealing with something new here. It transcends traditional protectionism, which tries to shield specific industries and workers from imports. It's trade obstructionism: a reflexive reaction against almost any trade agreement. The idea is that much trade is inherently "unfair.'' Multinational companies use it to ship U.S. jobs abroad; other countries compete unfairly with low wages and substandard labor practices.

The Annals of Improbable Research (home of the Ig-Nobel Prize) recently directed a "challenge" to its readers - "If you know of a published academic study that surpasses Werner-Michael Kulicke’s record of including 23 self-references, please send us a copy."

Today's email contains at least one contender, and it's Nobel winner James Heckman. In this 110 page working paper, Heckman (and two co-authors) cite 30 Heckman papers (that's only two fewer than my entire resume).

Now, I respect Heckman for his contribution, but 30 self-cites? As the AIR points out:

One of the studies he [Heckman] cites is:

"Sample Selection Bias as a Specification Error," J.J. Heckman, Econometrica, vol. 47, no. 1, 1979, pp. 153-62.

No small irony there.

The valuable NCPA Policy Digest passes along this observation:

In France, growing numbers of couples are choosing to raise children, buy homes and build family lives without religious or civil approval of their partnerships, says the Washington Post.

Do they mean civil approval or approval by the state? Later in the cllipping this appears:

The result is massive migration to urban areas, where young adults are more independent from their families; and a society that has become not only tolerant but supportive of personal choice in lifestyles.

If "society" is both tolerant and supportive of these unions, doesn't this constitute civil approval?

I just came across an interesting study about effective corporate tax rates around the world. It turns out, not surprisingly, that effective corporate tax rates are quite different from the posted statutory rates. To pick out one extreme example, the author estimates Belgium's effective rate to be -4.4 percent while the statutory rate is 34 percent. I'm not sure I believe the numbers (a negative corporate tax rate?!) but it's an interesting study nevertheless.

It was good to see co-bloggers, friends, and a former student at the SEAs in Charleston. Some things that have caught my attention over the past week or so (many are radio links b/c of my spending much time in the car over the past 10 days):

1. Another vicitm of the drug war--a drug raid kills an 88 year old woman in Atlanta.

2. NPR reports on a study finding that teacher certification does not increase student test scores.

3. NPR on the release of the Playstation 3. Another story here.

4. Frank Deford offers a funny take on how to make a sports movie.

5. From the better to feel good than do good dept: NPR compares the carbon offset movement to selling indulgences. (I almost ran off the road when I heard this one.)

6. Incentives matter: NC offers extra pay to teachers who will move to poor performing schools.

7. Cars are a normal good in Russia (and probably everywhere else). Hint to student readers--I expect this item or the next item to appear on the final in my principles class.

8. The supply of Christmas trees has decreased in in Texas and Denmark. Econ 101 in action.

The Nov. 28, 1906 NYT has an article describing some odd views on sport by the President of Harvard:

President Charles W. Eliot, since his recent declaration that the discontinuance of football would do the university no harm, made several objections to-day to basket ball, hockey, and even baseball.

"To discontinue football, hockey, and basket ball at Harvard would do no harm," he said. "Basket ball is very objectionable. It is too rough, and there are too many chances for cheating. The rules have been stretched so that they spoil the game. It would be a good thing, especially, to have basket ball discontinued."

Hockey he stamped as too rough.

"It [hockey] requires teamwork," he added, "and I must say I have no use for a game that requires that. It is not open enough, and as in basket ball, its rules have been distorted. Rowing and tennis are the only sports in which honorable play altogether is practiced. You can no more cheat in those two sports than in a game of cards; you would be crowded out of society if you tried.

Perhaps 100 years ago the idea of team sport, outside of baseball, was looked down upon? Yet, today the most popular sports in the U.S. and worldwide are team sports.

A letter to the editor in the Nov. 28, 1906 NYT continues the cigarette "debate":

If "M.C." in writing yesterday on the evil of cigarette smoking, referred to Gen. Grant's death as caused by cigarette smoking, he was certainly mistaken, as the cancer of the throat was caused by "dry" (unlighted) smoking of cigars to an excessive extent.

Every crime on the calendar has been charged to the cigarette although the crimes were prevalent before the cigarette.

The real danger in cigarette smoking is that the smoke is invariably inhaled, while the cigar smoker rarely does so, an argument which few use.

The Nov. 27, 1906 NYT reports:

Yale's entire football receipts for this season will be about $65,000. From the Yale-Harvard game each university receives about $32,000, and from the Yale-Princeton match the rivals each secured about $13,500. Yale's only other big game was with Brown, in which her share was about $2,000. The minor games will, however, bring the total up close to $65,000.

In today's dollars, the total receipts would be about $1.5 million - not but 3-5% of some of today's highest-revenue college football programs.

I recall the famous picture of Rep. Henry Waxman swearing in the tobacco executives before asking them what they knew about the dangers of cigarette smoking and when they knew it. Anecdotal evidence suggests that the general public knew of a correlation between cigarette smoking and illnesses of certain types long before the Surgeon General reports in the 1960s.

From a letter to the editor of the Nov. 26, 1906 NYT:

I want to say a word or two against cigarette smoking. Every place one goes a man or a boy is seen smoking a cigarette. It is bad enough to see boys smoking this poison, but when it comes to men over 50 years old it looks silly. In fact foolish.

It is said that President Grant brought on cancer of the throat from his long habit of smoking. In fact, I know of an elderly man who has been smoking cigarettes for over thirty ears...Yes, I suppose he will smoke as long as he is living. It is too bad - that is, it will bring on a disease that will kill him.

The 1906 college/high school football season was the first played under the new rules designed to open the game and reduce the probability of severe injury. At the end of the season, the initial impact of the reforms were reported in the Nov. 26, 1906 NYT:

Eleven players were killed and 104 were injured in the United States during the football season according to the Chicago Tribune. These figures are compared with the casualties of 1905, when 18 players were killed and 159 severely injured, and, according to The Tribune, show that "debrutalized" football has accomplished in a large degree the object aimed at, in rendering the game less dangerous to life and limb.

The decrease in casualties is especially marked among high school players. In the season of 1905 11 high school players were killed and 47 injured, while in the season just closed seven were killed and 25 hurt. All college and high school games this year were played under the new rules drawn up after the close of last season to satisfy the agitation for less dangerous football. This year not one fatality has occurred in the game played by the larger American colleges.

From the Nov. 26, 1906 NYT:

HOT SPRINGS, Ark - Miss Helen Gould has been appealed to by a local faction which has been fighting gamblers to donate to a fund for the purpose of buying out the handsomely fitted up gambling houses.

A public library, a Young Men's Christian Association home, and other public and charitable institutions, according to the plans, are to occupy the places in case money can be raised for their purchase.

Now it occurs to me, after I'm retired and can't use it--the perfect multiple-choice/discuss question for micro principles and intermediate micro (thanks in part to Dwight Lee):
"Anything worth doing is worth doing:
a. well.
b. to excess.
c. half-assed."
The answer, of course is (c), though a well-phrased discussion defending (a) might be tolerated.

Caroline Baum of Bloomberg.com reviews the Cato monetary conference, and manages (in the updated version) to get my name right one out of two times.

By the way, Baum writes that “Harvard University's Jeffrey Frankel admitted, ‘there are no libertarians in crises.’” A better verb would have been “claimed” or “charged” rather than “admitted”. Not being himself a libertarian (in or out of crises), Frankel isn’t in a position to make any “admissions” on behalf of libertarian economists.

Mark Thoma asks: “Is the administration willing to drop its insistence on private accounts as a condition for Social Security reform?”

I ask: if private accounts are dropped, what is left that can rightly be called “reform”? Tax hikes and benefit cuts do not constitute reform. They are merely marginal adjustments to preserve the same old lousy system.

In contrast to my yummy earlier post on Wagyu beef, a new report from Heritage Foundation details the yucky mounds pork in this year's federal budget. Money passage:

Giving lawmakers their own pot of taxpayer dollars to distribute as they wish invites corruption. Not surprisingly, the media has been saturated with stories of lawmakers earmarking federal grants to projects directly benefiting campaign contributors, friends, relatives, and even themselves.

In addition to waste and corruption, lawmakers’ obsession with pork raises a larger concern about the role of the federal government. Members of the U.S. Congress—a national legislature that has historically debated war, Americans’ rights, and broad economic policy—have become, in the words of Rep. Dan Lungren (R–CA), “mere errand boys for local government and constituents.”

The report lists the top 100+ pork projects still in the FY2007 budget (as of 11-15-06). My favorite: $1,000,000 for Mormon cricket and grasshopper activities in Utah. What the...?

Spotlighting this stuff helps, of course. But policymakers respond more to incentives fundamentally shaped by institutions. Because the U.S. system is geographically based with single representative districts, each legislator has a strong incentive to advance budget items that impart benefits on their home district while imposing the costs on the general tax fund. In this system, logrolling, omnibus bills, and more recently earmarks, enable policies that would otherwise fail if voted on individually. The institutional structure—not bad politicians—is the root cause of economically inefficient policies such as pork barrel spending. In order to achieve fewer bad policies, public choice analysis would suggest divorcing representation from geography.

Happy earmarking.

Due to excessive travelling, I won't be back home with family on Thanksgiving. So this holiday I will do the untraditional and dine at Harris, a San Francisco institution, with my wife (to be) and her sister. On the menu is a Kobe Wagyu boneless ribeye. After reading this story, "the world's most expensive steaks," I know what I'll be ordering:

It's a steak with the texture of foie gras, and it comes from cattle that, according to legend, are fed beer and massaged by human hands. In its raw state, the meat is pale--almost white--packed with what Chef de Cuisine David Varley of Las Vegas' Bradley Ogden restaurant calls "an ungodly amount of fat."

This marbled delicacy is the product of Japanese beef cattle, or "Wagyu," raised both in and outside of Japan, and it dominates high-end steak menus internationally.

Now THERE'S the beef. Happy Thanksgiving, all.

Ed

The city of Detroit has had a banner year and a half in hosting big-time sporting events. In July 2005, the city hosted the MLB All Star Game. In February 2006, the city hosted the Super Bowl XL. In May 2006, the city hosted a number of post-season NBA games, with the Pistons making it to the Eastern Conference Finals. During October and November, the city hosted a number of post-season MLB games, with the Tigers making it to the 2006 World Series.

If we believe the politicians and convention bureau folks, with all the big-time sports activity in the Motor City, Detroit should be raking in the dough. Why? Because Detroit isn't on most people's must-go tourism list and thus the additional people coming to the city would add substantially to the local economic activity. This is in contrast to other cities, such as Miami or pre-Katrina New Orleans, where sports fans likely just replace would-be sun tanners or Mardis Gras celebrants, respectively.

How can we get a handle on the impact of these events? One way would be to grab hotel occupancy rates, retail sales tax returns, or other local economic activity measures and estimate whether they experienced an appreciable change in those weeks and months during which the events took place. Perhaps this entry will inspire someone to do so, or I will offer the idea as a potential Master's thesis to one of our students.

In the meanwhile (and because I am lazy) we can look at Comerica Bank's Detroit Business Activity Index. This index is a composite of eight different sectors of the greater Detroit-area's economy. Tourism and tourism related spending is therefore only a portion of the index and it is likely that the manufacturing sector's decline will outweigh anything additional tourism might bring to the city, but in a given month who knows?. Nevertheless, this index provides an initial pass as to what these mega-events meant for the Detroit economy:

The 2006 Super Bowl might have had a slight impact on the local economy but the remaining events didn't seem to have a large contemporaneous impact on the business index. Moreover, the ocular estimator suggests that the mega-events didn't seem to dramatically alter the slope of the index's decline since just after the MLB Allstar Game.

I put together the time series of the index from January 2005 through October 2006 (STATA file here). I first looked at the difference in means between those months in which Detroit hosted a mega-event and those when it did not:

. reg index megaevent 

      Source |       SS       df       MS              Number of obs =      22
-------------+------------------------------           F(  1,    20) =    1.88
       Model |  31.6767677     1  31.6767677           Prob > F      =  0.1860
    Residual |  337.777778    20  16.8888889           R-squared     =  0.0857
-------------+------------------------------           Adj R-squared =  0.0400
       Total |  369.454545    21  17.5930736           Root MSE      =  4.1096

------------------------------------------------------------------------------
       index |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------+----------------------------------------------------------------
   megaevent |  -3.111111   2.271672    -1.37   0.186    -7.849736    1.627514
       _cons |   110.1111   .9686442   113.68   0.000     108.0906    112.1317

Those months with a megaevent average approximately 3 points lower than those without, but it is not possible to distinguish that difference from zero (p-value = 0.186). That said, the trend is downward to begin with and most of the events happen towards the end of the time series. I therefore regressed the index against a time trend and threw in the megaevent dummy variable:

      Source |       SS       df       MS              Number of obs =      22
-------------+------------------------------           F(  2,    19) =   11.51
       Model |  202.409125     2  101.204562           Prob > F      =  0.0005
    Residual |  167.045421    19  8.79186426           R-squared     =  0.5479
-------------+------------------------------           Adj R-squared =  0.5003
       Total |  369.454545    21  17.5930736           Root MSE      =  2.9651

------------------------------------------------------------------------------
       index |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------+----------------------------------------------------------------
       timeb |  -.4547473   .1031936    -4.41   0.000     -.670734   -.2387607
   megaevent |  -1.165803   1.697431    -0.69   0.501    -4.718567    2.386961
       _cons |    114.987   1.308702    87.86   0.000     112.2479    117.7262

The results suggest that during the sample period the index declined .45 each month and that megaevents did not have a significant effect on the business index (p-value = 0.50).

I then added an interaction between the megaevent dummy variable and the time trend to see if the megaevents impacted the intertemporal rate of change of the index:

      Source |       SS       df       MS              Number of obs =      22
-------------+------------------------------           F(  3,    18) =   10.34
       Model |  233.794673     3  77.9315576           Prob > F      =  0.0003
    Residual |  135.659873    18  7.53665959           R-squared     =  0.6328
-------------+------------------------------           Adj R-squared =  0.5716
       Total |  369.454545    21  17.5930736           Root MSE      =  2.7453

------------------------------------------------------------------------------
       index |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------+----------------------------------------------------------------
       timeb |  -.3751276    .103203    -3.63   0.002    -.5919489   -.1583062
   megaevent |   6.849738   4.230615     1.62   0.123    -2.038454    15.73793
    megatime |  -.5570758   .2729851    -2.04   0.056    -1.130596    .0164445
       _cons |   114.1333    1.28187    89.04   0.000     111.4402    116.8264

The megaevent dummy variable remains insignficant (although it is now positive), the parameter estimate on time remains significant although it declines slightly in absolute value, and the interaction term is negative and slightly significant (p=0.056). The results suggest that when a megaevent occured in Detroit, the level of the index might have increased (the parameter estimate might be positive in a one-tailed test with a p-value around .06, indicating that 6 times out of 100 we would be incorrect stating the parameter estimate was positive). However, the intertemporal decline in the business index was perhaps more than double of what it was in the non-mega-event months. The upshot is that there doesn't seem to have been a detectably large and positive impact of the unprecedented 17 months' worth of sporting events on the Detroit metro-area's business activity index.

While this might not be the best news for those in Detroit, these preliminary results jive with recent work with Dennis Coates (presented last weekend at the Southern Economic Association meetings) suggesting that the impact of mega-events is not tremendously large compared to the local economy (the 2004 Houston Super Bowl is estimated to have generated taxable activity equivalent to approximately 0.02% of the Houston economy).

Check out James Glassman’s new venture for AEI, which launched last week. Here’s the mission statement (without the embedded links):

The American is a magazine of ideas for business leaders. Modeled on Henry Luce's original vision for Fortune Magazine, it surveys the full scope of American life through the lens of business and economics. The magazine is published six times a year--our first issue came out on November 15, 2006. Our web site, American.com, takes the same editorial mission to the web, with original writing every day and a selection of thought-provoking links from around the web. The American is a project of The American Enterprise Institute.

From the Nov. 21, 1906 NYT:

Cleveland, Ohio - [State] Senator Charles W. F. Dick this afternoon made the declaration that he favored an income tax, saying:

"After some years of study of the tax problem gained while Auditor of Summit County I have become firmly convinced that the income tax is the nearest we can come to an equitable and impartial system of taxation.

A draft of my presentation at Thursday’s Cato Institute monetary conference, “Is Inflation Targeting Suitable for the United States?,” is available here. If you’d rather watch or listen than read, Real Video and podcast versions of each of the conference panels are also available at the same site.

My paper on “The Free Banking Alternative,” presented at Hillsdale College last month, is now available here.

More great links via Southern Appeal.

Reason's Jeff Taylor knocks one out of the park.

I was at the Cato Institute’s annual monetary conference yesterday, where Anna J. Schwartz was one of the featured speakers, when the sad news came that Milton Friedman had died. Anna was stoic as ever; perhaps she already knew. The final speaker of the day was Robert Barro, who had been asked months ago to speak about Milton Friedman’s influence. Barro noted with regret the additional poignancy his reminiscences would now have.

I had been asked to talk about inflation targeting. I prefaced my remarks by noting that asking me – someone who favors relying on markets rather than politics for monetary and banking arrangements – to discuss whether the Fed should adopt inflation targeting is like asking someone who advocates privatizing the mail whether the US Postal Service should adopt an explicit delivery-time target for priority mail. (Do Fed Ex, UPS, and DHL offer their customers a delivery-time commitment? Yes? Then, at least until we abolish the postal monopoly, it makes sense to give the USPS such a target. Application of the argument to the Fed is pretty straightforward.) My paper should eventually appear in the Cato Journal. Jim Dorn told me the conference issue would be dedicated to Milton Friedman’s memory.

Read More »

I've collected a few on Southern Appeal.

Thursday's (11/16/2006) All Things Considered carried an interesting story on profiling, "Hearing Sounds of Religion, and Fanaticism" (available on Lexis/Nexis). An excerpt:

I didn't want to be caught staring so I looked away, but not before I noticed he was driving a white cargo truck. Hold it. Muslim guy in a cargo truck. My mind played a flash round of word and picture association - all involving the words truck bombs.

My boring, suburban calm turned to an adrenalin-spiked code orange. I wished the light would hurry up and turn green already. Come on, come on, I said, drumming my fingers on the steering wheel. I glanced back at my kids in the rearview mirror. My daughter, still sleepy-eyed, had her headphones plugged into her ears and my 5 year old son, staring out the other window, seemed equally oblivious.

When the light finally turned green I made my left turn and the truck headed straight down the main thoroughfare. I felt such a sense of relief, and then - wait a minute - I thought to myself. What's gotten into me? I'm a Muslim of Egyptian decent, born and reared in the U.S.

Of course, this being NPR, the essayist chalked it up to societal conditioning.

Is Wal-Mart entering the negative campaign ad game? Maybe so, according to this report: "Wal-Mart had noted in a news release Thursday that on the same day Edwards was criticizing the company in a conference call with union-backed activists, the volunteer staff member had asked a Raleigh, N.C., electronics department manager to obtain a PS3 for the ex- senator's family."

It's been awhile since I last posted on Wal-Mart, but here's a nice offering from Art Carden.

NB: Happy Thanksgiving to readers and co-bloggers. I (and co-bloggers Bob, Josh, Ed, and Craig) will be attending the Southern Econ meetings Sat-Tues.

Milton Friedman has died.

I will forever be grateful for the help Milton Friedman gave Jim Gwartney and me as we set out to construct the economic freedom index. Even as a naive graduate student, Milton treated me as an equal. (One of my fondest memories will be of playing tennis with Milton in 1992 at one of our early meetings.)

Copied below is the forward that Milton wrote for the first edition of the EFW book.

Read More »

Milton Friedman has died; CNN story here and WSJ story here. (sub req).

HT: Dan Alban and Ted Crouse

UPDATE: George Leef points out CNN puts a nasty spin on its story by quoting a so-called progressive saying "concerns of workers took a back seat compared to those of creditors and bankers."

I'm sure I won't be the first to "report" it, but Milton Friedman has passed away.

I have probably read much less of Friedman's work than others who frequent this site, but I certainly recognize the immeasurable contributions he made to the cause of economic liberty in this country and worldwide. We will all miss his voice in the debate over school choice as well, something for which he recently became a strong advocate.

I know this is playing fast and loose with statistics, but it seems like harmless fun. I treat the prices at Intrade.com as probabilities. They give the price for these six candidates to be nominated (I call this ProbNom) and to win the presidency (my ProbWin). From this, I compute the conditional "probability" of winning given nomination for the six leading contenders.

Name ProbNom ProbWin Prob(Win|Nom)
McCain 0.49 0.34 0.69
Gore 0.11 0.07 0.63
Obama 0.13 0.08 0.62
Giuliani 0.18 0.11 0.60
Clinton 0.56 0.31 0.55
Romney 0.12 0.07 0.54

This article reports that San Francisco plans to place marijuana enforcement near the bottom of the list:

Legislation approved Tuesday afternoon by San Francisco's Board of Supervisors will have police put the enforcement of marijuana laws on the bottom of the priority list, although prohibitions remain for marijuana sales in public, possession by minors or use by motorists.

Good for them, I suppose, but 22.37 miles away, Belmont, CA, plans to ban smoking of cigarettes everywhere except for single-family detached residences.:

“We have a tremendous opportunity here. We need to pass as stringent a law as we can, I would like to make it illegal,” said Councilman Dave Warden. “What if every city did this, image how many lives would be saved? If we can do one little thing here at this level it will matter.”

Armed with growing evidence that second-hand smoke causes negative health effects, the council chose to pursue the strictest law possible and deal with any legal challenges later. Last month, the council said it wanted to pursue a law similar to ones passed in Dublin and the Southern California city of Calabasas. It took up the cause after a citizen at a senior living facility requested smoke be declared a public nuisance, allowing him to sue neighbors who smoke.

Is government supposed to pass ordinances so that a single citizen can sue his neighbors? That doesn't sound right.

Freedom goes 1-1 this round?

A man fixed his front tooth with superglue after failing to find an NHS dentist.

Gordon Cook, 55, has used the bizarre "DIY dentistry" technique on a loose crown for the last three years - with each fresh application of glue lasting around two months.

Story here.

I saw a newspaper write-up today about this new book (and forthcoming 20/20 segment):

Who Really Cares: America's Charity Divide; Who Gives, Who Doesn't, and Why It Matters.

Copied from the website:

Arthur Brooks, a top scholar of economics and public policy, ... demonstrates conclusively that conservatives really are compassionate-far more compassionate than their liberal foes. Strong families, church attendance, earned income (as opposed to state-subsidized income), and the belief that individuals, not government, offer the best solution to social ills-all of these factors determine how likely one is to give. Charity matters--not just to the givers and to the recipients, but to the nation as a whole.

Jacko stalked by wacko looking for a thriller

The article that Craig cites contains a link to a useful article about property rights in whales. An excerpt:

The debate about endangered whales is fundamentally flawed. Whale scarcity is not caused by whale hunting - the real problem is that no one owns whales.

Think about it - environmental groups like Greenpeace and the International Fund for Animal Welfare are not fussing about chickens, cats, or canaries. These creatures benefit from domestication and ownership, but whales are still subject to the "tragedy of the commons". Whales have become the victims of a massive international skirmish between environmental groups, and nations with a cultural practice of whaling, because no one owns them.

Preserving endangered species is not rocket science. We should not rely on people's benevolence to ensure their survival. If we allowed people, businesses, communities, and environmental groups to own whales, then Greenpeace could buy up all the whales to protect them, and businesses could sell whale-watching or sell hunting rights or whale meat.

Of course, the plight of whales and that of humans are fundamentally different. To the extent that whales are endangered, their status is due to human predation. Whether each whale could be a free moral agent is largely beside the point: Given the right (i. e. wrong) set of property rights, members of another species (ours) will hunt and kill them.

I am in shock and awe. As I am preparing for my two presentations in Charleston at this weekend's Southern Economic Association meetings, I come across this story [original link deleted - no sense giving these folks any more hits than they already get] titled: "WTO Announces Formalized Slavery Model for Africa." Well, it's called "full stewardship" but it's pretty darn similar to slavery:

A system in which corporations own workers is the only free-market solution to African poverty, Schmidt said. "Today, in African factories, the only concern a company has for the worker is for his or her productive hours, and within his or her productive years," he said. "As soon as AIDS or pregnancy hits—out the door. Get sick, get fired. If you extend the employer's obligation to a 24/7, lifelong concern, you have an entirely different situation: get sick, get care. With each life valuable from start to finish, the AIDS scourge will be quickly contained via accords with drug manufacturers as a profitable investment in human stewardees. And educating a child for later might make more sense than working it to the bone right now."

The article ends with the Orwellian statement:

"This is what free trade's all about," said Schmidt. "It's about the freedom to buy and sell anything—even people."

Shock and awe....shock and awe.

Looks like I bit on sucker-bait. I should know that if it sounds too good, or too crazy, to be true, it probably is. The piece does read like an "Onion" piece, but the follow up links were so good that I actually considered it real. My mistake. More than one helpful reader has pointed this out and hence the retraction. One helpful reader emails to point out:

I hope you know that www.gatt.org is not the real WTO website. That site is actually run by a group called the Yes Men. They're basically a "satire" group that attempts to sabotage some organizations and corporations by releasing statements falsely under their names. More information at wikipedia: http://en.wikipedia.org/wiki/Yes_men

Mea culpa - the upshot is they got me.

All I can say is "whew."

Aeon Skoble of L&P posts that John Tierney is leaving the NYT's op-ed page. His departure is a big loss for the cause of liberty.

Don Boudreaux comments here.

The return of HillaryCare? This, from AP:

She also said Democrats would focus on improving the quality and affordability of health care - a touchy matter for the former first lady, who in 1993 led her husband's calamitous attempt to overhaul the nation's health care system. The failure of that effort helped Republicans win control of both the Senate and House the following year.

"Health care is coming back," Clinton warned, adding, "It may be a bad dream for some."

"¡Viva el Capitalismo!" provides an interesting analysis of the recent Nicaraguan election. An exerpt: "In a sense, these moderate left-wing leaders, perhaps now including Mr. Ortega, are a lot more in sync with what Ronald Reagan and his men were aiming for in Central America in the 1980s than Oliver North would care to admit."

A belated posting on CA's defeated Prop 87. From the LA Times (11-3-06 via Lex-Nex):

Vinod Khosla is crusading for the measure on Tuesday's ballot that would tax oil companies billions of dollars to fund alternative energy development. He says it would be a boon to the environment.

But it could also be a boon to his investment portfolio.

Khosla, a co-chairman of the campaign to pass Proposition 87 and a $1.1-million donor to the effort, invests in ethanol manufacturing companies poised to claim government grants that would be funded with the new tax. Though he has vowed to give away any profits earned from companies that receive money stemming from the initiative if the measure passes, his situation reflects a trend that alarms advocates of campaign finance reform.

Once a means for venture capitalists to pursue philanthropic interests, the bankrolling of citizen initiatives has become a financial opportunity. Their campaigns for government funding of stem cell research and the promotion of cleaner energy technologies could bring billions of dollars in public money to niche technology markets that their firms bet on.

The committees created to allocate the money under such initiatives are not obligated to follow the conflict-of-interest restrictions that guide most government agencies. Representatives of start-up firms funded by venture capital companies have seats on those panels, as do some venture capitalists.

"You have these very wealthy individuals creating pots of public money that they then play a huge role in doling out," said Ned Wiggelsworth, a policy advocate for Common Cause, an organization that lobbies for campaign finance reform. "I'm skeptical their motives are pure when they stand to profit ... financially."

Just to be clear: I think the tax was a terrible idea and am glad it was defeated. Although some supporters' motives may have been personal enrichment, I would not favor Common Cause style limits on campaign contributions.

From the Nov. 11, 1906 NYT:

PEEKSKILL, N.Y. - A number of arrests were made here to-day for automobile speeding. Fourteen prisoners were held and all pleaded guilty when arraigned before Judge Travis. Fines ranging from $10 to $25 were imposed.

The prosecutions were the first of their kind here. The police marked a course of an eighth of a mile, and at either end men were stationed with signal flags and stop watches. It was expected that many automobiles would pass through the village to-day with parties bound for the Princeton-West Point football game at West Point, and in this the authorities were not disappointed. All those arrested were either going to or coming from the game.

If only Einstein's Theory of Relativity had been around, a good lawyer might have been able to get the speeders off the hook.

The folks at EH.net suggest that the range in fines was approximately $225 to $575 in 2005 CPI adjusted dollars. Ouch.

Why were speeders arrested rather than simply given a ticket and sent on their way? Perhaps the (marginal) cost of arresting a particular speeder was less because there were fewer cars on the road? On the other hand, perhaps the marginal benefit of arresting a particular speeder was greater. At the time, only the rather well-to-do drive cars, so perhaps there was a bit of scandal involved that would titillate the common man and "make an example" of someone?

Indeed, the article describes several of the people stopped:

Among those stopped for exceeding the speed limit was a man who said he was the ex-Gov. Robert L. Pattison of Pennsylvania....Another said he was George W. Morgan and persons in the court room said he was the Superintendent of Elections in New York....Elben Van Cott, who said he was the son-in-law of Isaac N. Mills, the newly elected supreme Court Justice.

The perp walk (whether on Court TV or in the columns of the NYT) might have held as much fascination in 1906 as it seems to today?

From the Nov. 11, 1906 NYT:

No man's respect for old age extends to eggs.

Some people can't even do their duty without striking an attitude.

A young man doesn't think seriously about marriage until after it happens.

Many a man gambles with his reputation, losing it in an effort to gain a bigger one.

Heaven is a place where the pedestrian will have just as many rights as the automobile.

A jury is a body of twelve men selected to decide which of the contestants has the best lawyer.

The glutton is always thinking of what he is going to eat, the dyspeptic of what he has just eaten.

1. Via Volokh: Police in CA arrested a naked man with a concealed weapon. Story here.

2. Via the comments on the naked man with concealed weapon story: A judge has ruled that a burrito is not a sandwich. Details here.

3. A study links homeliness with crime.

4. Ah the joys of socialized medicine:

A woman has been told she must remain in agony for more than two months because her hospital will be punished if it operates on her more quickly.

Bonnie Collins, who has gallstones, has been advised by her GP to live on water and occasional cream crackers to stop her condition getting worse.

Doctors will not operate on her until Christmas at the earliest, because debt-ridden Ipswich Hospital - which is planning to treat cats and dogs for cancer to raise funds - will not get paid for moving her up the waiting list. This is because her case is classified as urgent, but not an emergency.

5. JS points me to some folks who need a lesson on value added (story here; photo included):

In a field just off N.C. 42 in Gardners Township, a large cotton module with a message turned the heads of some motorists this week.

“Victoria’s Secret sells underwear for $45 a pair. Farmers sell cotton for 45 cents a pound. What’s wrong?” was written in black paint on its side. …

Kevin Gardner said … “That is how it is in the world. Somebody overseas buys cotton at cheap prices and multiplies the price 100 fold … Farmers over here are struggling to make it.”

That inspired the college student to write the message on the side of his uncle’s cotton, he said.

“I’m not good at math, but 100 times 45 cents ….” Gardner said. “There ain’t a 100 pounds of cotton in some of those drawers.”

This New Republic article contains some suspect economic analysis, but the political anallysis is intriguing.

Democrats have responded by fielding candidates like Tester who support gun rights, oppose gay marriage, and attack the Bush administration for expanding the reach of government.

Western Democrats like Tester have the potential to intellectually reinvigorate the Democratic Party as a whole. Indeed, they may be the only thing that can save a party flush with victory from heading down a road that will lead to future defeats.

About one-third of the credible Western Democratic candidates for major office this election cycle received "A" ratings from the National Rifle Association. Many spoke out against the Patriot Act on privacy grounds.

From a report in the Telegraph: "The French economy slumped in the third quarter as the Airbus crisis began to exact its toll, dousing hopes that Europe would take over as world's growth engine as America slows. Growth sank to zero with an accelerating twist down in September as car output fell 3.1pc and overall manufacturing slid 1pc, far worse than expectations. ... France's sudden downturn comes amid signs of flagging growth across the euro-zone following a brief burst of energy this year. Germany and Italy both face fiscal austerity packages in 2007."

Here, from USA Today, is a classic example of biased reporting. Under the headline, "Liberals mark big victories with ballot initiatives," USA Today goes crazy.

"Liberals claimed unprecedented victory in Tuesday's ballot measures as voters raised the minimum wage in six states, overturned South Dakota's restrictive abortion law and defeated for the first time a proposed constitutional ban on same-sex marriage.
"Also defeated were 16 of 17 efforts to limit state and local government through term limits, tax cuts and revenue restrictions, said Jennie Bowser of the National Conference of State Legislatures."

All true enough. But unmentioned in the entire article are the defeats of tax increase proposals in California and elsewhere, some of which I outline here.

Passage of the Michigan Civil Rights initiative draws this passing reference, buried in mid-paragraph, "In Michigan, voters approved a ban on several affirmative action programs." Does anyone doubt its defeat would have been trumpeted to the hills?

There is no mention at all about nine states that made it harder for state and local governments to seize private property. No mention at all about the failure of campaign finance restrictions in liberal California and "good government" Oregon.

Bias, anyone?

Some thoughts on Tuesday's results can be found below the fold. A bad day for Republicans, but not for limited government.

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From the WaPo (with a HT to Dan Alban):

NEW YORK -- Wall Street rose for a third straight session Wednesday, with the Dow Jones industrials reaching another record close as investors grew more confident that a huge victory by Democrats in congressional elections would result in gridlock and keep lawmakers out of the way of business interests.

I hope Wall Street is right, but I'm skeptical. Congress has passed all sorts of slop over the past 6 years but Bush has found only one bill objectionable enough to warrant a veto. I expect Bush to cave on CAFE, the minimum wage, and drug price controls (if not explicit then implicit via the "buying power" of Medicare). Pro-growth tax policy, one of the few Bush bright spots, is likely to be substantially undermined by the Dems desire for "middle class tax cuts."

That's finally over.

My city elected a mayor who, in a radio interview, claimed that he didn't vote to raise taxes while in the state legislature, since some of them were fees, some votes were to continue existing taxes, etc. A rose by any other name...

On NPR's live coverage last night, the anchor, referring to the slim margin in Virginia, said something to the effect of "and you think your one vote doesn't count?"

Isn't it sad when your one vote does count? We are establishing who will determine the laws and policies which will constrain our lives, confiscate our income, and ideally protect our life, liberty, and property. Yet that determination may be made by some dude in Virginia who decided to go to the polls because the Outdoor Channel was showing a rerun of a deer hunting episode. New episode? Completely different election result, different legislative direction of our country for two years.

"Every vote counts." That's why, if I had wasted a half hour of my life yesterday, I could have voted for the Libertarian who ran, oh wait, no Libertarians ran in my district. But I guess I could have enjoyed fulfilling my "civic duty" of tapping a computer screen with a three-foot curtain pulled behind me. My benefit-cost analysis of voting doesn't include emotional benefits. A half hour of my time vs. one more vote out of several hundred thousand for a candidate I don't like.

"Soldiers die protecting your right to vote." I honor their sacrifice. Which is the worse offense, that I don't vote or that those who I can vote for stand against every Constitutional principle?

"But if everyone thought that way..." I'm not everyone, I'm just me.

I can't remember where he said it, but Walter Williams said that in the best NBA games, you never notice the referee. They make consistent calls and apply the rules fairly. Visiting fans get annoyed when a hometown ref shows favoritism. In Congress, it shouldn't matter who we elect; their job is to apply the Constitution fairly. When the understanding of our political system devolves from a Constitutional republic into a mob-rule democracy, suddenly everyone is clamoring to pick the ref who will make the worst calls in their favor.

ACORN, the Association of Community Organizations for Reform Now, is self-described as "the nation's largest community organization of low- and moderate-income families, working together for social justice and stronger communities."

John Fund reports on some of ACORN's shenanigans relative to elections. The article includes these references to minimum wages.

Its manual for minimum-wage campaigns says it intends "to push for as high a wage as possible." But it doesn't pay those wages.

In 1995 Acorn unsuccessfully sued California to be exempt from the minimum wage, claiming that "the more that Acorn must pay each individual outreach worker . . . the fewer outreach workers it will be able to hire."

So at least one employer's demand curve for labor slopes downward.

No, the headline doesn't refer to the commiecrat takeover of the House and the Senate. While the Democrats' big year did take down some decent Republicans (e.g., Chris Chocola of IN), the party of pills for seniors, bloated farm bills, and bridges to nowhere didn't deserve to retain control. Of course, it's hard to make a case that the Dummycrats deserve to win. Not only is their agenda rotten, but campaign tactics such as GA Rep John Lewis's telling black voters that "Your very life may depend" on voting against a Republican running for the Fulton County Commission are outrageous.

Instead, the headline refers to Maine's defeat of a Taxpayers' Bill of Rights proposal. The proposal was given a good chance to pass and its passage would have given the TABOR movement momentum in other states. TABOR's failure in Maine makes it a bit less likely that GA's Republican leadership will push the measure.

One bright spot--several states including GA passed ballot items making it more difficult for government to seize property via eminent domain. I'd be more enthusiastic if I thought the measures would truly stop government predation. Instead, I expect crafty pols will make use of loopholes or creative reading of the measures to continue their legal plunder.

A sample of articles from the Nov. 7, 1906 NYT:

1. The Sixtieth Congress will be Republican. The majority in the House will be about 84, a falling off of 30...The result is something of a surprise, for even the Republicans expected more of a cut in their majority. The Democrats did not make noticeable gains in any section of the country, but picked up a Congressman here and there.

2. CONCORD, N.H. - The indications point to a failure of Floyd to secure a majority [in the gubernatorial election], and the settlement of the contest by the Legislature under the law.

3. Nearly 500 women cast their "votes" in a private polling booth at 2,034 Fifth Avenue yesterday. They admitted that they had no legal right to vote, but they "voted" all the same, and went through the whole procedure of "electing" one of the candidates with solemn reverence for election laws. They had a board of election, election inspectors, polling clerks, and ballot clerks.

4. PATERSON, N.J. - For the greater part of the day there was plenty of liquor to be had in a polling place in the Fourth Ward. A rear room was used as a storage place for liquor and beer, and all voters could pass through to this room and get free drinks. The stuff is said to have been the gift of a local worker.

5. MONTGOMERY, Ala - Incomplete returns indicate an overwhelming victory for the entire Democratic State ticket and nominees for Congress. The vote was light.

6. Innumerable thousands in Times Square last night saw the successive bulletins that told of Mr. Hughes's election and Mr. Hearst's defeat, and then made a colossal noise about it.

   Last night in Times Square duplicated the election scenes there last election da y and last New Year's. The crowd, as a rule, was good-natured all night logn, the returns from both up-state and Greater New York tending to give both Hughes and Hearst partisans plenty of news to make them glad at least temporarily...

   No small proportion of the crowds in Times Square last night were out to have a good time, regardless of who was elected...

   
   This last story suggests that in 1906 there was a sense of celebration about the voting process, warts and all, that seems to have been lost today.
   

Some other headlines:

CALIFORNIA.; Republicans Elect Gillette Governor -- Hearst's Man Badly Beaten

COLORADO.; Buchtel Carries the State by at Least 15,000

CONNECTICUT.; Sweeping Victory for Republican Candidates.

DELAWARE.; Burton Elected Governor -- Republicans Control Legislature.

FLORIDA.; State Goes Democratic -- Drainage Amendment Defeated.

INDIANA.; Republicans Claim Election of State Ticket by 50,000 Majority

IOWA; Election of Porter (Dem.), over Cummings by 10,000 Indicated.

Jersey Republican; Dryden may Lose

KANSAS.; Hoch May Be Beaten -- Republican Loss in Congress Districts.

KENTUCKY.; Primary Results Doubtful -- Each Faction Claims Victory

MASSACHUSETTS REPUBLICAN; Gov. Guild Re-elected by Plurality of 34,000.

MICHIGAN.; Republicans Elect Warner Governor by About 100,000 Majority.

MISSOURI.; Both Parties Claim State, but Looks Like Democratic Victory.

NEW MEXICO.; Early Returns Favor Joint Statehood by Small Majority

NORTH CAROLINA.; All Districts Go Democratic -- Plurality Over 40,000.

NORTH DAKOTA.; Democratic Gains Throughout State and Sarles Will Have Close Call.

PENNSYLVANIA.; Republican Ticket Elected in State and in Philadelphia.

REPUBLICANS WIN IN ILLINOIS AGAIN; Claim a Plurality of 125,000 in the State.

RHODE ISLAND.; Higgins, Democrat, Elected Governor -- Republicans Control Assembly

SOUTH DAKOTA.; Republican Plurality of 35,000 Expected for State Ticket

WEST VIRGINIA.; Returns Indicate Election of Five Republican Congressmen.

WISCONSIN.; Claim Election of Davidson [a Republican] for Governor by 60,000 Plurality.

Posted by Craig Depken at 11:56 AM in Politics

November 06, 2006

Vote early (and irrationally?)

Perfect timing for Bryan Caplan's "The Myth of the Rational Voter." Some excerpts:

But why are there some areas — like politics and religion — where irrationality seems especially pronounced? My answer is that irrationality, like ignorance, is sensitive to price, and false beliefs about politics and religion are cheap. If you underestimate the costs of excessive drinking, you can ruin your life. In contrast, if you underestimate the benefits of immigration, or the evidence in favor of the theory of evolution, what happens to you? In all probability, the same thing that would have happened to you if you knew the whole truth.

In a sense, then, there is a method to the average voter's madness. Even when his views are completely wrong, he gets the psychological benefit of emotionally appealing political beliefs at a bargain price. No wonder he buys in bulk.

So what remedies for voter irrationality would I propose? Above all, relying less on democracy and more on private choice and free markets.[12] By and large, we don't even ask voters whether we should allow unpopular speech or religion, and this "elitist" practice has saved us a world of trouble. Why not take more issues off the agenda? Even if the free market does a mediocre job, the relevant question is not whether smart, well-meaning regulation would be better. The relevant question is whether the kind of regulation that appeals to the majority would be better.

As long as elites persist in unmerited deference to and flattery of the majority, containing the dangers of voter irrationality will be very hard. Someone has to tell the emperor when he is naked. He may not listen, but if no one speaks up, he will almost surely continue embarrassing himself and traumatizing spectators.

HT to Don Boudreaux

Posted by Wilson Mixon at 05:17 PM in Politics

November 05, 2006

Vote early (and vote often?)

From a Nov. 5, 1906 NYT editorial:

To all our readers...we tender the urgent advice to vote as early as possible.

In many districts in the city there will be a heavy vote cast. In some there will be attempts at illegal voting. In some also there is reason to expect more or less disturbance. The man who votes early is pretty sure to escape unpleasant consequences from any of these causes. Mr Rock, the Labor and Independent candidate for the Senate, has supplied much amusement and no small amount of sound council in this campaign. His most urgent appeal to his friends is to vote early lest some one votes for you....

Posted by Craig Depken at 06:17 PM in Politics

November 02, 2006

EFW Communique

I'm in Costa Rica attending the annual meeting of the Economic Freedom Network, the group of think tanks who co-publish the Economic Freedom of the World index.

We put out this press release today:

Read More »

NOVEMBER 2, 2006 - 08:00 ET

The Fraser Institute: Economic Freedom and Rule of Law Key to Ending Latin America's Years of Stagnation and Poverty

SAN JOSE, COSTA RICA--(CCNMatthews - Nov. 2, 2006) - Failure to implement market-based reforms and embrace the rule of law has condemned most Latin American nations to economic stagnation and poverty, says the Economic Freedom of the World Network.

Latin America has never had a sustained market-based reform effort and, most dangerously, has failed to establish the rule of law. Limited reforms were attempted in the first half of the 1990s but were too restricted and too short lived to have much effect, the Network said in a communique issued prior to meetings in San Jose, Costa Rica. The communique in English, Spanish and Portuguese can be found at www.freetheworld.com.

"It's a myth that Latin America went through a sustained period of reform. We had some weak reforms but still Latin Americans remain among the least free economically on the planet - and the last decade has seen continual reversal of even these modest reforms," said Rigoberto Stewart, President of Costa Rica's Institute for Liberty and the Analysis of Public Policy, which co-hosted the Costa Rica meeting with The Fraser Institute. "If Latin Americans are ever going to build prosperity and reduce poverty, we must enter into a period of real reform - especially in building the rule of law."

Chile is the only nation in the region to establish a high coherence with the rule of law and adopt wide-ranging market reforms. Consequently, it outpaces all other Latin American nations by a wide margin, with real per capita economic growth of just under 25 per cent between 1995 and 2004, compared to a Latin American average of just over 10 per cent, according to the Network's research.

Venezuela ranks as one of the world's least free nations with the lowest level of economic freedom in Latin America and the fifth lowest in the world. Despite great oil wealth, the lack of market economics has deprived the people of Venezuela of the prosperity they should enjoy. Per capita incomes in Venezuela were lower in 2004 than in 1995, and the current government seems set on a course that will deprive the people of Venezuela of their birthright and keep them mired in poverty.

Brazil, the largest country in the region, has a mediocre economic freedom performance by Latin American standards and a very poor one by world standards. Brazil's score in rule of law has declined by 1.6 points since 1995, worse than the average Latin American average decline of 1.0 points. Brazil's weak performance in economic freedom - ranking 88th out of the 130 nations - is reflected in its per capita GDP growth. The total increase between 1995 and 2004 is just 8.5 per cent, worse than the regional average.

The average score of all Latin American nations in 2004 would rank the region, were it to be considered a nation, 65th out of 130 nations in the index of economic freedom, tied with Namibia, Tanzania, and Uganda. Even worse, Latin America ranks 85th in rule of law behind Russia, Senegal, and Uganda.

"The rule of law provides the infrastructure of a market economy, and too many nations in Latin America simply do not have the legal infrastructure they need for success," said Fred McMahon, Director, Trade and Globalization Studies at The Fraser Institute. "But the rule of law cannot be built quickly through a simple formula. It requires study, hard work, dedication to the cause, and patience."

The Economic Freedom of the World network consists of independent social and economic policy research organizations from 72 nations. It publishes the Economic Freedom of the World Annual Report which is recognized globally as a marker of good institutions.

For more information on the Economic Freedom Network, data sets and previous Economic Freedom of the World reports, go to www.freetheworld.com.

« Close It

Posted by Robert Lawson at 11:19 PM in Economics

"A Farewell to Alms: A Brief Economic History of the World"

This book, by UC Davis economist Gregory Clark, is the subject of Tyler Cowen's NYT column today. Due out in 2007 from Princeton U. Press, Clark has made it available in toto right now as a single big PDF file, here. Clark's bottom line? Economic growth and development are driven much more by "demography, technology, and labor efficiency" than by governmental and economic institutions and policies. (P. 422)

Posted by Mike DeBow at 03:04 PM in Economics

Bush still a Keynesian

I caught Rush Limbaugh's interview with the President yesterday on his show, in which Dubya had some disappointing things to say about China:

Our relationship with China is a very complex relationship, and it's an important relationship. Obviously we have an economic relationship, and we're trying to put that relationship in a position where our Americans can realize that trade is not only free but it's fair.

The last three words always make me shudder, since the implication is that free trade between two consenting parties can be unfair. Then there was this:

One great opportunity for China, Rush, is to encourage China to develop a society in which there are savers. In other words, a society in which there's a pension plan. Let me rephrase that: a society in which there's consumer [sic] because now there's a society of too many savers. The reason they're saving so much money is because there's not a pension plan or a legitimate healthcare system. The people horde [sic] the money they have in anticipating there's going to be a bad day. If we can encourage China to be a country of consumers, you can imagine what it would mean for US producers and manufacturers to have access to that market.

Yup, we're all Keynesians still. Saving is considered hoarding and is to be avoided. Hoarding occurs because there is no one besides me that is responsible for my retirement or health care (since it is determined by God that someone else must be responsible for me in my old age or bad health). Since it is consuming and spending that benefits US producers and manufacturers, we should stop buying our children piggy banks and start getting them credit cards. I know in my own life that nothing but good things have happened when I've spent instead of saved.

Bush's $300 per person tax cut checks a few years back were sold to the public on the same principle: "we need these tax cuts so that people start spending money and get the economy moving again."

Here's hoping Say's law doesn't completely die.

Posted by Tim Shaughnessy at 11:38 AM in Economics

"Sometimes our government goes too far"

So says DeKalb County (GA) CEO Vernon Jones after he vetoed tighter smoking regulations for the county. If only we heard Jones's sentiment more often from him and other government officials.

Posted by E. Frank Stephenson at 10:42 AM in Misc.

November 01, 2006

Cultural commentary c. 1906

A snippet from the Springfield Homestead repeated in the Nov. 1, 1906 NYT :

There need be no misgivings anywhere or at any time over the usual good sense of the people of the United States or of any State thereof. This is a democratic Government of a well-intending and fairly intelligent democracy, and a Government by it and for it. Out of our scares the Government has gone on to better things. The American public is not a mob. It is a sane and self-controlled Nation.

This is something to mull over.

Posted by Craig Depken at 12:27 PM in Culture

The value of a reputation c. 1906

From the Nov. 1, 1906 NYT:

PHILADELPHIA - Miss Bella Blum, daughter of Israel Blum, a wealthy resident of Brooklyn, N.Y., instituted suit in the Common Pleas Court to-day to recover $25,000 damages from Abraham Press, charging breach of promise of marriage. Press is a jeweler. Miss Blum, who is 19 years old, is seeking to recover jewelry worth over $2,000, which, she declares, Press gave her but afterward obtained on the pretext of having it repaired.

The folks at EH.net suggest that $25,000 in 1906 is approximately $560,000 in CPI adjusted 2005 dollars. Was the reputation of the jilted bride-to-be damaged that much? What a difference 100 years makes.

On a similar note, last year I "reported" on the alleged value of a stolen kiss in 1905 - approximately $208,000 in 2005 dollars. It is interesting(?) that a stolen kiss wasn't worth as much as being left at the altar, so to speak.

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Posted by Craig Depken at 12:25 PM in Culture