So Kenny Boy wasn't just W's buddy. From the first of a series of articles in the Financial Post (Canada):

The climate-change industry ... has emerged as the world’s largest industry. ... Some of the climate-change profiteers are relatively unknown corporations; others are household names with only their behind-the-scenes role in the climate-change industry unknown. ... This series begins with Enron, a pioneer in the climate-change industry.

Almost two decades before President Barack Obama made “cap-and-trade” for carbon dioxide emissions a household term, an obscure company called Enron — a natural-gas pipeline company that had become a big-time trader in energy commodities — had figured out how to make millions in a cap-and-trade program for sulphur dioxide emissions, thanks to changes in the U.S. government’s Clean Air Act. To the delight of shareholders, Enron’s stock price rose rapidly as it became the major trader in the U.S. government’s $20-billion a year emissions commodity market.

Enron Chairman Kenneth Lay, keen to engineer an encore, saw his opportunity when Bill Clinton and Al Gore were inaugurated as president and vice-president in 1993. To capitalize on Al Gore’s interest in global warming, Enron immediately embarked on a massive lobbying effort to develop a trading system for carbon dioxide.... To magnify the leverage of their political lobbying, Enron also worked the environmental groups.

The intense lobbying paid off. Lay became a member of president Clinton’s Council on Sustainable Development, as well as his friend and advisor. In the summer of 1997, prior to global warming meetings in Kyoto, Japan, Clinton sought Lay’s advice in White House discussions. The fruits of Enron’s efforts came soon after, with the signing of the Kyoto Protocol.

[From an internal memo, posted from Kyoto]: “Enron now has excellent credentials with many ‘green’ interests including Greenpeace, WWF [World Wildlife Fund], NRDC [Natural Resources Defense Council], German Watch, the U.S. Climate Action Network, the European Climate Action Network, Ozone Action, WRI [World Resources Institute] and Worldwatch." [Furthermore]: “I now predict ratification within three years. I predict business opportunities within 18 months. I predict this agreement will have very significant influences on the energy sector within OECD and transitional economies and will accelerate renewable markets in developing countries. This agreement will be good for Enron stock!!”

"Public Choice Concepts and Applications in Law" by Maxwell Stearns and Todd Zywicki is scheduled for publication this fall. Although aimed primarily at the law school market, it looks to me like it would be a great text for upper-level undergraduate and graduate courses in public choice and public policy. The authors have made the current draft available for review. If you're interested, contact Max for passwords and all that.

I just finished Bernadette Meyler's "Daniel Defoe and the Written Constitution" and can recommend it as an interesting and well-written law review article -- and you can't say that very often, friends. (Plus, Art, there's pirates!)

Finally, somewhere Charles Tiebout is smiling. The only remaining question is: What are the remaining two-thirds waiting for?

Without a firm commitment by the Obama administration to maintain central-bank independence at all costs, the Fed may become subordinate to the Treasury as it institutes the president's expansive plans to inject government into the economy. If this is the case (to paraphrase Milton Friedman) fiscal deficits will always and everywhere mean inflation.

To calm investor fears and demonstrate that the Obama administration is committed to respecting certain minimal rules of conduct, the Fed and Treasury need to establish a new accord. The new accord should be signed by Mr. Obama and formally recognize the Fed as an independent entity. It should make clear that the Fed is not responsible for the financing needs of the government.

That's DOL friends Scott Beaulier and Skip Mounts in Saturday's WSJ.

The lecture will be preempted by a talk from former BB&T CEO John Allison (to whom I am honored to yield the floor), but here are a few readings and a podcast on Walmart:

1. Why Wal-Mart Matters.

2. So you save money. Do you live better?

3. My SSRN page, with drafts of our Walmart papers.

4. In particular, here's a review of a volume of critical Walmart essays.

5. Cato podcast with Russell Sobel on "Wal-Mart vs. Mom and Pop"

6. Andrea Dean and Russell Sobel ask whether Walmart has buried Mom & Pop.

1. "The Great Depression and World War II"

2. My main sources for "The Great Depression and World War II," Robert Higgs's Depression, War, and Cold War and Jim Powell's FDR's Folly.

3. Randall Parker's EH.net article on the Depression

4. Frank Steindl's EH.net article on economic recovery from the Depression

5. Frank Steindl on how WWII did not end the Great Depression.

Here are some articles, books, and videos that cover some of the things I will discuss in my lecture on Sunday.

1. Julian Simon. A lot of what Professor Simon published is available at this site. If you're serious about environmental issues, you have to take Simon seriously.

2. George Reisman, Capitalism: A Treatise on Economics

3. Matthew Kahn's blog, "Environmental and Urban Economics."

4. David Zetland's blog, "Aguanomics" (NB: I met David at an IHS Social Change Workshop in grad school).

Here are some articles, books, and videos that cover some of the things I will discuss in my "Economics in One Lesson" lecture on Saturday. A lot of these are links to articles I wrote, many of which were inspired by my experience teaching at a "Liberty and Society" seminar last year.

1. There's no such thing as free grilled chicken.

2. Trade Creates Wealth, even if you're a Superhero.

3. The Locavore's Dilemma: trade conserves wealth (NB: I think there's an uncorrected typo in this).

4. "The Market, God Bless it, Works."

5. But what about when the market, gosh darn it, fails?

6. Drugs are bad, mmmkay? Does this mean they should be illegal? What about other stuff, like guns, alcohol, and prostitution?

7. Thomas Sowell, A Conflict of Visions. Bryan Caplan's review of Sowell.

8. Ten Key Elements of Economics.

9. Steven Landsburg, The Armchair Economist and Fair Play.

10. Henry Hazlitt, Economics in One Lesson.

Here is a brilliant take on the role of empathy in law from John Hasnas, who spoke at Rhodes in the Fall and who was a fellow faculty member at last summer's "Liberty and Society" seminar at Bryn Mawr.

By its nature, justice has to be blind. As Hasnas ably demonstrates, replacing the rule of law with the rule of empathy--or even making a substitution at the margin--assumes the possibility of moral accounting that cannot be done because the necessary information cannot exist. The nature of the problem rules out the judge's ability to divine the outcome consistent with cosmic justice. For a theological perspective, I refer you to the Misesian/Hayekian Psalm.

As an added bonus, here's an excellent post by Greg Mankiw on whether we can have our philosophical cake and eat it, too: if we're going to admit certain notions of distributive justice, then consistency demands that we tax the tall and subsidize the short.

Double bonus: it's apparently John Hasnas Friday. Here's an excellent article by Sheldon Richman (HT: Sheldon Richman) that discusses one of Hasnas's papers entitled "The Myth of the Rule of Law."

A bunch of stuff arrived: Butler Shaffer's new book, a collection of Hayek essays, the Scholar's Edition of Man, Economy, and State, and The Complete Works of Francis A. Schaeffer, among other things. That brings me to a bleg: does anyone know if there is a "Complete Works of C.S. Lewis" or something like it in the works? I've seen a couple of anthologies, but I was wondering if anyone is putting together a "complete works" or "selected works" or something similar. If you know and can let me know, I'll be in your debt.

I'm giving lectures this summer on "The Limits to Economic Growth" (IHS, next week) and "Environmental and Natural Resource Economics" (Mises University, end of July), and something that continues to perplex me is the popularity and near-ubiquity of the environmental destruction narrative. Consider this: I was listening to our pastor's Sunday evening sermon on the radio a few weeks ago when I was picking up my wife and Mother-in-law at the airport last month. He mentioned that a public school teacher in our congregation had been encouraged by the School Board to highlight the "fact" that overpopulation is our #1 environmental problem as part of the Earth Day curriculum. That this is demonstrably false doesn't seem to trouble anyone.

In the face of compelling evidence, people cling nonetheless to environmentalist mythology. Others (including co-blogger Michael Munger) have pointed out that recycling, for example, is an act of piety more than it is anything else. Is environmentalism how people are channeling their religious impulses in a secular world?

Update: Here's Steve Horwitz on the same issue (HT: Steve Horwitz). And here's one of my contributions to the ever-evolving English language.

SCOTUSBlog has an excellent review of Judge Sonia Sotomayor's important cases and how the Supreme Court has ruled on her opinions.

Since joining the Second Circuit in 1998, Sotomayor has authored over 150 opinions, addressing a wide range of issues, in civil cases. To date, two of these decisions have been overturned by the Supreme Court; a third is under review and likely to be reversed. In those two cases (and likely the third), Sotomayor’s opinion was rejected by the Supreme Court’s more conservative majority and adopted by its more liberal dissenters (including Justice Souter).

Reading through the excellent summaries that follow, I see a strain of legal pragmatism in her rulings, although as summarized by SCOTUSBlog she does frequently seem to treat consequences as secondary. She is not reluctant to curb government authority in speech, privacy and discrimination suits. One interesting exception is Leventhal v. Knapek, 266 F.3d 64 (2001) where she allowed a government employer to search an employees personal computer against his Fourth Amendment claim; quoting SCOTUSBlog, "Here, she explained, the search was permissible because it could have revealed employee misconduct." SCOTUS reversed a separate ruling (Malesko v. Correctional Services Corp., 229 F.3d 374 (2000)) in which her opinion allowed a man to sue a private prison operated under government contract for constitutional rights infringement. She was also reversed on her "most notable" environmental case (Riverkeeper v. EPA, 475 F.3d 83 (2d Cir. 2007)), which involved drawing intricate lines around the EPA's authority whether and how to use cost-benefit analysis. And here is the summary of an interesting case at the confluence of political and economic rights:

More recently, in Kraham v. Lippman, 478 F.3d 502 (2d Cir. 2007), she wrote an opinion holding that a rule prohibiting high-ranking political party officials from receiving court fiduciary appointments (such as appointments as guardians ad litem) in New York state courts did not violate the plaintiff’s right to freedom of political association. Sotomayor acknowledged that the rule required individuals to choose between holding a high-ranking party position and receiving court appointments, but she ultimately concluded that such an “incidental effect on individual decision-making, however, furthers the rational and legitimate goal of eliminating corrupt court appointments.”

Via an email from the IZA Discussion Paper Series:

"Do Immigrants Take the Jobs of Native Workers?" Free Download

IZA Discussion Paper No. 4111

NIKOLAJ MALCHOW-MOELLER, Copenhagen Business School - Center for Economic and Business Research (CEBR), University of Southern Denmark
Email: nmm.cebr@cbs.dk
JAKOB ROLAND MUNCH, University of Copenhagen - Department of Economics, Center for Economic and Business Research (CEBR)
Email: Jakob.Roland.Munch@econ.ku.dk
JAN ROSE SKAKSEN, Copenhagen Business School - Department of Economics, Institute for the Study of Labor (IZA)
Email: jrs.eco@cbs.dk

In this paper, we focus on the short-run adjustments taking place at the workplace level when immigrants are employed. Specifically, we analyse whether individual native workers are replaced or displaced by the employment of immigrants within the same narrowly defined occupations at the workplace. For this purpose, we estimate a competing risks duration model for job spells of native workers that distinguishes between job-to-job and job-to-unemployment transitions. In general, we do not find any signs of native workers being displaced by immigrants. Furthermore, we find only very limited signs of replacement of native workers by immigrants. Instead, in particular low-skilled native workers are less likely to lose or leave their jobs when the firms hire immigrants.

"L.A. Progressive" picked up my recent op-ed on intellectual monopoly. I ask whether Britney Spears would produce less output in the absence of intellectual monopoly. My guess is that most stars' income is pure rent, so Britney's output reduction would be trivial while the output increases of her potential competitors would be substantial. One of the commenters asks a very interesting question about Ms. Spears and her well-documented difficulties handling super-stardom: in the absence of intellectual monopoly, would we see the kinds of public meltdowns that have characterized the careers of Spears, Lohan, and others?

here's the URL because my Mac hates Movable Type: http://www.laprogressive.com/2009/05/26/intellectual-monopoly-is-an-unnecessary-evil/#comments).

Zimbabwe ranks dead last in the Economic Freedom of the World index, but maybe there is hope on the horizon -- at least is this new report has any impact.

The Zimbabwe Papers, a major report released today by 9 of Africa’s most respected think-tanks, examines the causes of Zimbabwe’s social and economic problems and offers a blueprint for urgent and practical reform that will enable the country to become a thriving, peaceful and prosperous country.

1. "Playing Chicken in Memphis." Is the company that owns KFC restaurants in Memphis making a business mistake by not offering grilled chicken? Inaction by the company's critics suggests not.

2. Review of Josh Waitzkin, The Art of Learning. This would be most properly titled "What I was writing a year ago but finally published." I decided to swing for the fences and sent it to the Harvard Educational Review first. They rejected it.

3. "Intellectual Monopoly is an Unnecessary Evil." Inspired by Boldrin and Levine, Against Intellectual Monopoly and Michael Heller, The Gridlock Economy. Thete's an interesting comment thread on the Mises blog.

And, for the second time today, I'm describing my life with a phrase from Digital Underground's classic "The Humpty Dance." Right now: "I think it's obvious, I also like to write." Earlier this morning: "I like my oatmeal lumpy."

Robert B. Ekelund, Jr., John D. Jackson, Rand W. Ressler, and Robert D. Tollison. 2006. Marginal Deterrence and Multiple Murders. Southern Economic Journal 72(3):521-541.

This paper examines empirically the state-level impact of capital punishment on multiple murder rates for the period 1995-1999. In baseline tests--tests employing mixed panel data and using an estimation technique combining aspects of both fixed- and random-effects models--we show that executions reduce the single murder rate and that the use of electrocution reduces the murder rate beyond that resulting from lethal injection. These results are not unique. The unique finding of our analysis is that multiple murders are not deterred by execution in any form, quite possibly because the marginal cost of murders after the first is approximately zero. Finally, we offer a brief historical analysis of how the principle of marginal deterrence has been used and suggest how it might be applied in the matter of multiple murders.

That's a snip from this NPR story on the Somali pirates. The story leaves a bit to be desired, but it has some interesting economics. There's also a "markets in everything" or division of labor angle in the Somali man's role as a negotiator/spokesman for Somali pirates.

One of the best data projects created in the last decade is the Doing Business project at the World Bank begun under the leadership of Simeon Djankov and inspired by Hernando de Soto's original work in Peru.

The Doing Business report aims aimed to measure the burden, complexity, and consistency of regulations in many dimensions. I use several of the indicators in the economic freedom index myself.

While the Doing Business project sometimes called for more government involvement (for example in creating property registries), the overall thrust of the project was to reduce the regulatory burden facing small and medium businesses. This emphasis on simpler, less costly regulations has not always been popular with others at the World Bank and the so-called development community.

Now, it appears these bureaucrats and rent seekers are seeking to frustrate the original intention of the project.

I was just shocked to learn that the Employing Workers section is being revised so that countries with burdensome International Labour Organization-approved regulations will get better scores! Consider this memo about forthcoming changes to the report (emphasis added):

Doing Business is one of the World Bank Group’s flagship publications, and over the years it has proven to be a powerful tool in the hands of governments determined to improve the climate for business. The business climate is one aspect of development policy, and the WBG emphasizes that other development goals must also be given appropriate weight. These include issues as diverse as political stability, social safety nets to shield vulnerable parts of society from intolerable levels of risk and protection of rights for workers and households as well as for firms. In the current global economic crisis, the WBG is looking at the advice, policy instruments, strategies and other tools at our disposal to ensure that we help governments meet this array of development policy challenges. It is important that government actions focus on the needs of the labor force and lower income households as well as those designed to help businesses to survive and grow. During this period of economic crisis, we are also scaling up our work on social safety nets through lending and analytical work. Issues of access to benefits such as unemployment insurance and social security are a key part of this work.

In light of these challenges, unprecedented in their scale, and building on the changes we signaled in last year’s Report, both immediate and longer-term actions will be taken with regard to the Employing Workers Indicator (EWI) in Doing Business. In the short-term:

· Adjusting the scoring in the Doing Business 2010 report (to be launched in September 2009) regarding provisions for fixed term workers and standards for severance payment, mandatory days of rest and night work and holidays, and minimum wage levels, in order to accord favorable scores to worker protection policies that comply with the letter and spirit of the relevant ILO Conventions, recognizing that well-designed worker protections are of benefit to the society as a whole.

· Removing the Employing Workers Indicator (EWI) as a guidepost in the Country Policy and Institutional Assessments (CPIA). A guidance note will be issued clarifying that the EWI does not represent World Bank policy and should not be used as a basis for policy advice or in any country program documents that outline or evaluate the development strategy or assistance program for a recipient country. The note will emphasize the importance of regulatory approaches that facilitate the creation of more formal sector jobs with adequate safeguards for employees’ rights and that guard against the shifting of risk from firms to workers and low-income families.

Josh Hall and Pete Leeson wrote about development countries and ill-timed labor standards here: "Good for the Goose, Bad for the Gander: International Labor Standards and Comparative Development," with Peter T. Leeson, Journal of Labor Research vol. 28, no. 4 (September 2007): 658-676.

Malcolm Gladwell, The Tipping Point. There's a lot to be said for this book and how it can inform social entrepreneurs. Gladwell offers a collection of stories and studies about social epidemics and their causes. It's a great business book.

Richard Florida, The Rise of the Creative Class. I'd read good and bad things about this book, so I looked forward to sampling it. I'm not sure if the "gay-pride-marches-as-development-strategies" are really reading Florida correctly; one thing that really liked about the book was its comparative-institutional perspective. Given that a local government is going to "do something," what is the best strategy? I especially like Florida's ideas about creating a sense of organic place within a city as opposed to big, splashy, subsidized projects like stadiums and malls.

Donald Norman, The Design of Future Things. I'm pretty sure I mentioned this some time ago, but this was an excellent find at a "Friends of the Library" book sale. I'll mention it again since I'm working on a few things that integrate some of Norman's ideas and address some of the points he makes. As a Hayekian, I take from this the insight that context matters and, while we can train computers to calculate, we cannot train them to think. Computers can process information, but I'm not sure that they can use knowledge (particularly tacit knowledge). For those at the forefront of the interface between man and machine, Norman's book has important implications for how we address the complementarities between computational power and human insight.

Mike Mulligan and His Steam Shovel. This was sent to us by a friend and will likely become a regular part of our reading-to-the-baby rotation. This one actually has a pretty good set of lessons about capital, labor, and entrepreneurship. I won't give it away, though--you'll need to read it yourself.

Gerald Weinberg, Weinberg on Writing: The Fieldstone Method. My review is here.

Randy Pausch, The Last Lecture. My review is here.

*--"Recent" is defined as "sometime in the past academic year and not yet discussed in a 'Recent Reading' post."

The piles of unfinished reading and writing projects littering my office have actually shrunk a little bit. Summer vacation rules.

1. "Wal-Mart's Weight Effect," published online on Wednesday and appearing in the June 8 issue of Forbes.

2. "The Great Depression and World War II," now online and forthcoming in the June issue of The Freeman.

3. "Conscription of Men, Women, and Resources, a Mises Daily on Monday.

4. Review of David M. Primo, Rules and Restraint: Government Spending and the Design of Institutions, forthcoming in Public Choice

5. My entry for Alex & Tyler's epigram contest: "A citizen who casts his ballot without having to the best of his abilities studied as much economics as he can fails in his civic duties."--Ludwig von Mises

Economists are well aware of the problems with Gross Domestic Product as a measure of how wealthy a country is. It doesn't account for "non-economic" values (T. Sowell: are there any values that aren't "non-economic"?), it doesn't count household labor, and so on. Nonetheless, GDP is an anvil that has worn out many hammers.* Here, for example, are two posts on the Human Development Index in which Justin Wolfers and Bryan Caplan argue that HDI is so highly correlated with GDP per capita that it isn't clear that it's useful. Caplan's dismissal of the HDI is particularly cutting: "Scandinavia comes out on top according to the HDI because the HDI is basically a measure of how Scandinavian your country is." In other words, if you're the best by definition, you'll always come out on top.

*--I'll send my now-obsolete copy of the eleventh edition of The Economic Way of Thinking to the first person who emails me with the correct reference to the "anvil that has worn out many hammers" phrase.

According to this Running SuperFans blog post,

You know what else turns out to be countercyclical? We’ll give you three clu…oh, you guessed running? Correct!

Check this out: just this weekend, the Cleveland Marathon set an event record for most participants. Meanwhile, in Minnesota, two new marathons are about to be run for the first time. So while the rest of the economy is going down the port-o-john, running is on the rise!

Also check out their hilarious running videos. For example:

The May 22, 1909 NYT reports on French military planning at the time:

PARIS - The Superior Council of the Navy has decided upon a programme which includes bringing the number of French battleships up to thirty-eight, a total that would insure France fourth place among the naval powers of the world. It is proposed to lay down in 1910 two 21,000 ton vessels of an enlarged Danton type.

The armament has not yet been decided upon, but the Council is in favor of twelve 12-inch guns in six turrets, those aft to be superposed. The naval artillery experts, however, have brought forward arguments in favor of sixteen 10.8-inch guns in eight turrets.

The Wall St. Journal has a fascinating article on the hobby of my once (UGA undergrad) and possibly future (GMU grad) student Curtis Melvin: he leads a web-linked do-it-ourselves effort to identify obscure features and fill in the details on Google Earth's map of North Korea. I knew Curtis had visited North Korea as a tourist, which is endearingly wacky, but this borders on the profound. What the effort has uncovered is pretty amazing. Don't fail to click through to the WSJ's interactive sidebars.

When govco discovers that the masses aren't remitting as expected it turns to long-forgotten means with which to extract the resources it so desperately needs. An example comes from today's Sporting News Today:

Some Bears season ticket holders were surprised to receive a notice saying they owe a city-issued amusement tax on seat licenses purchased up to seven years ago, according to the Chicago Tribune. A Bears spokesman, who says the team was unaware of the tax or the certified letters that were mailed out, says the franchise is looking into the issue.

From today's Tribune:

The city always planned to levy amusement taxes on Chicago Bears season ticket licenses, a city Department of Revenue spokesman said Thursday.

Ed Walsh also said a 7 percent amusement tax was paid by the Bears on the initial sales of the permanent seat licenses between late 2002 and early 2003. The amusement tax was raised to 9 percent this year.

"The amusement tax is applicable when a license is sold," Walsh said. "The tax burden is on the purchaser. This includes initial sales and re-sales, as any amount paid for the right to witness a game is subject to the tax."

From Bloomberg:

Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.
[. . .]
Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.

Federal Reserve Bank of Philadelphia President Charles Plosser said prices may rise 2.5 percent in 2011, a rate well above central bankers’ preferred range, and cautioned against complacency on inflation.

“The economy may be at greater risk of inflation than the conventional wisdom indicates,” Plosser said in a speech yesterday in New York. “While inflation expectations appear to remain anchored, we should not become sanguine about our credibility. It can be easily lost.”

Source. So the Fed has doubled it's balance sheet and is buying every asset this side of baseball cards and it now starts to forecast higher inflation. Actually, that last clause isn't exactly correct--I think Plosser deserves credit for speaking out on the likelihood of higher inflation since the rest of the Fed leadership seems unconcerned by it. I've been thinking about refinancing my mortgage now that rates have dropped--maybe I should move from a 15 year into a 30 year as an inflation hedge.

German Man Attacks Woman Over High-Priced Asparagus

here.

HT: My wife. Happy anniversary dear. (Funny story--Pee Wee, whose birthday was yesterday, likes to tell people he was born the day before his parents got married.)

A letter from yours truly appers in today's WSJ:

Daniel Akst ("Losing Control," Taste, May 15) argues that "our big problem [underlying poor health and dietary choices] is self-control" because "humans evolved to be highly susceptible to short-term rewards." This argument may well be correct, but Mr. Akst's conclusion that "we need more aggressive promotion of healthy choices by governments and schools" is misguided.

Governments and schools, staffed by politicians with eyes focused on their next election and teachers teaching to end-of-course tests, operate in environments in which short-term thinking is institutionalized. One manifestation of such ingrained myopia is the federal government's habit -- apparently every bit as addictive as nicotine -- of running budget deficits (i.e., levying future taxes) instead of making the difficult choices necessary for balanced budgets. Counting on government to address short-term biases is therefore akin to relying on the blind to lead the nearsighted.

E. Frank Stephenson
Rome, Ga.

Some recent letters that didn't make it into print are below the fold.

Wolfram's Alpha is out and is definitely worth looking at, if you haven't already.

The interview is here; below are some excerpts and comments:

[Interviewer Kai] Ryssdal: So it's been a little bit more than a year since the first version of this book came out. And it's been quite the tumultuous year in the economy, obviously. Do you find that behavioral economics is a little bit more, I don't know, respectable now?

ARIELY: Oh, yeah. Very much so. This has been a great year for me.

Ryssdal: Well, that's good, Dan.

ARIELY: Yeah, if you're looking for a satellite in this whole thing, it's behavioral economists, we're all celebrating. And the real issue is that for a long time we would do these experiments showing all kinds of irrationalities, and people would say, OK, it's very cute, it's very entertaining, it's amusing, but surely when it will come to people making large decisions in a repeated who are experts, all of these irrationalities will go away and people would behave perfectly rational. In 2008, Greenspan's testimony, that basically you can summarize as, oops, I thought the markets were irrational and would take care of themselves but they don't. I think there's a new realization of how important an endemic irrationality is, and that we really need to understand it better if we ever want to get out of not just this crisis, but we want to prevent the next ones who are just waiting around the corner.

I'm not at all convinced that the economic difficulties of the past year were caused by the irrationality of private actors. Instead, I attribute most of the problems to caused by people's predictable responses to perverse government policy.

Here's another snip of the interview:

ARIELY: So if you think about the problem from a behavioral economists' perspective, then what you would say is the following: we might get over the housing problem, we might help people, we might bail out some of the banks, but the real problem, the thing that was causing this whole issue, is actually the conflict of interest that the bankers had. And unless you solve that deeper problem, you haven't solved anything. So in fact what we're doing is we're looking at the causes for these behaviors. And this actually helps you to think very much about regulation. So we can say what are people naturally good at? And in those cases all we need to do is the government to step out of our business and let us do whatever we can because we would optimize. Versus what kind of things do people fail in and fail in them routinely, in predictable and repeatable ways, and those are the places that we would need to actually step in and regulate, and don't let people create damage for themselves and for the economy.

How about some recognition that regulators and politicians--whether rational or irrational--might not be infallible? Ariely seems to want to grant more power to folks who already have a dismal history of causing harm.

I'm not sure if people are rational or not, but it's going to take more than some "very cute" experiments to make me think government regulation would be an improvement.

I'm reading George Simmel's The Philosophy of Money for an upcoming Liberty Fund colloquium. The book has some important ideas, but it takes some serious effort to penetrate the turn-of-the-century German sociological prose which too often reads like postmodern French philosophy. I don't think it's the translator's fault. Check out the following single sentence:

Such trivial experiences as that we appreciate the value of our possessions only after we have lost them, that the mere withholding of a desired object often endows it with a value quite disproportionate to any possible enjoyment that it could yield, that the remoteness, either literal or figurative, of the objects of our enjoyment shows them in a transfigured light and with heightened attractions -- all these are derivatives, modifications and hybrids of the basic fact that value does not originate from the unbroken unity of the moment of enjoyment, but from the separation between the subject and the content of the enjoyment of an object that stands opposed to the subject as something desired and only to be attained by the conquest of distance, obstacles, and difficulties.

What I think he just said: Absence makes the heart grow fonder.

via XKCD.

This May 19, 2009 NYT article (from Drudge) reports that SF may impose a $0.33 per-pack tax on cigarettes to pay for the cleanup of cigarette butts thrown on the ground.

How many ways could this tax be avoided?

Yet, an unintended consequence is that currently courteous smokers who do not litter might begin to do so because they will have paid a tax for the "right" to litter.

Here's a revised version of my paper "Shock and Awe: Institutional Change, Neoliberalism, and Disaster Capitalism," forthcoming as part of a symposium on Naomi Klein's The Shock Doctrine in the Journal of Lutheran Ethics.

After a bit of foot-dragging, here are a few book reviews:

Review of Paul Heyne, "Are Economists Basically Immoral?" for the Quarterly Journal of Austrian Economics.

Review of Randall Holcombe, Entrepreneurship and Ecnoomic Progress, for Economic Affairs.

Review of Nelson Lichtenstein (ed.), Wal-Mart: the Face of Twenty-First-Century Capitalism, for Economic Affairs.

I recently devoured Jorg Guido Hulsmann's Mises: The Last Knight of Liberalism and skimmed Michele Boldrin and David Levine's Against intellectual Monopoly. I recommend both very highly. Hulsmann's biography of Mises is particularly inspiring.

The title might not make sense, but let me explain. I find it interesting how many famous people are famous long after they have been mentioned in the NYT or other major media. For example, one can search the NYT for George Bush and find a reference to a 1967 article in which the future president is interviewed concerning hazing at his fraternity at Yale (Available here for subscribers to Proquest). A search for Barack Obama yields the first mention of him in a 1990 article in the NYT concerning his selection to the Harvard Law Review (Available here for ProQuest subscribers).

The May 19, 1909 NYT has a similar story concerning one Branch Rickey, who will later become most famous for assisting Jackie Robinson break the color barrier in Major League Baseball in 1947 (but who also led a most fascinating life and career beyond this obvious achievement):

TOLEDO - Branch Rickey, the well-known baseball player, former catcher for the New York Americans and for several years coach for both baseball and football teams at Ohio Wesleyan University at Delaware, Ohio, has broken down in health and been compelled to go to Saranac Lake for a complete rest. Rickey, besides performing his coaching duties, has been attending law school at Columbus, each day teaching a beginner's law class at Ohio Wesleyan, and travelling over the country making speeches for the "drys" in the local option campaign.

... often have similar memories. Ron Bailey's closing line in is essay on the prospects of the latest round of government efforts to pick winners: "Thirty years ago, as a young energy regulator, I had a front-row seat as another president’s ambitious plans to transform America’s energy economy crashed and burned. I suspect that today’s eager young bureaucrats will witness a similar debacle."

Many minority dealers operate in cramped downtown locations that are less desirable than the spacious suburban auto malls that are now popular, said Mr. Lester and other dealers. Urban franchises typically draw fewer shoppers and carry less inventory for customers to choose among. Both factors tend to limit sales.

Minority dealers often don't own the land beneath their showrooms, so the monthly rent adds to their costs, Mr. Lester said. And since many borrowed money to get into the business, they sometimes have more debt than family run dealerships that have been in business for decades. *

*Alex P. Kellogg, "Minority Dealers Hit Hard by Auto Crisis," Wall Street Journal, 14 May 2009.

The Mises Institute has recently posted the text of a lecture by Hans-Hermann Hoppe, "'The Yield from Money Held' Reconsidered". The title refers to a classic article by W. H. Hutt. The theme and title of Prof. Hoppe's lecture recall an earlier paper by George Selgin, "The Yield from Money Held Revisited: Lessons for Today," which originally appeared in Market Process and was reprinted in Peter J. Boettke and David L. Prychitko, eds., The Market Process: Essays in Contemporary Austrian Economics (Aldershot, U.K.: Edward Elgar, 1994), pp. 139-65. Selgin's article does not appear to be available online.

Hoppe's discussion unfortunately suggests that Selgin's view (and mine, and Roger Garrison's) is opposed to that of Hutt's classic article. Not so. Selgin and I are both big fans of the article, and I assume Garrison is as well.

Hoppe writes:

The second example [of supposed anti-Hutt thinking] is from closer at home, i.e., from the proponents of "free banking" such as Lawrence White, George Selgin, and Roger Garrison. According to them, an (unanticipated) increase in the demand for money "pushes the economy below its potential," (Garrison) and requires a compensating money-spending injection from the banking system.

Here it is again: an "excess demand for money" (Selgin & White) has no positive yield or is even detrimental; hence, help is needed. For the free bankers help is not supposed to come from the government and its central bank, but from a system of freely competing fractional-reserve banks. However, the idea involved is the same: the holding of (some, "excess") money is unproductive and requires a remedy.

The second sentence of Hoppe's first paragraph quoted above is correct. The second paragraph contradicts the first, and makes no sense.

Let's be clear about terms. An "excess demand" generally means an excess of quantity demanded over quantity supplied, i.e. a shortage at the current price. An "excess demand for money" -- certainly not a phrase original with Selgin and me -- accordingly means a deficiency of money held. It exists when the current quantity of money units falls short of the quantity demanded at the current purchasing power per unit. It can indeed be alleviated by an injection of additional units (or, alternatively, by an increase in the purchasing power per unit of money).

In the second paragraph Hoppe takes "excess demand for money" to mean "the holding of (some, 'excess') money", or in other words a surplus of money units held. This is the reverse of its meaning.

On the correct understanding, being concerned about macroeconomic difficulties arising from an unsatisfied demand to hold money is fully consistent with embracing Hutt's point that money is held because it serves the holder's welfare.

Comments are open.

In today's inbox from Fine Wine & Beer by Gus here in Auburn:

Just before 3:00pm today, the Gourmet Beer Bill was brought up by the chair and we passed the Senate by a vote of 19-9. The House concurred with the amended Senate version just before 5:00pm. The amendment attempts to restrict beer with an ABV over 6% from being sold in convenience stores.

Celebrations are certainly in order, but we're not done yet.

At this point, we need the governor to sign the bill. Governor Bob Riley has two options:

He signs the bill and it becomes law.
He doesn't sign the bill and it doesn't become law.
There's no real veto at this point, thanks to the Constitutional "pocket veto" power of the governor this late in the session. The fate of our bill is solely in Governor Riley's hands.

Because of this, we're asking everyone to call, email, and/or fax the Governor's office asking him to sign HB373, the Gourmet Beer Bill.

I just talked to our political grassroots point-man, Dan Roberts. I think he put it best: "If that nice lady that answers the phone in Riley's office doesn't get sick of us and disconnect the phone, we're not doing enough."

One of the Governor's former staffers is a supporter, and offered the following advice:

The volume of letters and phone calls that he receives on a particular issue is reported to him every morning, and he takes them seriously. ... A couple quick points: They have a pretty sophisticated constituent database, so multiple calls/mail from the same person won't accomplish much. They report to him the number of persons, not the number of communications. Any arguments that sounds like something the gambling folks would say should be avoided ("People go over state lines to do it anyway..."). You don't want to equate yourself with those guys in his mind. Arguments about personal liberty and economic development will probably have more sway. Pointing out the surrounding states that allow it will also be helpful. The fact that GA, NC, SC, and WV have passed these bills in the past couple years is persuasive.

To contact Governor Riley's office:
Phone: (334) 242-7100
Fax: (334) 353-0004

A letter to the Birmingham News:

"Crime policy illustrates the necessity of careful economic reasoning. In his letter of May 14, Bill Cullen argues that "(t)here is absolutely no evidence" that the death penalty deters murder. This is incorrect: there is a large body of literature written by economists who have studied the deterrent effects of the death penalty. Economists have been especially adept at analyzing crime and punishment because it deals explicitly with incentives. Early studies, even among scholars who opposed the death penalty, showed a strong deterrent effect. More recent evidence analyzed by John Donohue and Justin Wolfers supports Cullen's point: it suggests that if anything, the death penalty might actually contribute to increases in murder rates.

Cullen is correct that a lot of murders are crimes of passion that won't be deterred even by very large penalties, but what is true about most murders is not necessarily true about all murders. Changing the costs and benefits of any activity will change the amount of that activity. While the best available evidence suggests that the death penalty is not the most effective way to deter murder, death penalty supporters are at least thinking about the issue the right way. This illustrates a very general and very powerful point: if we want to explain any activity that we don't like, we have to look for the incentives that produce it."

Check out more pix at uberpix.net!

The May 14, 1909 NYT reports on a paper presented by on Dr. Marcel Labbe at the Society of Internal Medicine in Paris. The paper focused on the treatment of obesity:

"[T]here is only one method of treatment: we must decrease the alimentary income and increase the expenditure of energy."

"Among the foods that must be reduced and even suppressed are, first of all, the fats, breads, pastries, and sweets; salt ought to be lessened as much as possible. The number of meals matters little; it is better to eat little and often, so as to calm the pangs of hunger, than much and infrequently."

"In reduction by means of exercise, the latter should be dosed like a medicine; walking is especially to be recommended, whether on level ground or up-hill. It has a double advantage, for while it lessens the fat it increases the muscular tissue through active function.

"The treatment of obesity by medicine should be absolutely given up, for it is injurious."

I did not see the episode, but Jonathan Freinberg at IHS forwards this segment, in which "Maggie Roark's" architectural genius confronts Ellseworth Toohey's brutish egalitarianism at the Mediocri-Tots Day Care.

1. Undividing labor ... the urban chicken movement (who knew?).

2. More on the "Moneyball" movie.

3. A stimulus check was mailed to a woman who has been dead 40 years--hmmm ... I wonder if she was being paid back for her vote.

4. I wish someone could explain the economic, not political, difference of the Obama Administration's threat to withhold porkulus funds unless California rescinds wage reductions for state workers and its likely squeeze of payments to doctors and other medical service providers. If cutting some workers' wages is economically harmful then why wouldn't it be harmful to cut the pay of doctors?

5. The Air Force One photo tour of New York is not only emblematic of government waste and boneheadedness, the picture of the plane soaring high above the State of Liberty pretty well sums up the current state of affairs for freedom vs. government. The imperial government is riding high and liberty is secondary.

6. A photo of a fellow who needs an anatomy primer.

From the May 12, 1909 NYT:

As a result of the sugar frauds in the New York customs service the Government has decided to do away with the customs weighers altogether and substitute electrical machines, which will automatically weigh and register goods, from the smallest package to the heaviest articles. These machines are to be installed just as quickly as they can be manufactured, and as fast as they are put into service the weighers will be let go. Through the use of the machines the Treasury Department feels that it will prevent in the future any repetition of the frauds that have stirred the customs service of late.

The use of the machines will eliminate from the service a small army of weighers, the largest corps of which is in New York.

If I have time I will track down the original scandal and see what it entailed.

The May 12, 1909 NYT publishes a letter to the editor concerning ex-president Roosevelt's hunts in Africa:

Another bull rhinoceros! five lions! a bag of thirteen big beasts! An ex-President who has dazzled a nation of eighty millions of citizens by the force of his imperialism and militarism and has led them up the ladder of glorious noisy monarchism - can such an ex-President do better than go thousands of miles to the wilderness, where he can give an example of how to murder God's creatures, his own fellow creatures? Is it not titanic and heroic to go with a staff of three hundred natives and hunt a poor lion? An animal that, if left alone, would not hurt anybody, and whose sporting ground will not be needed for many years to come by either white or black man. A Christian, too, is Mr. Roosevelt, preferring the religion of love, but also preferring to be a good shot and to excel in the art of killing. How civilized and how noble!

However, Mr. Roosevelt's barbarism does not, after all, shock us half as much as does the admiration, nay, applause of the people. The blame should fall where it belongs. If we did not admire him, if we did not applaud, he would probably not have moved a foot. So the enormity is rather ours and it seems time that we woke to it.

This came to my email box, but I have no answer. If anyone can help, I would appreciate any insight:

Do you know the last time two new intercollegiate football teams began their first season of play against one another? It is happening this year in Division III when Anna Maria College and Castleton State play each other in the first week of the 2009 season. They are both beginning college football programs for the first time.

The latest issue of Public Choice is out and it has several great articles. I highly recommend the following three:

Claudia Williamson, "Informal Institutions Rule: Institutional Arrangements and Economic Performance."

Abstract Institutions are widely believed to be important for economic development. This paper attempts to contribute to our understanding of how institutions matter by examining the effect of formal and informal institutional arrangements on economic progress. Formal institutions represent government defined and enforced constraints while informal institutions capture private constraints. The findings suggest that the presence of informal institutions is a strong determinant of development. In contrast, formal institutions are only successful when embedded in informal constraints, and codifying informal rules can lead to negative unintended consequences. This suggests that institutions cannot be easily transplanted in order to spur economic development.

Peter Leeson, "The Calculus of Piratical Consent: The Myth of the Myth of Social Contract."

Abstract Is a genuine social contract mythical? I argue that pirates created genuine social contracts that established a system of constitutional democracy based on the same decision-making calculus and with the same effects that Buchanan and Tullock’s contractarian theory of government describes in The Calculus of Consent. Pirates’ constitutional democracy is the “holy grail” of social contract theory. It demonstrates that the contractarian basis of constitutional democracy is more than a mere analytic device or hypothetical explanation of how such a government could emerge. In pirates’ case, Buchanan and Tullock’s social contract theory describes how constitutional democracy actually did emerge.

Matthew Higgins, Andrew Young, and Daniel Levy, "Federal, State, and Local Governments: Evaluating Their Separate Roles in U.S. Growth."

Abstract We use US county level data from 1970 to 1998 to explore the relationship between economic growth and government employment at three levels: federal, state and local. Increases in federal, state and local government employments are all negatively related to economic growth. We find no evidence that government is more efficient at lower levels. While we cannot separate out the productive and redistributive services of government, we document that the county-level income distribution became slightly more unequal from 1970 to 1998. We conclude that a release of government-employed labor inputs to the private sector would be growth-enhancing.

Here's Jeff Tucker on McCafe fancy coffee drinks at McDonald's:

"One of the reasons that the elites loathe places like McDonald's, or Wal-Mart, or Target, or any of these places that cater to Everyman – and you might suppose that the champions of the workers and peasants would love these places – is precisely their capacity to rob the rich of their distinctive social markers. One day it was a sign of class and distinction to drink a latte; the next day, every construction worker is doing it."

...

"Yes, it is all about profits. Sorry socialists: this also means that it is all about people."

My stellar student Erin Wendt and I have an article on labor textbooks' sparse coverage of occupational licensing in the current issue of Econ Journal Watch. The idea for the article came from my receiving a new edition of a labor econ textbook a few months ago. The book is subtitled something like "theory and public policy" but I noticed that it had no coverage of licensing--a prominent form of public policy.

Erin's headed for graduate school in fall 2010 so I expect this will be the first of many pubs from her. Many thanks to Dan Klein and a couple of referees for their helpful suggestions.

Brad DeLong and I debated the causes of the financial bust on the Cato Unbound website back in December. In January DeLong gave a lecture, published online, which among other things briefly summarized and dismissed the Austrian account of the boom and bust. Roger Garrison wrote a Freeman article criticizing the account of Austrian business cycle theory found in DeLong's Cato Unbound posts and in the January lecture. DeLong responded on his blog, explaining "one last time," with a sigh, why Garrison and the other Austrians are wrong and their account of the boom and bust won't do.

Roger Garrison has now issued a rejoinder that discusses how DeLong has missed the point and where the differences between DeLong and the Austrians lie. Highly recommended if you actually want to understand what about the bust the Austrian theory can claim to explain, and what it doesn't claim to explain.

From a link I followed from reddit

On Hayek's edited volume Capitalism and the Historians.

Marx: tried, measured, found wanting. I know it's a repeat link but the articles are complementary.

From this week's Sports Business Journal:

Of the $100 million coming to the Magic, Martins said the team will put $50 million directly toward construction of the new arena, which is set to open in October 2010. The rest of the debt is earmarked for pre-opening costs, including capitalized interest costs and unspecified debt reserve requirements. That portion of the funds also includes $12.5 million for the construction of five new community gymnasiums as required by the team’s arena deal with the city.

Most of the $480 million arena cost, which includes a $100 million land-purchase price, is publicly funded, with the Magic responsible for $50 million in construction costs. The team will also pay $1 million in annual rent and will pay for any cost overruns.

I know, there are people (usually non-economists) who argue that the events held in the arena will generate some amount of new spending. Perhaps, but work done by myself and Dennis Coates (working paper here) suggests that events held in an arena generally have less of an immediate impact as proponents predict. The main reason? Most of those who attend the event are locals who simply redirect their entertainment (and perhaps food) spending to the event rather than generating new spending. How would locals generate NEW spending? One way would be to pull money from savings to spend today, but even then the total economic impact is ambiguous.

Sports economists have argued for years that spending on arenas, at least at the levels that cities have been spending in the past ten years or so, is not justified. The vast majority of the benefits of a new stadium are internalized by the team owner (here is a general-audience presentation concerning MLB stadiums and the associated academic paper and a general-audience presentation concerning NFL stadiums.) thus a proper burdern-sharing has more construction and maintainance costs on the shoulders of the team. Alas, the curernt political economy of sports arenas leads to the public picking up 2/3 of the bill on average (see slides 7 and 8 of these lecture notes).

BTW, the $1m in annual rent is approximately 0.23% of the arena's initial value. This is equivalent to renting a brand new $100,000 house for $19 per month. How sweet it is to be a major league franchise.

More links:

Skip Sauer on EconTalk concerning stadium economics (MP3 audio)
Devin Leary-Hanebrink: "Socialized Sports: Your Money at Work" (MP3 audio)

Cross posted at Heavy Lifting

The May 11, 1909 prints a letter to the editor that attempts to distinguish among the various Socialist movements:

Materialistic Socialists, alienated from religion by such religious leaders and teachers as Mr. Haldeman, set as their goal the material well-being of the masses. This is precisely why Christian Socialists so designate themselves, and sedulously seek to be so designated. it is not because their economics are different - the difference is not in their method, but in their motive. What is the Materialistic Socialist's goal is the Christian Socialist's first milestone, for he seeks the material advancement - the industrial enfranchisement - of the working classes chiefly as the starting point for them of a life race worth running - not, as now, a mad scramble for the bread that perisheth.

In this material advancement - that is, in the industrial justice which Socialism really means, however variously it may be defined - the Christian Socialist sees the foundation on which every man (not simply the few beneficiaries of past inequality or the present holders of favored and secluded positions) may, if he choose, live the life of Christ.

What I found interesting upon reading the letter is that writer feels the need to distinguish one brand of (low?) Socialism which seeks to use coercion and theft to provide bread alone and another brand of (higher) Socialism which seeks to use coercion and theft to provide bread and circuses. According to the letter-writer, the latter form is to be lauded more because, ostensibly, the ability to address "industrial justice" is simply a matter of organization not a matter of understanding how wealth is generated by individuals not by "the masses."

If the letter was written only to Socialists, perhaps the letter writer can get away with the assumption that Socialism will work in its broad goals; after all, preaching to the choir does not require addressing first premises. However, a letter directed toward a general (i.e., non-Socialist) audience would seem to require stronger evidence in support of the coercion and theft required to introduce and maintain any form of Socialism.

With Spring semester officially in the books, I'm working through numerous backlogs of email, notes, stuff to read, etc. I came across an interesting paper by Francesca Mazzolari and David Neumark in which they look at how immigration affects the composition of what we consume (gated). I haven't read the full paper, but here's the abstract:

We study potential economic benefits of immigration stemming from two factors: first, that immigrants bring not only their labor supply with them, but also their consumption demands; and second, that immigrants may have a comparative advantage in the production of ethnic goods. Using data on the universe of business establishments located in California between 1992 and 2002 matched with Census of Population data, we find some evidence that immigrant inflows boost employment in the retail sector, which is non-traded and a non-intensive user of immigrant labor. We find that immigration is associated with fewer stand-alone retail stores, and a greater number of large and in particular big-box retailers – evidence that likely contradicts a diversity-enhancing effect of immigration. On the other hand, focusing more sharply on the restaurant sector, for which we can better identify the types of products consumed by customers, the evidence indicates that immigration is associated with increased ethnic diversity of restaurants.

It reminds me of a question I ask in econ 101 to discuss how conventional measures of standards of living understate real improvements: "how many of you like Thai food?" Most hands go up. We then get to talk about how access to good ethnic food is a new phenomenon for a lot of people. I look forward to reading the entire paper and incorporating it into my notes for next semester.

Addendum: here are some related armchair prognostications from Mike Hammock. Mike points out something I didn't think about: cheaper information via the internet, Google, Facebook, iPhones, Blackberries, etc. will reduce the relative strength of chain restaurants and increase the relative strength of independent restaurants.

Addendum 2: in the spirit of our posts, we've decided to go to India Palace for lunch.

The May 11, 1909 NYT reports an interesting criterion for continuing an intercollegiate sport:

At the meeting of the Harvard Athletic Club this evening it was voted to abolish basket ball as an intercollegiate sport at Harvard on account of the lack of interest and financial support.

However, if interest and financial viability are the means by which a sport is tp be justified on campus, the vast majority of teams (male and female) would be disbanded or would have to move to a "pay to play" format. Notwithstanding many people's angst concerning football and (today at least) men's basketball, because of their large revenue generating potential and (subsequently) large expenditures, many of the sports on even the biggest campuses around the country would be in trouble without the cross-subsidization from net-revenue-generating sports (and let's not forget the taxes paid by the student body).

A letter to the editor in the May 11, 1909 NYT:

Of all the propositions regarding taxes, not one of them calls for reduced expenditure. All the schemes have for an object the making of the income equal the outgo, none for the reverse. An income tax is proposed, and, as a bid for mass favor, it is proposed to limit the tax to incomes in excess of $3,000. This leaves the vast bulk of people's income entirely free. The masses being in possession of the great majority of the votes, make the laws for the disposition and control of what the helpless few are mulcted of.

It is as outrageous and absurd to exempt incomes below a certain figure as it would be to exempt all real estate below that value from taxation.

After one hundred years we have come no further in our tax debate than these two paragraphs. How discouraging.

Of course, some might claim that taxation might be even more onerous but for the vigilance of various groups and individuals. Undoubtedly that is true, but it seems a small victory.

The New York Times reports that at the White House Correspondents' Dinner on Saturday night, comedian Wanda Sykes said about one of the President's prominent critics: "I hope his kidneys fail, how about that?”

Really? Wanda, I wish you hadn't said that. Try visiting a dialysis clinic and you'll see why it isn't funny. I'm hard to offend, but that offends me. I'm going to have a hard time finding you funny from here on. Kidney failure is something you shouldn't wish on anyone, even for laughs.

The May 10, 1909 NYT prints a letter to the editor concerning the hullabaloo over signalling Mars:

However large the signal, however ingeniously arranged, it would be absolutely invisible to any one upon Mars for the following reason:

When we look up into the heavens during the day we see only the sun, and at certain times the moon. All of the starry host are there, but they are blotted from our vision by the glare of sunlight. Not only are we blind to reflected light from the planets, but also to the direct glory of the fixed stars that shine with an intensity many million times greater than any device of man could possibly attain. Now precisely the same state of affairs exists on Mars. We are within its orbit, its illuminated side is always what we see, which means that whenever eye or telescope rests upon its ruddy disk it is broad daylight there. A Martian looking earthward would fail to see the earth itself, much less our puny signal. Just as with ourselves, he would find nothing save sunlight and blue sky above him.

All this upon the supposition that the signal be flashed from the earth in our night. If it be attempted during the day it needs no argument to prove that it would be lost in the blaze of sunlight reflected from the earth's surface.

I am open to conviction, and if the views here are erroneous would be glad to have some scientist explain in what particular.

[Update (5/11/2009 10:15EDT) Bob emails me some clarifying thoughts:

"If the earth was flat but still rotating (as it must so that we have a day and night), then I don't think it would help.

Flat or not, if a planet is in an inner orbit it is visible from the outer orbit planet. We can see Venus (and Mercury) for example. The difference is that planets on inner orbits will exhibit phases (like our moon does). Planets in outer orbits are always full. This is one reason why Venus varies so much in intensity to our eyes over the course of the year. It's much brighter when it's in its full phase. (Its closeness to the earth matters too.) Mars in contrast varies much less -- only varying in intensity because of variations in closeness to the earth, but this is less noticeable."]

There are many who propose that new sports venues create situations for new development around the stadium. This development is then used as a justification for using tax dollars to pay for the venue. Generally, those who make such claims are NOT economists and make the claims long before the stadium has been built. Sports economists have been fighting the good fight to disabuse politicians and the electorate from these development dreams. I would say that we have had a modicum of success as about 50% of stadium referendums fail (those who pass, however, cost more and more over time).

The May 10, 1909 NYT reports on a politician swimming upstream in the stadium-development racket:

Alderman John J.F. Mulcahy is preparing a bill which, if it passes the Board of Aldermen, will force the New York Baseball Club to seek other quarters. The bill will open a street through the centre of the Polo Grounds, and will enhance the value of much of the surrounding property, and for that reason Alderman Mulcahy's bill is receiving strong support of the property owners near the Polo Grounds.

The good Alderman had this to say:

I am a lover of all kinds of sports, especially baseball, and while I do not want to work any hardships on the New York Baseball Club, I believe that the property rights of my constituents should be safeguarded, and with this object in view, I have looked the matter up, and have had a private survey made. I am not preparing the bill, which I feel certain will be passed, and will make every effort to push it to a successful conclusion.

From an LA Times article:

The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.

Schwarzenegger's office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act. Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.

1. Readers currently slogging through exams or term papers might appreciate this syllabus for an internet age writing course. A related book by Mark Bauerlein is here.

2. Massachusetts is a salami slice closer to cradle to grave socialism--it now gives cars to welfare recipients.

3. The EU falls for the fixed number of jobs fallacy: EU calls for shorter work week to create jobs.

4. Skip Sauer offers some remarks on the passing of Jerry Scully.

5. No such thing as a free lunch--green car and energy edition.

[UPDATE 5/11--A reader sent an email cautioning about citing the story from The Atlantic; here's a snip of the message:

The thing about rare earths is that they're not actually that rare. And if the need for more of them was to become plain there are plenty of alternative sources. ... What all too many miss is that you don't really need to dig great holes in the gound to get a number of metals. ...

Looking at metals production as being about holes in the ground is to commit that great economic sin, of thinking that technology is static.

I agree--thanks for the email.]

6. Will Wilkinson's commentary on MarketPlace earlier this week is worth a listen.

The May 8, 1909 NYT reports the results of yet another one-gallon test in New York City. The contest involves giving each car one gallon of gasoline and then seeing how far the car can go before it stalls for a lack of fuel. The contest facilitates comparisons across different types of cars by noting the number of cylinders, the horsepower, and the total ton-miles the vehicle travelled.

The contest involved twenty vehicles and the paper reported the results as follows:

+-------------------------------------------------------------------------+

| prlow   prhigh               make   cyl   hp   miles   tonmiles   cheap |

|-------------------------------------------------------------------------|

|     0      850           CADILLAC     1   10    42.2     98.115       1 |

|     0      850              BRUSH     1   10    40.6     55.622       1 |

|     0      850              BRUSH     1   10    29.9     29.687       1 |

|   841     1250              BUICK     2   16    28.2     86.574       1 |

|   851     1250           OVERLAND     4   25    24.2     62.434       1 |

|   851     1250              BUICK     4   22      27     56.835       1 |

|  1251     2000           FRANKLIN     4   18    33.6    105.408       0 |

|  1251     2000   CHALMERS-DETROIT     4   24    25.7       78.3       0 |

|  1251     2000   CHALMERS-DETROIT     4   24      21     67.305       0 |

|  1251     2000           CADILLAC     4   25   21.55     67.128       0 |

|  1251     2000         KISSEL KAR     4   29    13.3     43.737       0 |

|  2001     3000           OVERLAND     6   35      16       53.5       0 |

|  3001     4000               FIAT     4   16    25.9     84.434       0 |

|  3001     4000             LANCIA     4   19    23.9     76.958       0 |

|  4001        .             LOXIER     6   51    17.1     98.433       0 |

|  4001        .           MATHESON     4   40    15.5       86.8       0 |

|  4001        .            RENAULT     4   22    13.7     57.956       0 |

|     .        .             THOMAS     4   18    27.7     76.839       0 |

|     .        .            DE DION     4   14      19      57.95       0 |

|     .        .            DE DION     4   14      18      55.62       0 |

The results suggest that vehicles with more horsepower generally attained fewer miles in the contest, as might be expected. However, vehicles that were in the lower price range (less than $1250) generally went further on a single gallon of gasoline. There is no explanation for this in the article, but perhaps cheaper cars had fewer "amenities"? Perhaps the cheapest Cadillac of the day didn't have a windscreen?

Unlike today's discussions about fuel economy (most especially the Federal government's fetish with mpg), the 1909 contest sensibly scored the vehicles not on their absolute miles driven but on the ton-miles driven. Horsepower and the price range of the car had no relationship with the amount of ton-miles the car attained. This suggests that even in 1909, before all the regulation and intervention in the automobile industry, there was perhaps a natural equilibrium between vehicle size (as proxied by horsepower and price) and total efficiency.

Perhaps today's vehicles should be rated on ton-miles per gallon rather than simply miles per gallon?

Consider a Chevy Tahoe attains 18mpg while carrying four adults (700 lbs) and a curb weight of 5300 lbs. Assuming no other cargo, the Tahoe would attain 54 ton-miles per gallon. My 2004 VW GTI has a curb weight of around 2900 pounds. Add my buck-sixty-five for total drive weight of around 1.5 tons. I regularly get about 33 mpg, yielding 50 ton-miles per gallon. Oops.

Who is better off - the Tahoe driver or me? Such interpersonal utility comparisons are common in the real world (certain individuals suggest that I am better off and others argue the Tahoe driver is better off) but do not represent good economics. Revealed preference suggests that the Tahoe driver thinks she is better off in her Tahoe relative to my GTI and I think the reverse. However, when it comes to measuring efficiency by ton-miles per gallon, the two vehicles are strikingly similar, which means that the Tahoe driver might have selected the Tahoe for reasons other than efficiency - say, perhaps, to lug around four kids in car seats, which cannot be done in the GTI.

I am sure there are vehicle dyads that would show the bigger vehicle attains considerably fewer ton-miles per gallon, but my guess is that among most of the mass-produced, best selling vehicles the ton-miles per gallon are remarkably similar, at least much more similar than generally believed.

If the Tahoe was so much less efficient in terms of ton-miles than the other mass-produced vehicles, the Tahoe would have never been created or would have died a long time ago.

. reg miles hp cheap

      Source |       SS       df       MS              Number of obs =      20

-------------+------------------------------           F(  2,    17) =   11.58

       Model |  726.857555     2  363.428778           Prob > F      =  0.0007

    Residual |  533.414775    17  31.3773397           R-squared     =  0.5767

-------------+------------------------------           Adj R-squared =  0.5270

       Total |  1260.27233    19  66.3301227           Root MSE      =  5.6015

------------------------------------------------------------------------------

       miles |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]

-------------+----------------------------------------------------------------

          hp |  -.3451104    .135522    -2.55   0.021    -.6310367    -.059184

       cheap |   7.909198   3.017203     2.62   0.018     1.543456    14.27494

       _cons |   29.45668   3.695215     7.97   0.000     21.66046     37.2529

------------------------------------------------------------------------------

. reg tonmiles hp cheap

      Source |       SS       df       MS              Number of obs =      20

-------------+------------------------------           F(  2,    17) =    0.51

       Model |   416.30988     2   208.15494           Prob > F      =  0.6079

    Residual |  6902.62958    17  406.037034           R-squared     =  0.0569

-------------+------------------------------           Adj R-squared = -0.0541

       Total |  7318.93946    19   385.20734           Root MSE      =   20.15

------------------------------------------------------------------------------

    tonmiles |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]

-------------+----------------------------------------------------------------

          hp |   .3361303    .487511     0.69   0.500    -.6924279    1.364689

       cheap |  -4.122081   10.85374    -0.38   0.709    -27.02146     18.7773

       _cons |   63.78989   13.29274     4.80   0.000     35.74467    91.83512

------------------------------------------------------------------------------

The May 8, 1909 NYT published the following letter to the editor:

In view of the remarkable achievements in aviation of the Wright brothers, may I not suggest the propriety of advocating an award to them of one of the Alfred Nobel Prizes? Their accomplishments come within the Department of Physics, and possibly also, within the Department of Peace. Public agitation seems to be necessary - vide the case of ex-President Roosevelt.

On this, his 110th birthday, we here at Division of Labour are honored to publish a guest post by Friedrich A. Hayek, winner of the 1974 Nobel Prize in economics:

Spontaneous Orders in Nature*
F.A. Hayek

It will be instructive to consider briefly the character of some spontaneous orders which we find in nature, since here some of their characteristic properties stand out most clearly. There are in the physical world many instances of complex orders which we could bring about only by availing ourselves of the known forces which tend to lead to their formation, and never by deliberately placing each element in the appropriate position. We can never produce a crystal or a complex organic compound by placing the individual atoms in such a position that they will form the lattice of a crystal or the system based on benzol rings which make up an organic compound. But we can create the conditions in which they will arrange themselves in such a manner.

What does in these instances determine not only the general character of the crystal or compound that will be formed but also the particular position of any one element in them? The important point is that the regularity of the conduct of the elements will determine the general character of the resulting order but not all the detail of its particular manifestation. The particular manner in which the resulting abstract order will manifest itself will depend, in addition to the rules which govern the actions of the elements, or their initial position and on all the particular circumstances of the immediate environment to which each of them will react in the course of the formation of that order. The order, in other words, will always be an adaptation to the large number of particular facts which will not be known in their totality to anyone.

We should note that a regular pattern will thus form itself not only if the elements all obey the same rules and their different actions are determined only by the different politions of the several individuals relatively to each other, but also, as is true in the case of the chemical compound, if there are different kinds of elements which act in part according to different rules. Whichever is the case, we shall be able to predict only the general character of the order that will form itself, and nont the particular position which any particular element will occupy relatively to any other element.

Another example from physics is in some respects even more instructive. In the familiar school experiment in which iron filings on a sheet of paper are made to arrange themselves along some of the lines of force of a magnet places below, we can predict tht e general shape of the chains that will be formed by the filings hooking themselves together; but we cannot predict along which ones of the family of an infinite number of such curves that define the magnetic field these chains will place themselves. This will depend on the position, direction, weight, roughness or smoothness of each of the iron filings and on all the irregularities of the surface of the paper. The forces emanating from the magnet and from each of the iron filings will thus interact with the environment to produce a unique instance of a general pattern, the general character of which will be determined by known laws, but the concrete appearance of which will depend on particular circumstances we cannot fully ascertain (emphasis added).

*-Excerpted from Law, Legislation, and Liberty, vol. I: Rules and Order, pp. 39-40. Chicago, University of Chicago Press, 1973.

My contribution to the Foreign Policy debate is here.

Mike Lester's cartoon in today's RN-T is appropriate given Obama's $3.6 trillion spending spree.

My hourlong discussion on free banking this morning with Mike Beitler is now available here.

A lot of us are probably neck-deep in papers, exams, grading, and all of the stuff we get paid for (as one of my grad school mentors said once, we teach for free but we get paid to grade). I found this story about St. John's College encouraging. Here's a capsule, courtesy of Windsofchange.net:

During WWII the Navy considered seizing the campus of St. John's via eminent domain in order to expand the Naval Academy. The fledgling New Program based on the great books of western tradition had just recently found a home there, on a campus whose oldest building was constructed before the Revolution, and with funding precarious, any move would probably kill this controversial endeavor outright.

The Navy built the addition across the Severn River instead.

HT: Jeremy Horpedahl.

*-The title of this post is borrowed from Roderick Long's excellent discussion of cooperation versus coercion. In a nutshell, the effectiveness of cooperative institutions is way understated and the effectiveness of coercive institutions is way over-stated.

A story from the May 7, 1909 NYT provides one anecdote of how less free we were in many ways one hundred years ago:

BERKELEY, Cal. - Startled by the announcement during the past week of ten engagements among the students of the University of California, the Faculty of that institution has decided to add a course in household economics to the curriculum of the coming Summer session. Several years ago there was an epidemic of engagements and secret marriages among the students of the university, and so serious was the matter considered that President Benjamin Ide Wheeler made a special address to the "co-eds," advising them against encouraging marriage until the men students had become wage earners.

This talk put an end to the secret marriages but the engagements have gone serenely on until the record of this week was made. The announcements have revived the question of the desirability of co-education and the discussion among the Faculty and students has already become animated.

More to the point, what business does a University's faculty and administration have in the area of freely entered contracts and arrangements between students? Indeed, discouraging the social or romantic interaction of students would seem to invite inefficiencies.

The college years provide many opportunities for economies of scale and scope. Obviously one dimension of economies of scale is the spatial agglomeration of a widely diverse faculty from which a student can take four or six courses a semester in a form of one-stop shopping.

One dimension of economies of scope is that an individual can gain an education at the same time that they are introduced to any number of similarly aged, and ostensibly similarly educated, individuals. I have never seen a mission statement that proclaimed a moral judgement concerning whether the introductions lead to romance, love, marriage, or co-habitation. Thus, the perceived or actual cultural pressure to "do something" must have been felt by the Faculty and administration, even if such pressure seems foreign to us today.

While it might be good advice for "co-eds" to hold off until their suitors have jobs, the same could have been said for the suitors, if society hadn't been busy restricting the employment opportunities through formal and informal institutions. Was there an assumption that individuals in their twenties were blindly entering marriage because of hormonal influences?

Gerald Scully has just died. Jerry practically started the whole field of sports economics some three decades ago. In recent years he did great work on economic growth and economic freedom, which is how I came to know him. He was a genuine good guy and great economist. And I learned a lot from him.

John Goodman has more here.

Once again my beloved Reds are off to a better than expected start. They are above 0.500 with a 14-13 record as of today.

Also once again, my wife is getting excited believing that in spite of all the fundamentals, this is the year the Reds will put it all together. "Remember 1990!" she will say. I mutter in reply something about "regression to the mean" and for the better part of a generation, the Reds have sadly proved me right.

I just pulled the numbers from MLB for current win percentage and run differential (runs scored minus runs allowed). Running a simple regression yields the following result:

Win% = 0.50 + 0.0035 RunDiff

R-Sq = 65.3%

So as expected a larger run differential converts into a higher winning percentage.

And sure enough my Reds are performing better than expected. Their negative 13 run differential projects to a 0.452 winning percentage--fully 6.6 points below their actual .519 showing.

Here are the data (sorted from high to low based on the residuals):

I will be live Thursday morning at 10am Eastern / 9am Central on the internet radio talk show "Free Markets with Dr. Mike Beitler". Tune in for the hour, or wait a week for the podcast version to go up. Topics we'll probably discuss: the financial mess, the Great Depression, free banking.

You can listen here to podcasts of Mike's previous shows with Steve Horwitz, Joe Salerno, and Bruce Yandle.

1. Dracula, in "Real Time." HT: Freakonomics.

2. A Hedge Fund Manager Speaks "Truth to Power." HT: Russ Roberts.

3. Foreign Policy discussion of Marx. My contribution will appear today or tomorrow.

4. Op-ed on "regime uncertainty" created by political rhetoric about price gouging, based on my recently-published paper on the subject.

5. Update: Secession, State, and Liberty, full PDF. HT: Jeff Tucker. I find this especially interesting in light of my recent readings on Southern historical memory and religious apologists for slavery in the early nineteenth century.

While trying to find ways to avoid grading the piles of papers awaiting my attention (30 econ 101 papers, 15 econ 323 research papers, for those of you keeping score from home), I read William Easterly's excellent post "The Vortex of Vacuousness." Easterly takes the development community to task for using a lot of words to sound profound while saying nothing substantive. Of course, one can say the same thing about academic writing. Here's my Lifehack.org archive, which has a few articles about writing. I've tried to expunge the meaningless and trite from my own writing (not always successfully), and I try to teach my students to do the same. If only politicians would do the same!

Controversy abounds over a decision by the local KFC franchisee to not offer grilled products because retrofitting existing restaurants would be too expensive. Taking my cue from Don Boudreaux, I sent the following to the local paper:

In its discussion of the local KFC franchisee's decision not to offer grilled products because the special grills would be too expensive, the Commercial Appeal editorialized on May 6 that "it seems reasonable to invest money now for customers who might still be around to buy the product several years later."

Competition means that unexploited profit opportunities do not stay unexploited for very long. If offering grilled products would be a good business decision, then I encourage the KFC franchisee's critics to stop squawking, enter the market, and show us all the error of our ways by earning profits in the market for grilled chicken.

The May 6, 1909 NYT has an interesting letter to the editor:

The only relief in sight from existing conditions [concerning the consumption of high-alcohol drinks such as "whisky, cocktails, and various other mixed drinks"], lies, in my opinion, in the imposition of a virtually prohibitive Governmental tax on all highly alcoholic liquors, whose increased cost would have a tendency to lessen their use by the masses. This would have the effect of an increased consumption of milder beverages like beer and wine and would mitigate the evil. To abolish it is impossible.

You can prohibit the manufacture and sale of intoxicating drinks by law, but you cannot prevent their use, even if you make their use a crime.

On the one hand the author wishes to impose prohibitive taxation to alter behavior - looking for a substitution effect - but ignores the possible "scale" effect that individuals might drink more beer or wine in order to obtain the same level of "bliss" that the harder liquors provide.

The author then argues that prohibitions will not work - as the country will so ably prove over the next twenty odd years in the case of alcohol and is still proving today in the context of illicit drugs.

However, what is the difference between prohibitive taxation and prohibition? Granted, when facing two bad choices of taxation versus prohibition, taxation might be marginally more efficient (from society's point of view) as evading a tax is more likely to be penalized with a monetary fine whereas violating a prohibition is more likely to lead to incarceration and the associated social costs of that incarceration.

Both policies increase the expected and actual costs of consumption from the point of view of the consumer, and as such will price at least some individuals out of the market for the good - perhaps driving individuals to substitute goods. However, there is an additional cost to such policies because in both cases sime consumers, in their quest to obtain an arbitrarily expensive or banned product, face increased risk of consuming an adulterated product, the so-called "bathtub gin" problem, which might prove more dangerous than the original "sin."

When open markets are closed, whether through taxation or prohibition, many of the self-reienforcing mechanisms that consumers take for granted are likewise lost. Under-appreciated elements of the open market such as contestability (that is, the threat of entry and competition), reputation, self-imposed quality and innovation, and, ultimately, the threat of legal action for maltreatment of consumers, are all lost when either prohibitive taxation or prohibition is employed.

The letter writer makes a plea against prohibition, something that might be gaining more traction in today's world, but makes the mistake of assuming that behavior of the masses can be materially and permanently manipulated through arbitrary taxation. Unfortunately, this philosophy is alive and well in our modern world.

An interesting letter to the editor published in the May 6, 1909 NYT:

Did it ever occur to our astronomers that possibly the mysterious "canals" on Mars might be signals intended for us to answer? I believe I have heard that these "canals" do not always appear the same. It is barely possible that the Martians are scientists of much greater ability than we can conceive of, and that through some remarkable means they are able to mark the surface of their planet with symbols which they expect us to decipher.

From the May 6, 1909 NYT:

The professed aim of the Socialists, or the one as to which most of them are, so far as we can make out, most nearly agreed, is the abolition of certain kinds of private ownership and of competition. The reason for the adoption of this aim that most of them advance is that private property, in the hands of its actual owners, is made the source of infinite wrong to the people generally; that it stimulates greed and injustice and cruelty and dishonesty; that it makes men heedless of the rights of others, and of the law which is intended to protect those rights; and that it gives rise to a system of organized plunder, under the form of law sometimes, often in violation of the law, by which the rich grow richer and the poor become poorer. They - the Socialists - insist that under the demoralizing and perverting influence of absolute ownership, the wealthy constantly evade their obligations to their fellows, and especially that they resort to every means acute and highly paid brains can devise to shift their share of the burdens of the cost of Government to the shoulders of the helpless poor. Competition the Socialists regard as a system that aids in the attainment of these ends, arming the rich, disarming the poor, reinforcing the strong, tending to make the weak helpless.

Free-market philosophy seems to be against the ropes at the moment; perhaps it will be for the next few years. However, when the ponzi scheme is revealed, whether through bureaucratic rationing or through massive overt and covert taxation, will the political will exist to roll back the regulations and policies that the current generation of politicians are using to purchase their continued employment?

Story here. It isn't perfectly anarcho-capitalist--the airport will be getting a small fee from the city for every passenger--but it's a step in the right direction. HT: Betsy Carden.

from XKCD. HT: Steve Horwitz.

The May 5, 1909 NYT reports:

BATON ROUGE - Elmore Williams...was sentenced in De Soto parish yesterday to one hour in prison for involuntary manslaughter and was taken to the State Penitentiary immediately to serve his term.

Williams made more money in serving his sentence than he had ever made in the days of his life. On his discharge he got the customary $5 in cash, a new suit of clothes, and a pair of shoes.

I seem remember President Clinton referring to his early years in Hot Springs, Arkansas, as having some impact on his life. To be honest, I didn't pay that much attention.

But if true, then an event that merited four lines in the May 5, 1909 NYT might have yielded such unintended consequences:

LITTLE ROCK - The Senate, by a vote of 27 to 12, today passed the Wadley bill, permitting racing at Hot Springs. The bill will be reported to the House tomorrow.

The May 5, 1909 NYT reports on the forthcoming monthly Bulletin of the Chamber:

Comparing the records of 1908 with those of 1858, a most remarkable parallelism is revealed. They were both years of partial recovery from devastating panics that had swept the country in the years preceding. The financial crises of 1857 and 1907 not only occurred exactly fifty years apart, but they presented points of striking resemblance, so that of all the panics of the country no other two had more in common. There were the same antecedent years of immense gold production with its attendent speculation and inflation of prices. there was the same multiplication of banks and expansion of banking credits. There was the same enterprise in railroad extension. There was the same waste of capital in unproductive works. Preceding the panic of 1857 occurred the Crimean War; preceding that of 1907 occurred the war between Russia and Japan; both were heavy drains upon the world's resources.