Division of Labour: July 2007 Archives
July 31, 2007
Where “to battle inflation” means “to generate inflation”

Forbes’ headline on a story today: “Zimbabwe introduces new bank note as it battles hyperinflation”. First sentence of the story: “Zimbabwe's central bank introduced yet another higher denomination banknote as it grappled with runaway inflation which is rendering lower-value banknotes useless.”

Jane Fields of The Scotsman offers a less naive perspective:

With spectacular disregard for the rules of economics, [Zimbabwe’s ruler] Mr Mugabe has vowed to print even more money for underfunded municipal projects.

"Where money for projects has not been found, we will print it," the former guerrilla leader told town councillors on Friday, apparently ignoring the generally accepted view that printing money is a recipe for inflation.

Local currency prices in Zimbabwe are more than doubling every month. At that rate the new Z200,000 note – today worth about two pounds of rice – will need to be succeeded by a million-dollar note in two months.

Posted by Lawrence H. White at 09:39 PM in Economics

Bollywood star sentenced on weapons charges

The New York Times reports that Bollywood star Sanjay Dutt, son of 1960s Bollywood stars Sunil Dutt and Nargis, was sentenced to six years today for his conviction on illegal weapons charges from 1993. Dutt obtained the illegal weapons from Muslim gangsters who were setting off terror bombs in the city of Bombay. He said he was worried about defending his family against Hindu rioters who were targeting Muslims in retaliation for the bombings (his mother was Muslim). After a long trial Dutt was convicted of the possession charges in November 2006, though cleared of involvement in the bombings.

Dutt rose to stardom playing gangsters in such (recommended!) movies as J. P. Dutta’s Hathyar (1989) and Mahesh Manjrekar’s Vastaav (1999). In recent years (out on bail pending conclustion of his trial and sentencing), his biggest hits came playing a gangster who becomes a medical student in the comedies Munna Bhai, MBBS (2003) and its sequel Lage Raho Munna Bhai (2006) (I haven't seen either one). He also played a gangster named Munna Bhai in the (not recommended!) comedy Hum Kisi Se Kum Nahin (2002), a Bollywood adaptation of Hollywood’s Analyze This.

Posted by Lawrence H. White at 07:36 PM in Culture

Post-Friedman Monetarism and monetary policy rules

It’s official: “card-carrying” Monetarists, at least as represented by St. Louis Fed president William Poole, now renounce Milton Friedman’s constant-money-growth rule. In a speech today commemorating what would have been Friedman's 95th birthday, Poole said nothing in favor of any sort of rule (in particular, there's no word in Poole’s speech about Bennett McCallum’s velocity-and-income-responsive money-growth rule).

Poole declared:

Milton favored steady money growth because he did not believe that central bankers were wise enough to improve on the outcomes that would flow from steady money growth. With evidence from the Greenspan era, Milton changed his view a bit, but was not convinced that Greenspan’s success in adjusting the stance of monetary policy was likely to be replicated by future Fed chairmen.

Two things should be noted if we want to have an accurate take on what Friedman favored. First, at least since 1984, Friedman favored a particular type of “steady money growth” rule, namely freezing the monetary base (while letting banks freely issue inside money).

Second, while continuing to advocate a base freeze (with free banking) as first-best, in recent years Friedman changed his ranking of second-best policies a bit in response to the success of central banks around the globe at coming close to their inflation targets. He took that success as evidence that inflation or price-level targeting was a better option than he had once believed. (On both of these points see this 2006 interview. On inflation targeting see also this account of Friedman's remarks in a 2005 panel discussion.)

Poole's own view:

I believe that the Fed’s actual adjustments of its federal funds rate target have yielded superior outcomes since 1982 to what we would have observed under steady money growth. I also believe that advances in knowledge permit us to say with some confidence that these gains are not just an accident of Alan Greenspan’s special skills and intuition.

Poole concluded with this paragraph:

Although Milton did not prevail in his quest to have the Fed maintain a constant money-growth rate, he did prevail in his insistence that policy be apolitical and rely to the maximum possible extent on market judgments. He lost a battle but truly did win the war.

What does it mean for policy to be “apolitical”? Milton Friedman always insisted on something less vague, name that policy be strictly rule-governed. Poole doesn’t explicitly denounce rules in general, and he has endorsed some sort of inflation targeting in the past, but he implies that he is perfectly satisfied with the Fed's discretion. I’m sorry to see that.

Posted by Lawrence H. White at 06:34 PM in Economics

On the income elasticity of children c. 1907

From the July 31, 1907 NYT:

CHICAGO - With the completion of the Evanston school census today, Chicago's classic suburb was startled to discover that race suicide has been thriving in its midst. There are only seven more children within its borders than there were a year ago, and this condition apparently is due to the wealthier residents in whose homes children arrive only one-third as frequently as they do in the neighborhood of the working classes.

Of residents under 21 years of age, 1907 finds a decrease of five boys and an increase of twelve girls, or only a rise of seven in the total number of children. "The conlusion impressed upon me most strongly," said Victor McCulloch, who had charge of the census, "was that the falling off in the number of children was the fault of the so-called aristocrats."

I trust the change in the number of children wasn't simply because of relocation (that would be too easy an explanation).

Posted by Craig Depken at 03:15 PM in Economics

Demand curves are downward sloping c. 1907

From the July 31, 1907 NYT:

AUSTIN, Texas, July 30 - The Railroad Commission has issued a ruling that under the anti-pass [a form of anti-rebate] law, full rates must be paid for the transportation of advance cars of circuses and their representatives.

This proposed increase in their expenses has caused circuses to wipe Texas off of their routing map, according to the statements of their representatives.

Whether fewer nightmares of circus clowns led to an improvement in social welfare is an empirical question.

Posted by Craig Depken at 03:11 PM in Economics

Prohibition in Georgia c. 1907

From the July 31, 1907 NYT:

ATLANTA, July 30 - After ten hours of exciting debate the lower house of the Georgia General Assembly this evening, by a vote of 139 to 39, passed the Senate bill prohibiting the manufacture or sale of alcoholic beverages in the State after Jan. 1, 1908. Gov. Hoke Smith has announced that he will sign the measure, although prohibition mean the closing of the bar of the Piedmont Hotel, from which he receives a handsome income.

All day long the Capitol grounds and corridors were thronged with Woman's Christian Temperance Union women and other white ribboners. As soon as the final vote was taken the great crowd burst into "Praise God from Whom All Blessings Flow." Enthusiastic men lifted to their shoulders Seaborn Wright, the Prohibition leader in the lower house, and marched through the Capitol singing "Gloria in Excelsis."

The bill affects really only fifteen counties in the State, 135 already being dry under the local option law. Several large distilleries will be closed, and also breweries. It will cause a loss in revenue, State and municipal, of $1,000,000.

Posted by Craig Depken at 03:06 PM in Politics

"Salary" vs. "Wages" c. 1907

An interesting distinction is made in a short story in the July 31, 1907 NYT:

Mr. Justice Warrington observed that he preferred the old English word "wages," and pointed out that a Judge's pay was so called. The distinction between "salary" and "wages" is a very nice point. Etymologically, heir origins are very diverse. "Wages" are really rewards of labor stipulated to be paid, the idea being that the sum is pledged, or "engaged," put under pledge - the same "gage" appearing also in "mortgage" and "wager." "Salary" is simply "salarium," salt money, the allowance for salt given to Roman soldiers, which afterward came to mean a pension, stipend, or "salary" in the modern sense.

Posted by Craig Depken at 03:01 PM in Economics

One local economic development strategy c. 1907

From the July 31, 1907 NYT:

ST. LOUIS - "Take off the lid; let it stay off forever," is one of the suggestions of Miss May Healey, a stenographer, in the prize-winning answer to the question:

"If you owned St. Louis, what would you do to improve it and better it's people?"

Here is her most sensational and, she declares, her most important suggestion:

"Take the lid off, let it stay off forever; permit racing, saloons, and all that will help to bring business here instead of driving it away. Let all business keep open day and night, Sunday and every day. It will give employment to many, and increase revenue for St. Louis.

"It will put life into the city. As it is now, nothing doing, more like a village in a way, compared to other cities not nearly as old or half its size.

"Gov. Folk is a good man, but I don't agree with him in his ideas of closing up the town. I've heard that he takes a highball whenever he pleases. Why shouldn't he be willing for others to do the same?"

Posted by Craig Depken at 02:55 PM in Economics

On the move....again

Today the movers came and swept up most of my stuff, which I won't see again until a week after we get to Indy. Between my wife and I, this makes our 5th move in two years. We're enjoying the chance to purge junk and simplify. In a year we'll do it all over again. A year as resident scholar at Liberty Fund should definitely be worth it all, and then some.

Having been out of it lately, a bit of quick catching up on some interesting finds.

Sunday's NYTimes book section had this deep review of what could be an important war book. I found the review to be overstated in some areas.

Speaking of Indiana, my buddy Eric Schansberg landed a piece at the WSJournal on Indiana property taxes. Eric blogs about his experience with the editors here: http://schansblog.blogspot.com/. Text of article is posted there too.

The latest issue of The Lighthouse features William Gray on hurricanes and global warming, Alex Tabarrok on class action torts, news from the ethanol boondoggle, and---get this!---Bob Higgs taking on Randy Barnett on justifying the Iraq war.

I really enjoyed Todd Zywicki's article on Tullock's critique of the common law. I've been reading some of Tullock's early law and econ work, and Todd has as strong a handle on the value of the contributions as I've seen.

Our last night in San Francisco was at The Red Victorian Inn, a "B&B" and "Peace Center" with galleries of home grown art and plants in the Haight-Ashbury. An oasis for communitarians. A funky sort of convenience for me, being around the corner from the apartment we vacate today.

Happy travels.


Posted by Edward J. Lopez at 12:12 PM in Misc.

July 30, 2007
ACORN's Mischief

John Fund addresses voter fraud in general and ACORN's contribution thereto in particular:

[In] Seattle ... local prosecutors indicted seven workers for Acorn, a union-backed activist group that last year registered more than 540,000 low-income and minority voters nationwide and deployed more than 4,000 get-out-the-vote workers. The Acorn defendants stand accused of submitting phony forms in what Secretary of State Sam Reed says is the "worst case of voter-registration fraud in the history" of the state.

Local officials refused to accept the registrations because they had been delivered after last year's Oct. 7 registration deadline. Initially, Acorn officials demanded the registrations be accepted and threatened to sue King County (Seattle) officials if they were tossed out. ... Of the 1,805 names submitted by Acorn, only nine have been confirmed as valid, and another 34 are still being investigated. The rest--over 97%--were fake.


But ACORN gets off with a very light slap on the wrist:

In Washington state, King County Prosecutor Dan Satterberg said that in lieu of charging Acorn itself as part of the registration fraud case, he had worked out an agreement by which the group will pay $25,000 to reimburse the costs of the investigation and formally agree to tighten supervision of its activities....

From disenchanted ACORN employees (recall ACORN's strongly pro-union stance on issues):

Last year several Acorn employees told me that the Acorn scandals that have cropped up around the country are no accident. "There's no quality control on purpose, no checks and balances," says Nate Toler, who was head of an Acorn campaign against Wal-Mart in California until late last year, when Acorn fired him for speaking to me.

Loretta Barton, another former community organizer for Acorn, told me that "all Acorn wanted from registration drives was results." Ironically, given Acorn's strong backing from unions, Ms. Barton alleges that when she and her co-workers asked about forming a union, they were slapped down: "We were told if you get a union, you won't have a job." There is some history here: In 2003, the National Labor Relations Board ordered Acorn to rehire and pay restitution to three employees it had illegally fired for trying to organize a union.


Posted by Wilson Mixon at 01:55 PM in Politics

July 29, 2007
Say it ain't so, Bear

Man v. Wild star Bear Grylls is under fire for faking parts of his show including staying in hotels on some occasions when he's supposedly been out in the wild.

There's also some questioning about his real service in the "British Special Forces", his being airlifted off Everest after his successful summit, and some of his survival advice.

Posted by Robert Lawson at 09:36 PM in Culture

The down side of Hotwire

This past week I gave a couple of lectures at the annual Seminar on Austrian Economics at the Foundation for Economic Education. Richard and Anna Ebeling are doing a great job turning FEE into a beehive of activity.

To get to FEE from the airport, I rented a car. To save money, I used Hotwire. Hotwire gives you lower rates on car rentals than any other site I know. The unique feature is that you prepay before you know which company from you’re renting from. That way the companies can offload leftover cars at deep discounts without making the lower price visible to their customers who are willing to pay a higher price. It’s a clever price discrimination scheme. (They also use it for hotels and airlines.) The set of car rental companies is limited to Alamo/National, Avis, Budget, and Hertz, so what’s the risk?

I’ve rented many times from Hotwire without any reason to complain. This time Budget gave me what had to be the worst car on its La Guardia lot: a bright yellow Chevy Aveo without a CD player, power windows, or power locks. The guy who checked me back into the lot and the end of the rental was amazed – he said he’d never seen a car without a CD player.

If I had reserved through Budget directly, you figure they’d be reluctant to give me such a car, for fear of losing my future business. Normally they’d give me the best car of those available in the size class I’d reserved. But for Hotwire customers, Budget may figure: even if he’s unhappy with the car, he can’t use Hotwire and choose to avoid us next time, because he won’t know who he’s about to rent from next time.

Posted by Lawrence H. White at 05:56 PM in Economics

July 27, 2007
GOOGLE Suit

GOOGLE suit, in North Carolina.

I am the "lead" plaintiff, but of course the work is done by the attorneys at the NCICJ.

Interesting business, though.

Posted by Michael Munger at 09:32 PM

July 26, 2007
"Doping debacle"
(USA TODAY) -- What's the French phrase for "doping debacle"? VICTORY BEFORE DEFEAT: Rasmussen wins stage before removal from Tour

Rasmussen, 33, had claimed to be in Mexico his wife is Mexican but was actually in Italy, working with an unidentified physician. The ruse was discovered when a former pro racer saw him training in the Italian Dolomites June 13 and 14 and gave that information to a Danish TV station on Wednesday.

Rasmussen missed four mandatory tests in the last 18 months and is also under investigation for shipping banned blood products in 2002.

"We did all we could do to get rid of him," Tour director Christian Prudhomme told Agence France-Presse.

Rasmussen wasn't the first rider to be ousted Wednesday. Italian Cristian Moreni, who was part of a riders' anti-doping protest at the start of Wednesday's stage, was taken into custody at the finish line because his urine sample from the July 19 stage tested positive for testosterone. He admitted his guilt, and his French Cofidis team left the race.

Prerace favorite Alexandre Vinokourov of Kazakhstan and his Astana team were expelled Tuesday after he tested positive for blood doping after his July 21 time trial win.

Yikes. Sad. I was really impressed with Rasmussen's poise throughout the Tour. Yesterday's stage win was truly impressive.

I break lines with a lot of my libertarian friends when it comes to doping. Though like any self-respecting libertarian, I think such drugs should be legal, I strongly support the bans imposed by the sports authorities governing the various sports. I notice that a lot of my libertarian friends disagree and support Barry Bonds and others accused of doping. But rules are rules boys. (As a libertarian I'm opposed to government not governance.*)

What I found really odd was how the Versus TV announcers made no mention yesterday of Vinokourov's ouster (ok I could have missed it but I watched almost the whole stage last night on tape). This after singing his praises for two weeks.

*It is a fair question to ask if the sports' bans on doping would continue if the state ended its jihad against drugs.

Posted by Robert Lawson at 03:24 PM in Sports

Stack the Court?

This NY Times op-ed piece suggests that, assuming a Democrat wins the 2008 presidential election and the congress remains Democratic, a resizing of the Supreme Court might be in order.

"Chief Justice John Roberts and his conservative colleagues might do well to bear in mind that the roll call of presidents who have used this option includes not just Roosevelt but also Adams, Jefferson, Jackson, Lincoln and Grant."

Posted by Wilson Mixon at 09:49 AM in Politics

July 25, 2007
"No Revision" Policy at Economic Inquiry

I was forwarded this email from the Western Economics Association today.

------ Forwarded Message From: Date: Wed, 25 Jul 2007 19:10:05 -0700 Cc: "" Subject: Economic Inquiry has a new Editor!

We are pleased to announce the appointment of R. Preston McAfee as the editor of Economic Inquiry. He brings an exciting new perspective to the journal and has proposed an innovative manuscript review policy that you would want to know about. We invite you to read about Dr. McAfee and his exciting no-revision submission policy.

McAfee delivers a sharp critique of the prevailing referee process at economics journals, then announces the journal's bold new reviewing process.

See beneath the fold. Hat tip Tom Means.

Read More »

Posted by Edward J. Lopez at 11:30 PM in Economics

Ethanol and Pollution

Big surprise: A new study predicts that increased demand for ethanol will increase the pollution of the Chesapeake Bay.

A surge in the demand for ethanol -- touted as a greener alternative to gasoline -- could have a serious environmental downside for the Chesapeake Bay, because more farmers growing corn could mean more pollution washing off farm fields, a new study warned yesterday.

The study, whose sponsors included the U.S. government and an environmental group, predicted that farmers in the bay watershed will plant 500,000 or more new acres of corn in the next five years. Because fields of corn generally produce more polluted runoff than those of other crops, that's a problem.

Posted by Wilson Mixon at 08:36 PM in Science

Should U.S. Americans instead call themselves United Statesians?

I am in beautiful Charleston, SC, where I have just wrapped up a Liberty Fund conference on Alexis de Tocqueville's Democracy in America and Edith Wharton's Ethan Frome and The Age of Innocence. The selections are interesting in that they pair a Frenchman who was fascinated by America with an American who was fascinated by France. Naturally much of the conversation analyzed Euro-American and more specifically Franco-American comparisons.

I was reminded of a Le Monde editorial (English translation here) from a few weeks ago. Titled "Should U.S. Americans instead call themselves United Statesians?", the article questions the "imprecision" of the monicker "American" as applied to nationals of the U.S.A. Ultimately the editorial promotes replacing "American" with "United Statesian."

What is the proper term to refer to those of you who live in the United States of America? The word "American" is so deeply embedded in your nation's identity that it may seem curious to you that there could be any discussion about it, but some people - in Latin America, for example - find it offensive, while others, including some in France, simply find it imprecise.

The Franco filiation with lingistic purity is cool with me. It's in fact so pervasive as to border on the cliche. Which is also cool with me. But this editorial is imprecise in some basic and very impure ways. The editorialists were forced to defend themselves.

When we published a note on our language blog defending the use of États-Uniens [United Statesians]--"the word is neither pretty nor musical, but it answers a certain need"-- we had an outpouring of responses. They ranged from absolute opposition to the word (because of its supposed anti-Americanism, its ugliness, its snobbishness, its sarcastic tone, its usefulness only for academics - and because it sounds like space aliens) to enthusiastic approval, notably as a counter to the "imperialist" appropriation of a whole continent by one country's ethnonym.

Obviously they argue that "American" is unfairly ascribed to people of the U.S. at the expense of other nationals on the American continents. The subtext, in my opinion, is that Le Monde suggests "United Statesians" precisely because it is neither pretty nor musical. But that is an unfalsifiable opinion.

What is clear is that the editorialists completely ignore Mexico, whose official name is los Estados Unidos Mexicanos. Linguistic perfectionists that they are--and Mexican immigrants to the USA that their cartoon defends--the French editorialitsts have simply forgotten that the United States of America are not the only "United States" in the world. (They have only to look at the blue and gold EU flag to recognize this.)

Overall the article is vapid but good natured and probably worth the five minutes reading. Here it is again.

HT: Watching America

Posted by Edward J. Lopez at 01:36 AM

July 24, 2007
Daniel Sickles

Craig's post below reminded me of my trip a few years ago to the National Museum of Health and Medicine at Walter Reed Army Medical Center in D.C. It's a really creepy museum, off the beaten path, but well worth the trip if you're tired of all the glitzy museums on the Mall.

The purpose of our visit was to see the shattered lower leg of Civial War General Daniel Sickles. Ick.

Daniel Sickles was my great, great, ..., great uncle on my mother's father's side. He's more infamous than famous. A Tammany Hall politician and U.S. Congressman, before the war he shot and killed the son of Francis Scott Key in Lafayette Park and was the first person ever acquitted on the grounds of temporary insanity. As a General in the war he was a disaster; he almost lost the battle of Gettysburg for the Union by moving his troops off Little Round Top as ordered and into the Peach Orchard far in front of the union lines on Cemetery Ridge. After getting his Corp III almost wiped out, complete disaster for the Union was only narrowly averted by a quick-thinking major who dragged several cannon up Little Round Top to stop the Confederates from taking the unguarded hill and outflanking the union lines. If he hadn't suffered the leg injury at Gettysburg and been so well connected politically, he most surely would have been court martialed for disobeying orders.

UPDATE: Perhaps I was too unfair to Gen. Sickles? I received the following e-mail.

Sir: With all due respect, I don't take such a dim view of your "great, great, ..., great uncle on my mother's father's side" as you do. Perhaps you have accepted as gospel Thomas Keneally's hatchet job, "American Scoundrel: The Life of the Notorious Civil War General Dan Sickles." Personally, I think you'd be better served by embracing W. A. Swanberg's "Sickles the Incredible: A Biography of Daniel Edgar Sickles" or Edgcumb Pinchon's 1945 book "Dan Sickles: Hero of Gettysburg and 'Yankee King of Spain.' " In any event, regarding the incident at Gettsyburg, I used to tell visitors to the National Museum of Health and Medicine (where I worked for 6 years until retiring in March) that if Sickles hadn't disobeyed the incompetent Gen. Meade (who was actually about to order a retreat!) by moving his soldiers 3 miles forward to higher ground, that the Confederates would have easily overrun his Division and then perhaps have encircled the remaining Federals and won the battle. Sickles was the right man in the right spot. Not having gone through the ranks, he had no problem arguing with Meade and eventually doing what he felt was best. I'd compare him to General H. Norman Swartzkopf. As to his other exploits, shooting Francis Scott Key's son, moving in with Queen Isabella, etc., I think these add to the aura of his swash-buckling reputation. The author Norman Mailer has written a screenplay about Sickles. And although he's never released it I have talked to his archivist and we both hope that someday he will. Wouldn't that be something?

PS: And as far as your comment about his leg, the first time the Medal of Honor was ever awarded was to soldiers who fought in the War of the Rebellion. Sickles received one along with thousands of others. Years later, when the Army decided to make the medal a more meaningful decoration, it rescinded most of the medals it had awarded. They did not take Sickles' medal back. The Army felt he deserved it!

I am aware that there is some dispute about Sickles' role at Gettysburg. True, Meade was a boob and he was probably going to retreat. True, Sickles' moving of his III Corps lured the Confederates to attack and committed both sides that the battle. True, the Union ultimately won the battle. Still my (now dated) reading of military histories of the battle (as opposed to Sickles biographies) is that his move was pretty foolish and almost resulted in complete disaster (as opposed to disaster just for his III Corps). It was pure dumb luck that it didn't turn out very badly for the Union. Meade ultimately was fired in disgrace and rightly so. But if anyone was in a position to write the history books in his favor it was Sickles, and he definitely tried, yet he still is given low marks in most accounts.

Posted by Robert Lawson at 03:13 PM in Misc.

Call your Congressman c. 1907

From the July 24, 1907 NYT:

WASHINGTON - Members of Congress receive many strange requests from their constituents, but probably the most curious one ever received came to a representative from Minnesota recently from Capt. J. F. Allen of St. Paul. Capt. Allen asked the member to look up his arm, which he had lost at the battle of Antietam.

Capt. Allen learned that the surgeon who performed the operation had preserved the member and sent it to the Army Medical Museum. Capt. Allen expressed a desire to have a photograph of the arm, and as he was a very influential man in the district, the Congressman instructed his Secretary to make an investigation.

The arm of the Captain was found at the museum in an excellent state of preservation and a photograph was forwarded to Capt. Allen.

Posted by Craig Depken at 02:06 PM in Culture

In today's inbox...
Prior to the Electronic Journal of Sustainable Development, there was no journal which offered a critical discussion of the concept of sustainable development, and the varied debates that have arisen from it. As you will see, we are not averse to publishing articles that are fundamentally sceptical of the concept- or articles of extremely diverse, even opposing views, in the same issue.

So, here is the first issue of the EJSD – a peer-reviewed, free, online journal- the result of a partnership between International Policy Network and the University of Buckingham.

Posted by Robert Lawson at 01:26 PM in Economics

July 23, 2007
The Nigerian lottery scam c. 1907?

The July 23, 1907 reports an interesting scam in England:

How to win safely at baccarat has been discovered by Sylvain Crollet and his friend, Mme. Noel. The mathematical formula is X equals G divided by 3 plus P. X is thought to be the amount to be won. Unfortunately, we cannot determine P or G. However, a second lady was satisfied, and gave Sylvain 240 [pounds] to which to apply the formula. The latter was such a success that Sylvain was able to pay the lady 12 pounds a month interest. She immediately intrusted to him 500 pounds more, but this time the equation seems to have failed. He paid her 16 pounds the first money, 16 pounds more two or three months later, then nothing at all. In court Sylvain, prosecuted by the lady, explained that his equation should have succeeded, but bad luck pursued him. His mathematical calculations had not foreseen the element of chance. Ostend baccarat tables had completely upset his theorem. Anyhow, he had been unfortunate, not dishonest. But the court thought differently. Sylvain has got a year, and Mme. Noel, six months, while both are jointly sentenced to refund 660 pounds to the deluded lady, plus 20 pounds damages.
The single "equation" has two unknowns and therefore P and G cannot be determined uniquely. The fact that an innumerate lady gave money towards such a system seems funny but reminds us that promises of unearned riches are not unique to the Internet age.

The defense that it was "bad luck" and the element of "chance" that "upset the theorem" gets a chuckle from me.

Posted by Craig Depken at 04:26 PM in Economics

On "Bad" money c. 1907

The July 23, 1907 NYT reports :

MANILA - Major Paymaster Eugene Coffin has been obliged to have his left arm amputated, the result of infection from the handling of money in paying troops.

He is a veteran of the civil war and a member of the old McKinley regiment.

I am clearly not a monetary historian, but I have never read about tainted money causing a public health problem, although I recall modern stories that a high percentage of circulating currency has detectable traces of cocaine on them. I wonder if our resident monetary experts would believe this story or perhaps the diagnosis was premature?

Posted by Craig Depken at 04:17 PM in Economics

Nutrition in school c. 1907

The July 23, 1907 NYT reports on a development in the pencil industry which today's anti-obesity police might want to resuscitate:

Pencils with potato in place of wood is the latest article "made in Germany." A company has been formed to exploit an invention which, instead of making use of the expensive cedar wood, substitutes a compact mass, the main ingredient of which is potatoes.
Perhaps a bio-mass compact mass could be used today which would save trees and provide nutritional value for those who chew on their pencils during class and exams?

Posted by Craig Depken at 04:03 PM in Science

On the bookshelf c. 1907

From the July 23, 1907 NYT:

PRESENT LITERARY DEMAND From the London Times:

The demand for all kinds of reflective writing is now very small, and the vehicles for such writing are diminishing in number. The paying public of to-day want to be told how to do things, where to go, what to read, how to dress and behave, and how to keep string in a string box; in short, how to do the things which their parents did every day of their lives by common sense and mother wit. At present it is indifferent to essays and poetry and every kind of pure literature.

Posted by Craig Depken at 04:00 PM in Culture

The Springfield Economy

I am quoted in a Financial Times (Germany) article on the economy of the town of Springfield from The Simpsons. The article (in German) can be found here. I will put a rough translation of the article by the author below the fold.

Read More »

Posted by Joshua Hall at 02:33 PM

Harry Potter (no spoilers)

I spent all day (12 straight hours) reading the book yesterday. My wife read it all day Saturday. We spent most of the evening going over the twists and turns.

Now the kid has it but will take a few days I'm sure for her to finish it.

All this for $35!

Frankly I feel guilty that J.K. Rowling didn't get more from us--we would've paid much, much more! Bottom line: She deserves every penny she has. Maybe I should send her some more money? Nah.

Posted by Robert Lawson at 11:50 AM in Culture

July 22, 2007
Will Canadian senior citizens be an effective lobby for lower inflation?

David Laidler hopes so. He also hopes for a price-level target rather than an inflation-rate target. His full commentary is here.

Posted by Lawrence H. White at 05:20 PM in Economics

Argentina’s Economy Minister in cash scandal: the $64,000 question

Argentina’s economics minister, Felisa Miceli, resigned last week after “after a prosecutor ordered her to testify about $64,000 in cash that was found in a bag in her office bathroom, the government said.”

Miceli claimed that her brother had lent her the money as a down-payment on a house. But, according to Reuters, the prosecutor investigating the case “traced the cash back to a bank he said the money came from, but failed to find any accounts there linked to Miceli or her brother. He also found there was no record of a withdrawal for that amount of money at the bank.” Meanwhile Pravda reports that

Part of the money –100,000 Argentine pesos- was sealed and registered by the Argentine Central Bank. As the Central Bank of Argentina does not have retail customers, it became clear that her brother could not have lent the money to her.
Posted by Lawrence H. White at 04:43 PM in Economics

Green Revolution

Interesting article on an individual who might have done more good for people in the Third World than even Bono:

In the mid-'60s, doomsayers predicted that, because of war and overpopulation, millions of people in India and Pakistan would die of starvation – and nothing could be done to prevent it. Dr. Borlaug thought otherwise. He wanted to see if his new wheat seeds could help prevent the looming catastrophe in South Asia. Bureaucrats initially thwarted him. But as the famine grew worse, he was finally permitted to move forward.

Within a year, wheat yields more than doubled. Over the next eight years, the two countries became self-sufficient in wheat production. For his work, Dr. Borlaug was awarded the Nobel Peace Prize in 1970. In his acceptance speech, Dr. Borlaug quoted the creator of the prize, Alfred Nobel: "I would rather take care of the stomachs of the living than the glory of the departed in the form of monuments."

Posted by Wilson Mixon at 11:50 AM in Science

July 20, 2007
NYT "economic scene" shuffle

I've been buried this past week or so. While catching up on some reading I found this Greg Mankiw post from a few days ago about changes to the Economic Scene feature in the New York Times. I didn't find mention of it here or on MR. But it will affect the kind of economic writing that reaches NYT's major audience.

At the end of his column today, David Leonhardt reports:

If you read Sunday’s business section, you probably noticed that Gregory Mankiw, the Harvard economist, blogger and Republican policy adviser, wrote the Economic View column. His debut as a regular contributor is the start of some changes in our economics coverage.

The View column will now be written by a rotating panel of outside economists. Besides Mr. Mankiw, it will include Alan Blinder, Judith Chevalier, Robert Shiller and Lester Thurow, as well as three of the economists who have been writing the Economic Scene column on Thursdays: Austan Goolsbee, Tyler Cowen and Robert Frank. (The fourth member of the Scene rotation, Hal R. Varian, is leaving to concentrate on his new role as Google’s chief economist.)

They are a stellar group, and they will use the column to examine everything from big policy questions to the economics of everyday life. By moving the economists to Sunday, when our section isn’t filled with news, we think we can give their writing more attention.

Posted by Edward J. Lopez at 02:01 PM in Economics

July 19, 2007
Creative destruction: internet phone services

Goodbye SunRocket, but hello ooma.

Posted by Lawrence H. White at 11:53 AM in Economics

Easy bake ovens recalled again

Toy ovens + children = burned fingers. Who would have suspected?

Posted by Lawrence H. White at 11:42 AM in Culture

July 18, 2007
Vernon Smith Leaving GMU?

Thinking on the Margin reports that this is the case.

Posted by Joshua Hall at 05:23 PM in Economics

Demand Curves are Downward Sloping ...

... even for greenies. From Yahoo News:

Most of those polled said they are less likely to conserve water and electricity while they're away from home. More than six in 10 said they were using more because they knew it would be free.

Nearly 70 percent of respondents said they open a new mini-bottle of shampoo each time they shower at a hotel, and 63 percent said they were more likely to leave the lights on at a hotel than at home.

Three out of four hotel guests believe it is important to have their sheets and towels changed each day — an environmentally unfriendly habit few practice at home.

Posted by E. Frank Stephenson at 04:07 PM in Economics

Wealthiest Americans across time

Check out this interactive, inflation-adjusted graphic from the NYT.

Posted by Mike DeBow at 10:25 AM in Economics

July 17, 2007
Bad history in Charlotte c. 1907

As I relocate to the Charlotte, NC area, this story from the July 17, 1907 NYT caught my attention:

CHARLOTTE, N.C. - The trial of twenty citizens of Anson County, this State, charged with lynching J.V. Johnson, a white man, which was begun yesterday at Monroe, continued to-day.

Miss Alice Bogan, daughter of the Sheriff, resumed her testimony, detailing how the mob broke into the jail on the plea of having a prisoner to commit, how they seized and held her father, took the keys to Johnson's cell from him, released Johnson, and, after tying him with ropes, dragged him down the road to the point where he was lynched. She positively identified several of the indicted men as being members of the mob.

Posted by Craig Depken at 03:49 PM in Culture

Intolerable losses c. 1907

One wonders how the world would respond if a story similar to this one from the July 17, 1907 NYT was to occur today:

Returns of deaths from the plague in India show the appalling total of 1,060,067 for the six months ended June 30. The monthly total is at present decreasing, however, the death roll for June being placed at 69,064.

The total for the first six months of 1907 already surpasses that for the entire twelve months of 1904, when 1,022,000 persons died. It is the highest ever recorded previous to the present year.

Posted by Craig Depken at 03:45 PM in Culture

On Breakaways in the Tour de France

From USA Today comes this example of sports economics:

The escapees in Tuesday's stage were out front for more than six hours and 145 miles, only to be absorbed with the finish line in sight. If they hadn't taken a roadside restroom stop early on, they might have kept overall leader Fabian Cancellara of Team CSC from taking a surprise stage win.

There was a method to their breakaway madness: Frenchmen Nicolas Vogondy of the Agritubel team and Matthieu Ladagnous of Franзaise des Jeux got more American TV time Tuesday than French President Nicolas Sarkozy gets in a month.

Tour teams are financed by corporate sponsors, so think of breakaways as commercials with wheels. Most of Tuesday's stage was an extended infomercial for Agritubel's cattle-restraint devices and FDJ's French national lottery.

Agritubel, a non-ProTour team that got a wild-card spot in the event, has been especially aggressive about getting riders out front. It was Cedric Hervй on Monday. Look for Nicolas Jalabert today.

ADDENDUM (7/18): Co-blogger Bob points me a similar instance in this year's Boston Marathon:

At yesterday's 111th Boston Marathon, two Kenyan athletes with slim credentials appeared to be trying to steal the race, when in fact they were simply stealing television time, promoting a running shoe ...

Posted by E. Frank Stephenson at 02:24 PM in Sports

Farewell, Antioch by George Will

George Will provides an appropriate eulogy for Antioch College.

During the campus convulsions of the late 1960s, when rebellion against any authority was considered obedience to every virtue, the film "To Die in Madrid," a documentary about the Spanish Civil War, was shown at a small liberal arts college famous for, and vain about, its dedication to all things progressive. When the film's narrator intoned, "The rebels advanced on Madrid," the students, who adored rebels and were innocent of information, cheered. Antioch College in Yellow Springs, Ohio, had been so busy turning undergraduates into vessels of liberalism and apostles of social improvement that it had not found time for the tiresome task of teaching them tedious facts, such as that the rebels in Spain were Franco's fascists.
Posted by Robert Lawson at 08:47 AM in Politics

July 16, 2007
Elliot's silly attack on financial liberalization

Larry Elliott, economics editor of The Guardian, gets carried away today with attacking a straw man. In reference to the chiefs of the IMF, World Bank, World Trade Organization, and European Central Bank, he writes:

Together, they embody a distinct world view; growth is good, inflation is bad, free trade is good, protection is bad; free movement of money is good; capital controls are bad; the market is good, the public sector is bad.

Okay until the last phrase. Please refer me to a single document where any official of any of these public-sector agencies has said that the public sector is bad.

Elliot continues:

Not entirely coincidentally, this also happens to be the world view of the rich and powerful around the world. It is the agenda of the multi-national corporation and the City of London; it is the agenda of the media mogul and the hedge fund.

This is the classic argumentum ad hominem: a view must be wrong because the wrong people support it. But in this case the premise is false. The rich and powerful, and the media moguls, do not in fact consistently support a free-market agenda. We could only wish.

Later Elliot pulls out all the stops will a silly analogy:

Take financial liberalisation. The case for removing all the shackles from capital was that the constraints imposed after the second world war not only led to inefficiency but were also an intolerable attack on freedom. Everything would move a bit faster and a bit more smoothly if these constraints were removed.

All sounds entirely sensible, doesn't it? By the same token, though, it is an intolerable attack on liberty to force a teenager to pass a driving test before being allowed out on to a public road. What's more, traffic would move more smoothly if we abolished speed limits. Get right down to it, and government has no part in this process at all. We should let people sit behind the wheel of a car whenever they want. We should leave it to the self-regulation of the motor manufacturers to restrict the speed of the vehicles put on the road. And we should rely on the common sense of motorists to know just how safe it is to drive.

Well, there might be some libertarian ultras who would support such an idea, but most of us can tell the difference between freedom to drive and licence to kill. Any period of self-restraint would be short-lived and before long we would all be driving like Mr Toad. There would be an almighty car crash, after which there would be urgent calls for the old controls to be brought back.

An untrained teenage driver, or a reckless speeder, endangers those around him. For that reason nobody objects when the owner of a road sets rules against its unsafe use. Likewise, the owners of the New York Stock Exchange set rules against its unsafe use. The constraints imposed by government against capital flows had nothing to do with safety and everything to do with rent-seeking, protectionism, and masking the effects of bad monetary policy.

Two final comments: (1) Elliot is a credit snob:

Now take a look at the financial system. It is easier than ever to get credit. People who really should not be allowed to borrow are being bombarded with offers of loans.

Who decides “who really should not be allowed to borrow”? Can’t we leave that decision to lenders, who are staking their own money on each loan approval?

(2) Elliot misrepresents rate-of-return arbitrage:

Free movement of capital internationally means speculators can borrow money where interest rates are low and invest in riskier assets somewhere else in the world.

Speculators do want to borrow at low rates, but they want to invest where they can earn high risk-adjusted returns. Other things equal, they want to avoid riskier assets. Free movement of capital internationally in fact means that speculators can borrow money where interest rates are low and invest wherever rates of return are high. Just as we should want them to do.

Posted by Lawrence H. White at 05:15 PM in Economics

July 12, 2007
It's not Saigon, but...

The last of the Depken's are heading out of Texas this evening. For those who aren't up-to-date, I am taking a position at the University of North Carolina - Charlotte starting this fall. I am going to miss UT-Arlington and will have wonderful memories of one of the most well-kept secrets of academia - a place with great collegiality, brains, and output. I look forward to the challenges and experiences in my new position but will not lose touch or loyalty with the department that gave me my first job and tenured position.

New contact information will be forthcoming but for the moment any email can be sent to depken-at-sbcglobal-dot-net.

Blogger out for a few days until I get east of the Mississippi.

Posted by Craig Depken at 05:16 PM in Personal

The NY Times has a slanted view of the economics profession's slant

Arrgh. It’s enough to make one suspect left-wing media bias on the part of the NY Times. The story by Patricia Cohen opens:

For many economists, questioning free-market orthodoxy is akin to expressing a belief in intelligent design at a Darwin convention: Those who doubt the naturally beneficial workings of the market are considered either deluded or crazy.

But in recent months, economists have engaged in an impassioned debate over the way their specialty is taught in universities around the country, and practiced in Washington, questioning the profession’s most cherished ideas about not interfering in the economy.

But none of this is true (except for the statement that economists have been debating). Here is how Daniel Klein and Charlotta Stern summarize the results of conducting an actual survey (rather than relying on highly selective anecdotes like Cohen does),

We find that about 8 percent of AEA members can be considered supporters of free-market principles, and that less than 3 percent may be called strong supporters. The data is broken down by voting behavior (Democratic or Republican). Even the average Republican AEA member is “middle-of-the-road,” not free-market.


So in fact, for better or worse, questioning free-market policies is very mainstream. Those who “doubt the naturally beneficial workings of the market” are not ipso facto considered deluded or crazy. The reverse is closer to the truth. Ideas “about not interfering in the economy” – later in Cohen’s articles such ideas are identified with Milton Friedman -- are not the profession's "most cherished ideas". (Much less are they practiced in Washington!)

So what is Cohen’s anecdotal evidence that criticism of the free market renders one an “apostate” (Blinder’s term)? (1) Alan Blinder is sore about the criticism he has received over his claim that outsourcing and trade may result in a loss of 30 to 40 million American jobs. (2) David Card is sore about the criticism he has received (and pointed questions his students have gotten on the job market) over his much-debated finding (with Alan Kreuger) that a hike in the minimum wage didn’t cost jobs in the New Jersey fast-food industry (described fawningly by Cohen as “groundbreaking research on the effect of the minimum wage”). Sorry, soreheads, but that’s no evidence that free-market ideology rules the roost. Everybody’s claims get criticized. Ask any free-market economist if he or she receives criticism.

Finally, Cohen notes that

In addition to Mr. Blinder, other eminent economists like Lawrence H. Summers and the Nobel Prize-winner George A. Akerlof have pointed out what they see as the failings of laissez-faire economics.

So this is evidence for the proposition that critics of the free market are treated like apostates? That the critics of the free market include Blinder, a Princeton professor and former Federal Reserve governor, Summers, a Harvard professor and former Treasury Secretary, and Akerlof, a Nobel laureate? Seems to me like evidence against that proposition.

Posted by Lawrence H. White at 12:24 AM in Economics

July 11, 2007
On Drug Prohibition

Clemson economist Todd Kendall--who earlier today treated the summer econ campers to a boffo talk on how the internet has affected markets--takes on "out-of-kilter" drug laws. He could have also noted the corrupting effects of drug law enforcement on police and the innocent victims of overzealous drug law enforcement (e.g., here.)

Posted by E. Frank Stephenson at 04:23 PM in Economics

Read now before 2008!

I know it is WAY too late to begin discussing the 2008 presidential elections, since we are only 484 shopping days away, but you may be interested in a paper fellow FSU alum Don Lacombe and I recently published in Public Finance Review titled "Accounting for Spatial Error Correlation in the 2004 Presidential Popular Vote:"

One problem with describing election vote shares using ordinary least squares (OLS) is that it ignores the possible presence of spatial error correlation, whereby the errors are correlated in a systematic manner over space. This omission can bias OLS standard errors. We examine the 2004 presidential county vote outcome using OLS and a spatial error model (SEM) that accounts for spatial autocorrelation in the error structure. We find that spatial error correlation is present, that the SEM is superior to OLS for making inferences, and that several factors deemed important to the 2004 election outcome are not significant once the spatial error autocorrelation is taken into account.

The spatial techniques are intuitively appealing in political analysis due to the obvious geographical spillover effects or influences that are felt locally or regionally. We are currently working on spatial analyses of Farm Bill votes.

Go Ron Paul!

Posted by Tim Shaughnessy at 12:41 AM in Economics

July 10, 2007
Teen Summer Employment/Clemson

A few weeks ago, I took issue with a WSJ article claiming teen summer job prospects were being hurt increased competition from older workers and teens. (The WSJ later ran "Employers Beef Up Summer Hiring" providing even more reason to discount the article about dismal teen employment prospects.) USA Today reports that half of teens are forgoing summer jobs. The article cites both increasing family wealth (correct, imho) and the bit about about increased competition (incorrect, imho). One way to shed some light on the competiting hypotheses is to look at teen unemployment. The BLS reports that the teen unemployment rate in June was 15.8%, up 0.4 from June 2006 but well below the 16.4%, 16.8%, and 19.3% for 2005, 2004, and 2003, respectively. The slight uptick this year may indicate a more competitive job market for teens but the overall downward trend in teen unemployment is more consistent with rising family wealth making teens choose not to work in the summer.

I'm spending this week and next at the Clemson/BB&T Economics Summer Camp for Exceptional High School Students. The students are indeed exceptional; I'm thrilled to be involved. A shout out to DOL readers at Clemson, especially those participating in the camp.

Posted by E. Frank Stephenson at 02:19 PM in Economics

A preview of HillaryCare II

Senator Obama visited Birmingham yesterday. The Birmingham News's story about his campaigning gives us just a hint of the rent-seeking/protection orgy we will see should the Democrats win both the Presidency and Congressional majorities in '08, and proceed to "reform" the American health care industry:

At the Sheraton Hotel in downtown Birmingham, an energized Obama told a large, diverse and enthusiastic crowd that America under President Bush has seen a government that "can't do, won't do and won't even try."

"Americans are hungry for change. They are desperate for something new," Obama told about 2,000 cheering fans, most of whom had paid $25 each to listen to him. "We have had so much dysfunction, so much nonsense ... in Washington D.C., that people have just said enough."

The crowd, a mixture of white and black, young and old, affluent and not, repeatedly cheered as Obama criticized Bush.

"We've got a health care system that is broken, that is bankrupting families all across America," Obama said.

. . .

After his downtown speech, Obama headed to another fundraiser, this one at the Mountain Brook home of HealthSouth President and CEO Jay Grinney. Those attending paid $1,000 to $2,300 a person to meet the White House hopeful who by most polls is chasing Clinton for the Democratic Party nomination for president.

Posted by Mike DeBow at 12:34 PM in Politics

Alt-T-W

Discovery News reports this AP story, "Study: Men Gab as Much as Women."

The researchers placed microphones on 396 college students for periods ranging from two to 10 days, sampled their conversations and calculated how many words they used in the course of a day.

The score: Women, 16,215. Men, 15,669.

The difference: 546 words: "Not statistically significant," say the researchers.

"What's a 500-word difference, compared with the 45,000-word difference between the most and the least talkative persons" in the study, said Mehl. He said the least talkative person in the study — a male — used just over 500 words a day, while another male topped that by more than 45,000.

It's also a nice example of intellectual entrepreneurship:

Co-author James W. Pennebaker, chairman of the psychology department at the University of Texas, said the researchers collected the recordings as part of a larger project to understand how people are affected when they talk about emotional experiences.

They were surprised when a magazine article asserted that women use an average of 20,000 words per day compared with 7,000 for men. If there had been that big a difference, he thought, they should have noticed it.

They found that the 20,000-7,000 figures have been used in popular books and magazines for years. But they couldn't find any research supporting them.

Here's the study on ScienceMag.com.

Follow up study: average words per post for male vs. female bloggers!

Posted by Edward J. Lopez at 10:25 AM

July 09, 2007
Vivid example of change in demand; George Will reviews Amity Shlaes

From a Reuters story last week:

ABUJA, Nigeria - The price of machetes has halved in parts of Nigeria since the end of general elections in April because demand from thugs sponsored by politicians has subsided, the state-owned News Agency of Nigeria reported.

NAN surveyed prices in the northeastern state of Gombe and found that a good quality machete was now selling for 400 naira ($3) compared with 800 naira before the elections, which were marred by politically motivated violence in many states. . . .

"Before the conduct of the general elections, I was selling a minimum of seven machetes daily but can hardly sell one a day now," said Usman Masi, a trader quoted by NAN. . . .

European election monitors estimated that at least 200 people were killed in politically motivated violence during months of campaigning ahead of the April polls.

ON Sunday George Will filed a glowing review of Amity Shlaes's new book, The Forgotten Man: A New History of the Great Depression --

She says Roosevelt's wager was that, by furiously using legislation and regulations to multiply federally favored groups, and by rhetorically pitting those favored by government against the unfavored, he could create a permanent majority coalition.

In the process, says Shlaes, Roosevelt refined his definition of the "forgotten man." This man had been thought of as a general personality, compatible with the assumption that Americans were all in it together. "Now, by defining his forgotten man as the specific groups he would help, the president was in effect forgetting the rest -- creating a new forgotten man. The country was splitting into those who were Roosevelt's favorites and everyone else."

For Shlaes's column in the June 25 WSJ, click here.

Posted by Mike DeBow at 07:25 PM in Economics

Why do I still get the daily newspaper?

On Saturday, the local fish wrapper ran a long feature story on some local nutjob inventor who supposedly devised a car that runs on water, but was killed by the evil government, shadowy foreign business partneers, big oil, the Arabs or some such thing.

And the mainstream press wonders why more and more people get their news from blogs?

Posted by Robert Lawson at 03:14 PM in Science

Cultural Wars

Whilst Larry spent his weekend doing the Hookie Lau, I spent several hours myself at the Origins International Game Expo here in Columbus.

Once upon a time I was into board wargames (especially Squad Leader) but haven't played in years. Still it was great fun to see all the new games and game systems that have come out in recent years.

By the way, if you want to feel normal and socially well-adjusted I suggest a few minutes at a gaming convention.

Posted by Robert Lawson at 02:52 PM in Culture

Cultural weekend

I spent the weekend in Chicago absorbing some culture, specifically Polynesian decorative arts and the indigenous folk music of Southern California. In other words, tiki collectibles and instrumental surf music. The occasion was a music fest called Exotica 2007. 2 bands / 3 sets on Friday night, 8 bands / 9 sets on Saturday, 2 bands / 2 sets on Sunday. Exhausting but fun. Highlight was Saturday night’s headlining appearance by the legendary Trashmen (of “Surfin’ Bird” infamy). For “gramps with amps” they sounded great!

Posted by Lawrence H. White at 11:13 AM in Culture

New working paper on land use restrictions

Another Dehring-Depken production (this time in cahoots with John Chamblee, a post-doc at UGA) rolls off the assembly line. We posted it at SSRN as my UTA website is not long for this world and I don't know what my URL will be at UNC-Charlotte:


Watershed Development Restrictions and Land Prices: Empirical Evidence from Buncombe County North Carolina


with John Chamblee (University of Georgia) and Carolyn Dehring (University of Georgia)

The State of North Carolina’s Water Supply Watershed Protection Act of 1989 required local governments to adopt land use measures in watersheds to protect the water supply emanating from the watersheds. Watershed protection ordinances often contain minimum lot size restrictions that constrain development density in the watershed. We examine vacant land prices in Buncombe County’s Ivy River Watershed at the time such a regulation took effect: two-acre minimum lot sizes were mandated inside the watershed. Our results suggest that costs of watershed development restrictions are borne primarily by those vacant land owners in the watershed for whom the development restrictions make land subdivision infeasible.

Paper available here at SSRN.

Posted by Craig Depken at 10:51 AM in Economics

July 08, 2007
Hoxby moves to Stanford

This would have made getting that Searle Foundation post-doc in applied economics policy even nicer.

Posted by Joshua Hall at 01:01 PM in Economics

July 07, 2007
Economic Imperialism Redux

Steven Landsburg's new book, More Sex is Safer Sex gets a solid review in tomorrow's NYT (permalink). Perhaps for journalistic reasons, the review couches More Sex as an example of economists conquering other fields, which the reviewer traces to 1996 when Landsburg first began writing his Slate.com column (although, oddly, there's no mention of The Armchair Economist from 1993), in which he explained for the everyman a subtle (and technical) economic theory relating more sex with less spread of AIDS. The review goes on:

This research was one of the early examples of the economics profession’s imperialist movement. For the last decade or so, economists have been increasingly poking their fingers into other disciplines, including epidemiology, psychology, sociology, oenology and even football strategy. These economists usually justify their expansionism on two grounds: They say they’re better with numbers than most other researchers and have a richer understanding of how people respond to incentives. Arrogant as this sounds, there is some truth to it. Besides, the public seems hungry for the kind of real-world social science economists are practicing.

In general, I agree wholeheartedly that it's a good time to be an economist. A decade ago, economists answering the cocktail party standard "what do you do?" would get either "oh, I hated my econ class in college" or "oh, what's the stock market gonna do?" These days, it's more likely to be "so do you think foreign aid works?" or, at least, "so what do you think of that book, what's it called, Freakonomics?" A world where the likes of Tyler Cowen, Hal Varian, Greg Mankiw, Steven Landsburg et al. add influence to public opinion is likely to be a better world. (Although I know people who complain that economics has become largely a parlor game of high intellects matching wits rather than producing ideas...but that's probably another post.)

That said, economic imperialism is, of course, nothing new. In the 1950's a slew of subdisciplines emerged within economics, largely defined by the new territory each was charting. Becker et al. took over sociology. Buchanan, Tullock et al. conquered politics. Coase, Posner and Calabresi the law. North, Fogel et al. history. And Friedman reclaimed economics proper. The movements were so exciting at the time that British economic journalist Henri Lepage furiously toured America to visit these intellectual imperialists, and wrote an economics book for the everyman that has become a classic, Tomorrow Capitalism, published in 1978. (See Frederic Sautet on this.)

As for sex, no frontier there either. It was in 1992 that Richard Posner published his unforgettable Sex and Reason. And Peter Boettke's review, "Good Economics, Bad Sex, and Even Worse Philosophy" (recent post by Pete here.), appeared soon after. Heck, my old colleague Jeff Rous published his 1997 dissertation on---and I'm serious---breastfeeding.

So I think it's missing the point to cast as "imperialist" the recent spate of economics books for popular consumption. The point is, economists have gotten a lot better at communicating the ideas that get produced at high levels of intellectual rigor. This changes things, both for the reader (and his/her opinions)...

At his best, Landsburg helps us see the world in new ways and confront some of our assumptions. In one chapter, he argues that you should give all your charitable donations to the single cause you deem most worthy. If you think the most important thing you can do is help a starving child by giving $100 to CARE, you should give all your donations to CARE. Your first $100 is not going to cure hunger, and the next $100 you could give — money that might now be going to another cause — will help just as many children. When I started reading the chapter, I was rolling my eyes. When I finished it, I couldn’t decide how I felt.

...and also it changes things for the economics author, for whom the effective communication bar has been raised.

Still, I suspect this book will command a much smaller audience than some of the economics-tinged best sellers, mostly because it is short on the nuance that comes from real human stories. Landsburg’s characters tend toward the hypothetical — Benny the Burglar and Manny the Mugger; Jane the A student and Mary the B student; Albert and Alvin, two imperfect altruists — and his arguments, as he puts it at one point, can sound like “idle Sunday dorm-room chitchat.”

A generation ago Dierdre McCloskey rightly chastised economists for their terrible writing skills. It's healthy for the discipline and the market for ideas that economists have begun to compete in communicating to broader audiences. (In my opinion, David Theroux and The Independent Institute have been doing that for more than a decade now.) So I say kudos to Levitt, Harford, Landsburg, Wheelan, Lott, et al., and who ever else finds ways to effectively communicate and entertain with economics ideas. Prove your theorems, bootstrap your standard errors, and THEN TELL YOUR STORY!!!

Posted by Edward J. Lopez at 01:46 PM in Economics

July 06, 2007
Pro Bono or pro malo publico? The aid industry and African development

William Easterly, as usual, offers sensible observations on aid and growth, this time in Africa.

Just when it seemed that Western images of Africa could not get any weirder, the July 2007 special Africa issue of Vanity Fair was published, complete with a feature article on "Madonna's Malawi." At the same time, the memoirs of an African child soldier are on sale at ... Starbucks, and ... Bob Geldof is touring Africa yet again ... to document that "War, Famine, Plague & Death are the Four Horsemen of the Apocalypse and these days they're riding hard through the back roads of Africa."

Do [those Four Horsemen] really explain Africa today? What percentage of the African population would you say dies in war every year? What share of male children, age 10 to 17, are child soldiers? How many Africans are afflicted by famine or died of AIDS last year or are living as refugees?

In each case, the answer is one-half of 1% of the population or less. In some cases it's much less; for example, annual war deaths have averaged 1 out of every 10,800 Africans for the last four decades. ... [M]ore Africans need latrines than need Western peacekeepers — but that doesn't play so well on TV.

[S]ub-Saharan Africa ... in 2006 registered its third straight year of good GDP growth — about 6%, well above historic averages for either today's rich countries or all developing countries. Growth of living standards in the last five years is the highest in Africa's history.... Foreign private capital inflows into Africa hit $38 billion in 2006 — more than foreign aid. Africans are saving a higher percentage of their incomes than Americans are (so much for the "poverty trap" of being "too poor to save" endlessly repeated in aid reports). I agree that it's too soon to conclude that Africa is on a stable growth track, but why not celebrate what Africans have already achieved?

Instead, the international development establishment is rigging the game to make Africa ... look even worse than it really is. It announces, for instance, that Africa is the only region that is failing to meet the [U. N.'s] Millennium Development Goals... . Well, it takes extraordinary growth to cut extreme poverty rates in half by 2015 (the first goal) when a near-majority of the population is poor, as is the case in Africa.

This is how Blair's panel managed to call Africa's recent growth successes a failure. But the reality is that virtually all other countries that have escaped extreme poverty did so through the kind of respectable growth that Africa is enjoying... .

[Likewise in education], most African countries have actually expanded enrollments far more rapidly over the last five decades than Western countries did during their development, but Africans still won't reach the arbitrary aid target of universal enrollment by 2015.

In truth, Africans are and will be escaping poverty the same way everybody else did: through the efforts of resourceful entrepreneurs, democratic reformers and ordinary citizens at home, not through PR extravaganzas of ill-informed outsiders.

The real Africa needs increased trade from the West more than it needs more aid handouts. A respected Ugandan journalist, Andrew Mwenda, made this point at a recent African conference despite the fact that the world's most famous celebrity activist — Bono — was attempting to shout him down. Mwenda was suffering from too much reality for Bono's taste: "What man or nation has ever become rich by holding out a begging bowl?" asked Mwenda.

Today's short Latin lesson: we know what "pro bono" means; "pro malo publico" refers to pet projects, according to The Self-Help Law ExPress.

Posted by Wilson Mixon at 09:06 PM in Economics

March to the Sea c. 1907

The July 6, 1907 NYT reports on yet another attempt to re-create Sherman's March to the Sea through Georgia. Being from Northwest Georgia this pressing desire to recreate the march is interesting:


CHATTANOOGA, Tenn. - A start was made yesterday by military men to traverse the route pursued by Gen. W.T. Sherman, on his march through Georgia. A year ago Father Sherman, a Jesuit priest and son of the Union General, attempted to make the trip, but only reached Cartersville, where he was stopped because of public criticism.

The trip is being made by commissioned officers, with only enough enlisted men to care for the stock and to pitch camps. There are thirty-four officers from the Military Staff College at Leavenworth in the party.

There was considerable comment by Confederate veterans, but none of the objections raised was of serious import.

Posted by Craig Depken at 01:21 PM in Politics

On to-be famous ships c. 1907

The July 6, 1907 NYT reports:

The Lusitania, the new liner of the Cunard Line, has been carrying out her experimental trials this week. The results are regarded as extremely satisfactory. The steamer twice covered a measured mile in 144 seconds, giving her a speed of 25 knots. Considering the fact that the Lusitania was not running under full pressure and has still to be dry-docked, her performance is considered remarkably promising.

Posted by Craig Depken at 01:12 PM in Culture

Antidotes to Sicko

Mark Perry makes an interesting point about the lastest Michael Moore film:

In the movie "Sicko," Michael Moore mentions several times that life expectancy is longer in countries like the U.K. and France that have socialized medicine than in the U.S., which doesn't have socialized health care. The implication is that the superiority of socialized medicine results in better health care and longer life expectancies.

It is true that life expectancy is higher at birth in the U.K., by 1.6 years for males and .70 years for females. However, life expectancy at older ages is greater in the U.S. than in the U.K. (see chart above, click to enlarge).

For example, American males who are alive at ages 70, 75 or 80 years have about .60 years (7 months) of greater life expectancy on average than U.K. males; and American females alive at ages 70, 75 and 80 have more than an additional .70 years (8 months) of life expectancy.

Since quality health care (surgery, treatment, critical care, advance testing, expensive prescription drugs) is most important towards the last years of our lives, couldn't we counter Michael Moore's claim and say that the inferiority of socialized medicine, especially at the time when quality care is most important, reduces the lives of older people in U.K. by at least 1/2 year?

Insurance companies are Moore's bete noire; he favors a so-called single payer system. For a cinematic treatment of the bureaucracy that would result, see the first half of Barbarian Invasions (Bob posted on it here).

Posted by E. Frank Stephenson at 10:12 AM in Economics

Two steps ahead of SCOTUS

Associated Press on Yahoo! news reports, this story

"Justices to teach, travel in Europe"

Here's a proposition a majority of the Supreme Court can agree on, without rancor or regard for ideology: Europe is a good place to spend the summer.

At least five of the nine justices will travel there this summer, mostly to take part in international programs sponsored by U.S. law schools.

I just returned from three weeks in Europe with my wife. No teaching. But plenty of sun in Mediterranean Spain, France, and Italy, with a long weekend in Munich and a topper-offer in Rome. Sorry, no Tyler-esque observations sophistiquées. But I did meet up with Ed Stringham for a week. Great fun.

Oh, the Justice with the coolest Eurotrip itinerary? Probably Roberts, who's scheduled for Vienna and Paris.

Posted by Edward J. Lopez at 08:51 AM in Personal

July 05, 2007
One answer to my AER problem

I have posted one ad hoc approach to determining which AER's from the past 32 years to keep in hard copy over at Heavy Lifting. Comments and suggestions for improvement are appreciated, we are at D-Day-8.

Posted by Craig Depken at 08:59 PM in Economics

On the weather c. 1907

From the July 5, 1907 NYT:

The warmest places in Europe this morning were within the Arctic Circle. Lapland also was genial, with a temperature of 70 degrees, which was warmer than London, where the thermometer at 8 A.M. registered 56 degrees. Iceland was several degrees warmer than many places on the Irish and Welsh Coasts...No fine weather is possible until a readjustment takes place as regards the relative position of these important players in the meteorological game.

Posted by Craig Depken at 10:21 AM in Science

On the public provision of goods c. 1907

The July 5, 1907 NYT has the following editorial:

Baltimore has abandoned its municipal lighting plant because a private company offered to supply the same illumination at one-fourth the city's cost. And the two American Dreadnought contracts have just been awarded to private bidders because they underbid the navy yards, although the private bidders reckoned upon a profit and the navy yards estimated at cost. The municipal ownership faddists must redouble their arguments if they are to contend with day to day facts like these.

Posted by Craig Depken at 10:17 AM in Economics

July 04, 2007
Funniest blog comment I read today

George Borjas, the economist known as a critic of immigration, blogged today about how much he likes his new iPhone, but added: "Despite all the hype, it won't mow my lawn or bring my breakfast to bed."

To which a quick-witted reader commented: “Mexicans can do that for very little money!”

Posted by Lawrence H. White at 07:04 PM in Economics

July 03, 2007
Marketing genius

Tie a quirky flavor variation on a well-known candy bar to a revered dead celebrity? Yes! It’s the new Reese’s Collector Edition Elvis Peanut Butter and Banana Creme Cup!

Elvis, as every pop-culture otaku knows, loved peanut butter and banana sandwiches.

Collect all four Collector Edition packages: Leather Jacket Elvis, Crooning Sweater Elvis, Vegas Jump Suit Elvis, and Hawaiian Lei Elvis!

Posted by Lawrence H. White at 12:03 AM in Culture

July 02, 2007
Here's a question - pass it along

I have every issue of the American Economic Review from 1969 through 2007. I have exceeded my office shelf space and therefore am trying to determine exactly which relatively few (say up to twenty) issues of the AER I should retain - the rest will be donated to a book campaign for African universities.

So here's my question: If one were to keep ten to twenty (or fewer) specific issues of the American Economic Review, which would you nominate?

I have decided to retain all issues from 1969, my birth year, 1996, the year I received my Ph.D., and 2002, the year I attained tenure here at UT-Arlington (benchmarks in my life at least).

I haven't had a chance to grab citation information from Web of Science, but I anticipate doing that this week - perhaps it is easiest to start with the issues that have generated the most non-self-citations?

Perhaps other economics bloggers could pose the question and point to this post or direct folks to send nominations to

bestaer - at - yahoo - dot - com.

Otherwise, I'll leave the comments open for a couple of days - I appreciate your thoughts and personal favorites.

[Update: I'll post some more information in the next few days. I have a Stata data file already created from Web of Science records and have a sliced-and-diced the data a few different ways. More later.]

Posted by Craig Depken at 09:35 PM in Economics  ·  Comments (0)

Think Globally, Act Irrationally

On, among other things, running garbage through the dishwasher.

An essay, and a podcast, from Econlib at Liberty Fund.

An excerpt:

A generation of American has been indoctrinated into a "save resources, recycle at all costs" mindset. "Recycle!" is used as a moral bludgeon. This is different from "Don't Litter!" Littering is a collective action problem, a genuine social dilemma: cheaper for me to throw that cup out the window. But I myself would prefer a world where no one throws cups out of windows over a world where everyone does. "Don't litter" is an attempt to solve a real problem.

"Recycle, regardless of cost!" doesn't solve a problem; it creates one. Laws requiring recycling harm me, the environment, and everyone else. We have to take prices into account, because prices are telling us that we can't save resources by wasting resources.

Posted by Michael Munger at 08:30 AM in Economics

July 01, 2007
Have China Scholars All Been Bought?

So asks the title of an insightful article from the April issue of the Far Eastern Economic Review by Carsten A. Holz. Money quotes:

Foreign academics must cooperate with academics in China to collect data and co-author research. Surveys are conducted in a manner that is acceptable to the Party, and their content is limited to politically acceptable questions. For academics in China, such choices come naturally. The Western side plays along. …

What happens when we don’t play along is all too obvious. We can’t attract Chinese collaborators. When we poke around in China to do research we run into trouble. …

We talk about economic institutions and their development over time as if they were institutions in the West. “Price administration” regulations, central and local, abound, giving officials far-reaching powers to interfere in the price-setting process. Yet we accept official statistics that show 90% of all prices, by trading value, to be market-determined. We do not question the meaning of the Chinese word shichang, translated as “market,” but presume it to be the same as in the West.

Similarly, we take at face value China’s Company Law, which makes no mention of the Party, even though the Party is likely to still call the shots in the companies organized under the Company Law.

As they say, read the whole thing. The lesson for consumers of China research is basically the same as the lessons of my piece on monetary policy research and of Klein and DiCola’s piece on development economics research: be skeptical, and be alert for status quo bias.

And hey, it's nice to see a journal other than Econ Journal Watch willing to publish an article like this.

Posted by Lawrence H. White at 10:34 PM in Economics

Licensing in Everything: Disney™ produce

I recently ate a package of grapes branded with the logo Disney Garden™. The package was also decorated with cartoon pirate and a smaller logo for Pirates of the Carribean. I understand leveraging the Dole™ brand name from pineapples to other produce (bananas, bagged salads). I even understand tying kid-oriented movies like Shrek into breakfast cereals, microwave popcorn, and “toaster streudel”.

But leveraging the Disney™ brand name from movies and theme parks into fruits and vegetables? I don’t get it. Is an adult supposed to believe that the grapes are premium quality because they say “Disney” on the package? (They tasted like any other seedless green grapes.) Or is a kid supposed to believe that they’re more fun? Is the idea that: hey, if they can sell kids sugary cereal this way, maybe parents can use it to get kids to eat healthy foods?

Didn’t Disney try this gimmick once before? Oh wait – I haven't seen it in a while, but apparently Donald Duck Orange Juice is still being marketed today.

Here’s what the Disney Garden™ web site says:

Imagination Farms, LLC, is a national fresh produce marketing company founded with the mission of increasing the consumption of fresh fruits and vegetables among children. The company is the marketer of the Disney Garden™ brand of fresh produce, offering both organic and conventionally grown products, supplied by leading domestic and international growers and shippers.

Comments are open for anyone who has a theory.

Posted by Lawrence H. White at 09:28 PM in Economics  ·  Comments (4)

Then and Now c. 1907

The July 1, 1907 NYT has the following concerning the State of Illinois planning a commemoration of the 1858 Lincoln-Douglas debates, to be held in the presidential election year of 1908:

The Illinois commemoration is well worth while if only to impress alike the parallel and the distinction between conditions then and now. Then there were bitter differences of opinion, whereas now it is difficult to draw party distinctions, as the parties might almost exchange their leading candidates...Perhaps the greatest distinction between then and now is that whereas in the old time all the talk was of what the Constitution meant, now all the talk is how the Constitution can be made to mean what the temper of the hour would like it to mean. The distinction is vital. The Constitution is a written document, and the meaning of the words has not changed. Yet the Supreme Court from the bench has found it necessary to say the lawful way to change it, if the Nation wants to change it, as according to the method provided, and not by "construction."

Posted by Craig Depken at 09:48 AM in Politics

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

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