Division of Labour: March 2010 Archives
March 31, 2010
Posted by Edward J. Lopez at 08:53 PM
Palmer on the Broken Window Fallacy
Here's an excellent (and short) video of Tom Palmer discussing the Broken Window Fallacy (HT: Steve Horwitz). It's a venerable fallacy, but it's one from which I hope we might be recovering. A couple of quick Google searches couldn't turn up anyone saying that the recent earthquake in Haiti will be good for Haitian economic growth.
I had a Mises Daily a few years ago on the fallacy. Bastiat inspired Henry Hazlitt's Economics in One Lesson, which I discuss here. Here's a series of interviews with economists on different parts of Economics in One Lesson.
Cross-Posted at the Mises Blog and the Beacon.
March 30, 2010
What I've Been Writing Lately: On Timothy Ferriss, The Four-Hour Workweek
Does anyone remember the recipe?
For bathtub gin, that is. One wonders what the behavioral response if this ballot initiative in California were to pass:
A measure that would raise the excise tax on a 750 ml bottle of wine from 4 cents to $5.11 has been cleared for circulation by the Secretary of State. Proponents can begin collecting the 433,971 signatures needed to put the initiative on the November ballot.
I love the (under)-statement "due to a likely decline in consumption." You think!?!? I would argue that the statement should read "due to a likely decline in taxable consumption."
I suppose the two proponents are part of a temperance movement, which is about the only rationale that can explain such massive tax hikes. If you live in California or work in the California wine industry or service industry you have to hope that such an initiative a) can't get the required signatures or b) can't get the necessary votes.
HT: Christian D.
March Madness: I need a Bracket Bailout!
March Madness means, among other things, bracket picks, office pools, etc. Both of my brackets--the "real" bracket and my "which school has the highest-ranked econ department?" bracket--are completely underwater. It isn't my fault: the upsets at various stages sank my real bracket, and my hypothesized correlation between econ department ranking and probability of victory just didn't quite pan out. No one could have predicted that. Besides, I'm no expert--I don't really follow college basketball.
In the spirit of the times, I'm asking for a bailout. Please click on the button below to contribute $1 to Art Carden's Bracket Bailout. Alternatively, you can send me an email explaining not only why you aren't contributing, but why you shouldn't. I'll send my spare copy of Eugen von Boehm-Bawerk's Karl Marx and the Close of His System to whoever submits the best 500-word-ish answer by (say) midnight on Friday.
Price elasticity of beans c. 1910
From the March 30, 1910 NYT:
The price of Boston baked beans has increased over 33 1-3 per cent. during the past two years, and caused a decrease in the consumption of approximately 9 per cent. Two years ago beans retailed at 7 and 8 cents per quart, while they now cost 10 and 11 cents.
The arc-elasticity of demand for beans = -9%/33.3% = -0.27. To put this in some perspective, a 1996 meta-analysis of the price elasticity of demand for gasoline found that the short-run price elasticity of demand for gasoline is -0.26.
Perhaps people really, really, really liked their Boston baked beans in 1910?
March 29, 2010
Incentives matter c. 1910
From the March 28, 1910 NYT (there wasn't anything interesting in the March 29, 1910 NYT):
A Time for Reflection: Thomas Sowell on Experts
As part of my haul from the Goodwill Book Store in Panama City last week, I picked up a copy of Paul Johnson's Intellectuals (here's a recent updated version; Johnson's portrait of Karl Marx is illuminating and disturbing, but I'll have more on that later). Here's Thomas Sowell discussing his new book Intellectuals and Society, which I plan to read soon. I've read that it's a sequel of sorts to Johnson.
Mike Lester on Obamacare
Posted by E. Frank Stephenson at 08:52 AM
Maybe They Should Call It the Waxman Effect
The abstract of a new NBER WP by Lauren Cohen, Joshua D. Coval, Christopher Malloy:
This paper employs a new empirical approach for identifying the impact of government spending on the private sector. Our key innovation is to use changes in congressional committee chairmanship as a source of exogenous variation in state-level federal expenditures. In doing so, we show that fiscal spending shocks appear to significantly dampen corporate sector investment and employment activity. These corporate reactions follow both Senate and House committee chair changes, are present among large and small firms and within large and small states, are partially reversed when the congressman resigns, and are most pronounced among geographically-concentrated firms. The effects are economically meaningful and the mechanism - entirely distinct from the more traditional interest rate and tax channels - suggests new considerations in assessing the impact of government spending on private sector economic activity.
March 28, 2010
Farmers leave strawberries rotting in the fields after price drops
Strawberry farmers in Florida are facing such a sharp collapse in prices for their berries that many are deciding to simply leave huge tracts of the berries to rot in the fields.
On Twitter: 140-Character Microblogging
I joined Twitter a few months ago; you can follow me here. Here's an interesting article on the effective use of Twitter. I just made a note to myself to give Twitter assignments in my classes this Fall ("use exactly 140 characters to explain X"). Cross-posted at The Beacon.
Baseball Card Bubble
Here's a Freakonomics entry on a new book about baseball cards. The mention the late 1980s/early 1990s baseball card bubble was especially interesting because that's when I was collecting. When I discovered Ebay in the early 2000s, I bought a bunch of unopened boxes of late 1980s/early 1990s cards. They're there for nostalgia and also to be used for in-class demonstrations.
I also committed an entrepreneurial error in 1997. I used about $150 to augment my already-enormous collection of cards featuring my favorite player: Mark McGwire. Had I sold out after he broke the home run record, I would have turned a tidy profit. I'm not sure what the cards are worth now.
March 27, 2010
Things I'm Glad Did Not Happen in Georgia
State police have charged a central Pennsylvania man with public drunkenness after he was seen giving mouth-to-mouth "resuscitation" to a long-dead opossum along a highway.
Posted by E. Frank Stephenson at 11:00 PM
On Obamacare and High Deductible Health Insurance Policies
A former student's comments on his FB page:
My current health insurance is illegal under the Health Care Reform legislation just signed into law. My deductible is higher than the maximum $2000/individual deductible allowed under Section 1302(c)(2)(A)(i). Paying the first several thousand dollars of my health care each year encourages me to shop around and be price conscious in my health care spending. Why is the gov't discouraging this?
This gets at the heart of why, unless it resorts to death panel style rationing, Obamacare won't "bend the cost curve." Instead of reducing the role of third party payments, the new law leads to even more third party payment.
ADDENDUM: Closing the "donut hole" in Medicare Part D is a similar mechanism that will raise rather than lower medical costs.
Pot Growers and Baptists
The smell of pot hung heavy in the air as men with dreadlocks and gray beards contemplated a nightmarish possibility in this legendary region of outlaw marijuana growers: legal weed.
ER Visits by the Uninsured
One of the frequently cited effects of having many uninsured folks is that they drive up medical costs by using the ER instead of going to a family doctor or other provider. A new NBER Working Paper by Michael Anderson, Carlos Dobkin, and Tal Gross suggests that this claim is (surprise, surprise) untrue. Here's part of the abstract:
[W]e exploit a sharp change in insurance coverage rates that results from young adults “aging out” of their parents’ insurance plans to estimate the effect of insurance coverage on the utilization of emergency department (ED) and inpatient services. Using the National Health Interview Survey (NHIS) and a census of emergency department records and hospital discharge records from seven states, we find that aging out results in an abrupt 5 to 8 percentage point reduction in the probability of having health insurance. We find that not having insurance leads to a 40 percent reduction in ED visits and a 61 percent reduction in inpatient hospital admissions.
March 26, 2010
Where's the U.S. sovereign debt ceiling?
I don't know, but the market seems to be saying that we're palpably moving closer.
“Everyone thought we would see rising rates due to higher inflation, but it appears the bond vigilantes are demanding a higher real rate due to concerns about Treasury issuance,” says George Goncalves, head of fixed income strategy at Nomura Securities.
“This appears as a credit shot across the Treasury market bow and concerns over the US fiscal spending could well move to the dollar and equities,” says Mr Goncalves.
“The spotlight on Greece only helped to reveal that the US’s kitchen – with Federal and state budget balances – was itself full of cockroaches,” says William O’Donnell, strategist at RBS Securities.
The story is here. I'll admit it. I got the link from Drudge.
Posted by Noel Campbell at 10:45 PM
What is the evolutionary advantage of envy? I can hypothesize some advantage for nearly every virtue and nearly every vice, but envy has stumped me.
I do mean "envy," and not "jealousy." I'm talking about the type of envy wherein you resent someone for some perceived advantage he enjoys, even though you're aware it could never be yours; the resentment that leads you to do yourself injury if doing so could also injure the object of your envy, such as the desire to punish the "successful" even if it costs you to do so.
I'm convinced envy has some evolutionary component. Envy, to some degree, appears present in every human society, present or past. Envy also imposes serious costs on the envious and on their objects. Unless envy was selected for SOMETHING I doubt those two statements could be mutually true. But what was it selected for?
Please send your thoughts to email@example.com
Posted by Noel Campbell at 10:35 PM
Samizdat: The Libertarian Alarm Clock
You might have read the story about the Socialist Alarm Clock. Here's one version. A friend who wishes to remain anonymous sent his libertarian version and asked me to post it (cross-posted at the Mises Blog and The Beacon):
"This morning I was awoken by my alarm clock built by the ingenuity of millions of individuals all working for their own gain, but whose efforts were coordinated by the prices for labor and materials and finished goods provided by the free market. I then took a shower in the clean water provided by the shower head, pipes, and sanitation facilities whose construction also involved the efforts of thousands of people acting in their independent interest. After that, I turned on the TV to The Weather Channel, whose owners include one of the largest multi-national corporations and private equity companies, to see the week's forecast presented in a clear, informative (and even entertaining) manner. I watched this while eating breakfast of General Mills’ inspected food and taking drugs whose strong brand name gives me confidence in its safety.
Libertarianism v. (American) Liberalism: Has the Market Spoken?
Last night, we went to the Goodwill bookstore in Panama City. It's a real gem of a place, and we bought a pretty good pile of stuff. Among our treasures were signed copies of two books by Jimmy Carter and a signed copy of Harry Browne's Why Government Doesn't Work. Interesting fact:
p(two signed books by Jimmy Carter) = 0.75*p(one signed book by Harry Browne)
Granted, Browne is deceased, but it's odd that the signature of the guy who ran for President on the Libertarian ticket in 1996 and 2000 is worth more than two signatures by someone who was actually President. Does this tell us something about liberty? Or does it just tell us something about Jimmy Carter?
March 25, 2010
Real HHS Spending
Piracy business model
From page 99 of a UN report on Somalia via UN Dispatch:
A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.
Interesting discussion fodder for a principles class?
What I've Been Writing Lately: How Shall We Live?
With Paul Cleveland (and based on one of his lectures), in the new issue of The Freeman. Paul's book Unmasking the Sacred Lies is very interesting; I bought copies for family and friends for Christmas. Here's Paul discussing his book at the Austrian Scholars' Conference in 2009:
March 24, 2010
Baptists, Bootleggers & Vidalia Onions
From the Associated Press:
The smell of pot hung heavy in the air as men with dreadlocks and gray beards contemplated a nightmarish possibility in this legendary region of outlaw marijuana growers: legal weed.
If California legalizes marijuana, they say, it will drive down the price of their crop and damage not just their livelihoods but the entire economy along the state's rugged northern coast.
Many were also enthusiastic about promoting the Humboldt brand of pot. Some discussed forming a cooperative that would enforce high standards for marijuana and stamp the county's finest weed with an official Humboldt seal of approval.
New working paper
I have recently finished a new working paper focusing on the impact of NCAA tournament and NIT participation on home regular attendance. The paper has been accepted for inclusion in a collected volume so I will just post the abstract rather than the entire paper.
If you are interested in the paper, email me and I will forward you a copy (cadpi - at - yahoo - dot - com)
How much spending is too much spending?
My own guess is that the United States will likely raise taxes substantially, and taxes as a percent of GDP will reach levels never seen in U.S. history (although common in Europe). The politics of that will be fascinating to watch. If the political process is stymied as our leaders debate the relative merits of tax hikes versus spending cuts, bond investors may get nervous, and we could witness either the Krugman inflation scenario or the much less likely default scenario.
Bravo Bush II, Obama and Congress.
Suits over Suites
From this story in the Fort Worth Star-Telegram:
Cowboys Stadium LP, an entity controlled by Cowboys Owner Jerry Jones, has filed 17 lawsuits in Tarrant County, and the "largest one is against the Dallas Center for Cosmetic Dentistry." The suit indicated that the center "signed 20-year leases for six suites with an annual fee" of $2.1M. Cowboys Stadium LP is suing for $42M, "what the dental group would have paid over the course of the leases." The suit said that the group "paid only $210,000." The Cowboys are "suing for full payment of the 20-year leases," a total of $113.8M under current terms. Baker notes the team "collected $711,500 in down payments from those leaseholders, but they should have paid" $3.2M by now. Cowboys Stadium LP attorney Levi McCathern said that the lawsuits "affect only a fraction of the 300 suites that were leased." But McCathern added, "Signing up for multimillion-dollar luxury suites is big business; they knew what they're doing."
New working paper
I have a new paper with co-authors Dennis Wilson and Jason Berkowitz investigating fan interest in NASCAR:
Available at SSRN. Comments always welcome.
Unicorn parking in the back
A paragraph from this NY Times article:
"We think it's [the health care bill] a big step forward," said Bill Vaughan, a policy analyst at Consumers Union. "It's going to provide a peace of mind that many Americans who really want or need health insurance will always be able to get a quality product at a reasonable price regardless of their health or financial situation."
For their next trick, Congress will pass legislation that will make water run uphill.
How about this for partial-equilibrium analysis:
But there is no question that the legislation should benefit consumers in various ways. Beginning in 2014, for example, many employers — those with 50 or more workers — could face federal fines for not providing insurance coverage. Several of the other changes would take effect much sooner.to what kind of "consumers" does the story refer? Is it the consumers of health care? Maybe prices of health services come down when more people have health insurance but we also know that prices might (probably) increase. Do the consumers of the products of the firms impacted by the referred to regulation benefit? My a priori bias suggests that,on net, probably not. However, it is possible that I am wrong.
Firms with 55 workers might fire six of them to get below the mandated threshold, thereby reducing service/quality on the margin while remaining at profit maximization (which unfortunately might be in negative-profit land). The increased costs might push some firms out of business, reducing the supply of the "widget" and potentially raising price. On the other hand, depending on the "widget" in focus we might see an increase in concentration in the "widget" industry which might reduce quality/quantity and increase price (the standard monopoly outcome) or might increase quantity and reduce price (the economies of scale/natural monopoly outcome).
More partial-equilibrium analysis, I know, but I don't specialize in the general equilibrium stuff.
I am not the only one skeptical that Congress, much less economists, lobbyists, and the average Joe, having a firm grasp on the general equilibrium repercussions of the various portions of the bill, much less for its entirety.
Will Europeans Pay our Medical Bills?
Arnold Kling points to a paper about European fiscal imbalances. Social Security in the US is a time bomb, but the situation is worse in Europe. It turns out that there are limits to the amount of capital that can be consumed.
What does this have to do with the recently-passed health care legislation? When European taxes start rising to pay for their social obligations, the US will look better and better for potential migrants. Further, European countries will probably start raising corporate taxes, as well, which will push capital out of Europe and into the US. Perhaps President Obama and others are counting on large infusions of capital (physical, human, and financial) from overseas as European welfare states self-destruct.
Update: Here's a post by Greg Mankiw on these issues. Is Berkshire Hathaway now the standard for the risk-free rate?
Amazing view behind the curtain
The Iron Curtain, that is. Several pages from the in-the-works memoir of sportswriter Paul Zimmerman before his recent stroke.
His descriptions of the 1980 Olympics in Moscow read like George Orwell's 1984.
March Madness - Starting Salary Bracket
Duke, Cornell, Georgetown, and Vanderbilt comprise the final four.
March 23, 2010
New Book: The Cultural and Political Economy of Recovery
Congratulations to my colleague Emily Chamlee-Wright on the publication of her new book The Cultural and Political Economy of Recovery. Full information below the fold. Suggest your library order a copy today!
Read More »
The Cultural and Political Economy of Recovery
By Emily Chamlee-Wright
In August 2005 the nation watched as Hurricane Katrina pummelled the Gulf Coast. Residents did not just suffer the personal costs of a home that had been severely damaged or destroyed; frequently they also lost their entire neighbourhood and the social systems that under normal circumstances made their lives "work". Katrina raised the questions of whether and how communities could solve the complex social coordination problems catastrophic disaster poses, and what inhibits them from doing so?
Professor Chamlee-Wright investigates not only the nature of post-disaster recovery, but the nature of the social order itself – how societies are able to achieve a level of complex social coordination that far exceeds our ability to design. By deploying the tools of both political economy and cultural economy, the book contributes to the bourgeoning literature on the social, political and economic impact of Hurricane Katrina.
Through a selection of case studies, the author argues that post-disaster resilience depends crucially upon the discovery that unfolds within commercial and civil society. The book will be of particular interest to postgraduate students and researchers in economics, sociology and anthropology as well as disaster specialists.
February 2010 | Hardback: 978-0-415-77804-6 £80.00 NOW £64.00 $130.00 NOW $104.00
For more information visit: http://www.routledge.com/9780415778046
« Close It
What is this system designed to maximize?
I'm trying to comply with the law, but Arkansas surely doesn't make it easy.
N.B.: Conway city is in Faulkner County; Morrilton city is in Conway County. The counties border each other, and the cities are 20 miles apart.
On the first of January I moved fifteen miles from Faulkner County to Conway County.
This week I have tried to transfer my personal property (i.e., vehicles). (1) One trip to the state revenue office to renew my driver's license, but I wasn't allowed to transfer my cars because (2) I had not cleared the Conway County Tax Assessor's Office. A trip from Conway to Morrilton, and I finally had my assessment notice for personal property in Conway County. Then, I was required to go to (3) the Conway County Tax Collector's Office. Conway County Tax Collector's Office called the Faulkner County Tax Collector's Office. Faulkner County would not transfer my records until I paid my taxes owed to Faulkner County for 2009: $390. A trip back from Morrilton to Conway, to wait at the Faulkner County Tax Collector's Office. Upon calling my number, the tax clerk told me I needed to (4) go to the bank because she could only accept cash or money order, now that I lived outside of the county. After going across town to the bank, (5) I returned to the Faulkner County Tax Collector's Office and paid my vehicle taxes for 2009. Then (6) I returned to the state revenue office to transfer my registration from Faulkner to Conway.
(7) I returned home, where over a PBR (cans, of course) I pondered switching from cars to a mule.
Posted by Noel Campbell at 03:19 PM
Add Your Name to History
Organizing for America will establish a permanent archive with all the signatures, so that generations to come will have a record of those who stood together in this moment and won this fight for our future.
If you're considering signing this, I urge you to consider what you're doing very, very carefully: if you want to take ownership of "this great achievement," you're also taking ownership of its unintended consequences. For just one example, Bryan Caplan identifies the enormous adverse selection problem the legislation creates. He's also trying to think of Ehrlich/Simon style bets based on the legislation. I am, too: I'm certain that this is going to cost a lot more and deliver a lot less than the bill's proponents seem to think.
Addendum 2: I was looking for this earlier but couldn't find it and didn't want to say "I read somewhere that...". Here's Douglas Holtz-Eakin on the CBO's projections of the costs of health care (HT: Mike Sykuta). Holtz-Eakin calls it "fantasy in, fantasy out." Unfortunately, the "independent, nonpartisan" CBO apparently has its hands tied in terms of what it can and cannot question in the legislation it is supposed to analyze. Greg Mankiw points us to the CBO's caveats.
March 22, 2010
Mike Lester on Obamacare
What kind of monetary institutions would be best for the Bahamas?
You can't tell from the banquet hall wall behind me, but here I am in the Bahamas ten days ago, thanks to the kind folks at the Nassau Institute. I'm talking about why having the Central Bank of The Bahamas weakly pegging the Bahamian dollar to the US dollar is dominated by having a currency board, which in turn is dominated by free banking on a US dollar standard. This is part 1 of 11.
Here I am at the College of The Bahamas, talking about the market theory of money and banking. Same day, same suit. This is part 1 of 6.
Smoke 'em if you got 'em
Well, folks, the brand new world of free-lunch health care has arrived in the United States. Some have opined that passing this bill will usher in a blessed period of gridlock while the "change" is litigated. Others have opined that the stage is now well and truly set for a 1994-style GOP takeover, complete with a sense of mission. I agree that both are possible, but my most certain conviction is that the ratchet has turned. I'm also convinced that only litigation will "un-turn" the ratchet.
Relatedly, don't look to the stock market to predict "the market's" take on health care nationalization. Stock price event studies based on political events are notoriously difficult to undertake. The market has probably priced in most of the nationalization effect in dribs and drabs over many months.
Posted by Noel Campbell at 11:12 AM
Building Brand Equity: EFW Index lecture
An edited version of a recent talk I gave on the EFW index in Wichita, Kansas:
March 21, 2010
Compare and Contrast II
In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false.
A news report from The Sun (via Instapundit):
A patient was left infertile after doctors operating on his testicle removed the wrong one. The bungling medics' mistake has prompted an urgent overhaul of procedures at West Suffolk Hospital in Bury St Edmunds.
Previous installment here.
Posted by E. Frank Stephenson at 07:25 PM
Mike Lester on "Free" Healthcare
Here (sorry for not uploading--some sort of tech gremlin).
Posted by E. Frank Stephenson at 03:29 PM
On Feminism and the Forbes Richest People List
Traditionally, one might expect feminists to tut-tut about women comprising less than 10% of the Forbes Richest People list.
Not Sarah Gilbert of AOL Daily Finance. She considers it a badge of honor. Instead, she considers membership on the list to be an "indictment" because “It is proof that, instead of working to better the lives of employees and consumers who are 'stakeholders' of your business enterprises, you have instead extracted vast wealth.” Can you say zero sum fallacy?
Thanks to Dan for the pointer.
March 20, 2010
Process Costs of Health Care
In his excellent A Conflict of Visions, Thomas Sowell points out that people with the constrained vision tend to emphasize social processes while people with the unconstrained vision tend to emphasize social outcomes. Here, Steve Horwitz asks a good set of questions on process costs. In this video, Reason.tv discusses the process by which the government might increase its intervention in health care (HT: Cafe Hayek).
March 19, 2010
Stuff To Read While You Watch College Basketball
1. My new Forbes piece on immigration.
2. Seth Simonds' great Lifehack piece on using Twitter. A key selection:
3. Sidestep Stoner Syndrome
3. A 2002 article about Netscape suing Microsoft for "crushing" Netscape Navigator. Having just switched from Firefox to Chrome and having kept kind of an eye on the battle between MySpace and Facebook, the worries about a Microsoft browser monopoly seem kind of silly in retrospect. Here's are some links from 9/1/09 on natural monopoly.
4. Also, watch J.C. Bradbury on Stossel talking about stadium subsidies.
Minnesota gets ready to walk the plank?
Having spent a lot of money on the new Target Field for the Twins and a new football stadium for the Minnesota Gophers, the city of Minneapolis and the state of Minnesota seemed to have learned a lesson and publicly stated that there was no money for a new Vikings stadium and that they might have to make do with the Metrodome.
Indeed, a proposal was floated a few weeks ago to sell the Metrodome to the Vikings for a single dollar in order to give the team a millstone around their neck which would encourage them to stay in the city. The team wisely (from their point of view) turned down the offer.
Today, however, comes a story about the Vikings seeking some public money for a new artifical turf for the Metrodome and some remodeling of old Twins ticket boxes, etc.
That in-and-of-itself is not so surprising and probably not even a poor investment, although it seems the team doesn't want to pay. However, that's not really my point. The story contains the following short paragraph:
Vikings VP/Public Affairs & Stadium Development Lester Bagley said team officials have had "excellent discussions behind the scenes" with state leaders over a new stadium for the team. Bagley: "The governor has stepped up and is engaged with his staff on a solution." Bagley added that among the funding solutions being discussed are "using taxes generated by the Vikings and economic activity around the stadium, and creating a Vikings-branded state lottery"So state leaders are having back-room negotiations with the team? That's what happened in Arlington (albeit the mayor did the secret negotiations). Bad precedent.
How about the funding options?
1. Taxes generated by the Vikings might be used to pay for a new stadium? Taxes on what? Tickets? Okay, but there is not enough money in ticket taxes to fund a new stadium.
2. Economic activity around the stadium? More and more research is finding that the economic activity in the area immediately around the stadium is relatively low and events at the stadium might actually decrease taxable activity throughout the host city.
3. A state lottery branded with the Vikings image/logo? This would set up a (albeit voluntary) tax on the entire state to pay for a stadium in one city. L
It is tough to see how these three funding sources would be enough to generate enough money to pay for a new stadium. Arlington's debt service on their $325 million contribution to Cowboy's Stadium is approximately $20 million per year for the next thirty years. Is it safe to predict a similar level of debt service being covered by a state lottery, local taxation and taxes on tickets?
If the Vikings manage to insinuate themselves into this legislative session, it likely will be with a bill to build a new stadium on the current site of the Metrodome, the team said Thursday.
Beware secret negotiations between local/state/federal "leaders" and private business, and beware attempts by private companies to "insinuate themselves into the legislative" process. We know how this works out.
March 18, 2010
Graph of the day
This site shows a useful piece of history regarding pollution.
Timberlake on the gold standard
The latest Econ Journal Watch podcast, hosted by yours truly, is now available for listening. In it I talk with Richard H. Timberlake, my former colleague at the University of Georgia, about the historical record of the gold standard and central banks. In particular, Timberlake argues (contrary to Barry Eichengreen, Ben Bernanke, and Peter Temin) that the failures of the monetary system between the wars were due to central bank intervention and mismanagement, not to the gold standard. After all, the classical gold standard worked well before WWI. At that time central banks either didn't exist (as in the US) or let the gold standard do its thing to equilibrate money supply and demand. Toward the end we talk about Bernanke's views and current monetary policy.
Something is spinning under the altar of St. Peter's Basilica
This Yahoo News piece caught my eye: President Barack Obama's sweeping health care legislation won precious support from a longtime liberal holdout in the House on Wednesday and from a retired Catholic bishop and nuns representing dozens of religious orders...
Shortly after Kucinich's announcement, a letter was released from 60 leaders of women's religious orders urging lawmakers to vote for the legislation...a letter released by Network, A National Catholic Social Justice Lobby.
So I did some snooping and found Network's Voting Record of the 111th Congress, First Session. Here are some summary stats of the score received by legislators voting with Network:
It's hard to argue, as the article does, that "The endorsements reflected a division within the church," as if a group that is so partisan in its rankings of legislators could be called a legitimate unbiased voice of Catholic opinion. The words "peace and justice" are splashed all over the site, which won't help shake the image of such groups being more concerned with economic issues than life issues or fidelity to the Church. Instead of quoting one retired Bishop who supports this bill (even with the inclusion of abortion funding), the article downplays the opposition to the bill (here & here) of the US Conference of (nonretired) Catholic Bishops.
March 17, 2010
NCAA Picks by Econ Dept Ranking
If Econ Department Rankings determined winners in the NCAA tournament, the Final Four would be Maryland, Minnesota, Wisconsin, and UC-Berkeley, with Berkeley beating Minnesota in the Finals.
March 16, 2010
Perks? What Perks?
From the Dallas Morning News comes a story about the pending destruction of Texas Stadium in Irving, Texas. The Cowboys moved to their new stadium in Arlington last year and the old stadium is being imploded to make room for new development.
The story points out that to witness the event in one of the adjoining parking lots will cost $25 per car. That's one way for the city to make some coin on the end of the stadium's existence.
Years ago I suggested that the city of Irving should have auctioned off the right to push the detonation button (or perhaps auction it off to a number of people who might or might not push the actual button) - figuring that some NY Giants or Washington Redskins fan would pay a lot of money to push the final button on the stadium. Alas, my suggestion seems to have been ignored.
However, in an interesting twist of how politicians enjoy perks from their position when it comes to sports and publicly funded stadiums, the story has the following paragraph:
Under an exit agreement between the city and the team, those items can't be sold for 10 years. The proposed policy would allow Irving City Council members to give five pairs of seats and 15 turf memorabilia pieces to whomever they choose.So, City Council members get to take five pairs of seats to hand out like lollipops? That's a perk I hadn't seen before.
The Ludwig von Mises Institutet i Sverige (HT: Jeff Tucker).
The Process Demonstrates Hayek's Importance
You might have read some of the discussion of the (apparently controversial) decision to include Hayek among the people studied in Texas schools (here's Russ Roberts with comments and links). I think Hayek's importance is demonstrated in debate: it's perhaps ironic that he is being inserted into a curriculum through a very un-Hayekian process of central coordination.
Is Hayek important? Yes, and I would suggest that anyone in any department who has The Communist Manifesto on his or her syllabus should add Hayek's "The Use of Knowledge in Society," Mises's "Economic Calculation in the Socialist Commonwealth," and possibly Hayek's The Road to Serfdom (hey, there's an idea for Econ 100...). For the state to assume it knows all and impose Hayek by fiat, though, is pretty un-Hayekian.
A quick word on standards: I would suppose that being a public school teacher in the face of such controversies is demoralizing because control of your classroom is in the hands of some far-off board or bureaucrat indulging the pretense of knowledge. Theirs is a fatal conceit for everyone involved: teachers' hands are tied, students' options are limited, and everybody loses. I know I would be demoralized if my syllabi were handed down from a College Board in Nashville or Washington, and I'm pretty sure our students would be demoralized if they couldn't take their business elsewhere.
We've got a map for that
... and it runs through Washington. This analysis from Harvard's Nieman Watchdog:
[G]iant telecoms and cable companies -- and the lobbyists, think tanks and astroturf groups they fund -- have so corrupted the debate over broadband that what may look like progress actually amounts to small steps toward antiquated standards that taxpayers have already paid for many times over.
March 15, 2010
Free Banking for $0
Update: The book has been claimed and my estimate of the probability that markets are generally efficient has been revised upward.
Reposted: Boudreaux on Voting
In light of today's EconTalk discussion with Don Boudreaux on Public Choice and voting, I decided to repost this entry from November:
Here's Don Boudreaux on why he refuses to vote (HT Don Boudreaux). Perhaps non-voting can be an exercise in civic virtue: by abstaining, non-voters reduce congestion at the polls and make life easier for those who derive great satisfaction from voting. I've written on voting several times. Don's essay is well worth reading.
I find the emotionalism that surrounds voting truly perplexing. During the 2008 election, I had a number of discussions in which I claimed that even if we assume that you should vote, it doesn't follow that you should vote for one of the major-party candidates (see the links above for the arguments). I thought my claims were obvious and non-controversial: the probability that your vote will determine the election is practically zero, so if you're going to vote, you should find the candidate whose preferences and views most closely reflect yours. People still reacted negatively (and sometimes, somewhat harshly).
March 14, 2010
On Behavioral Economics, Ancient Refrigerators, and Landlord Incentives
In a WSJ article (gated) discussing the influence of behavioral economics on the Obama Adminstration's policies, Johnathan Weisman writes that "Landlords have no incentive to replace a 40-year-old refrigerator if the tenants are paying the utility bills." Well, how about the incentive of being able to rent the apartment? While it's true that landlords may not recoup the cost of energy saving appliances if their tenants pay the utility bills, the need to attract prospective tenants still gives landlords a strong incentive to furnish their apartments with relatively modern appliances. Circa-1970 refrigerators, which lacked features such ice makers and specialized compartments, would likely turnoff many would-be renters.
Emergent Order Sighting
From the WSJ (gated):
Hairdresser Yasmine Beaupin has found a new calling in the wake of the earthquake that ravaged this city: running the affairs of a teeming tent city.
Posted by E. Frank Stephenson at 02:32 PM
March 13, 2010
Markets in everything: shade edition
The Florida Marlins are going to charge an additional $5 for seats that are in the shade.
Many teams seek public funding for a stadium with a retractable roof. In the case of the Marlins why go through the hassle of building a roof when you can price discriminate based upon sun tolerance.
I predict a class action lawsuit against the Marlins as the additional $5 might price some folks out of the market for shaded seats and into the sun, with increased probability of contracting skin cancer, etc.
HT: Chris J.
Southern Civilization Bleg
I'm revising my Oxford Handbook of Southern Politics paper on Southern economic history, and this has led me into a sideline inquiry. As I understand it, a major part of the Southern cultural heritage is the idea that there was a distinct and different "Southern Civilization" that developed apart from the industrial civilization of the North. I'm finishing I'll Take My Stand now and have read Clement Eaton's The Civilization of the Old South. If you have any additional reading suggestions, please let me know.
March 12, 2010
Cat out of the bag?
In today's Sports Business Daily (gated) is an interview with Jerry Jones, Jr. of the Dallas Cowboys:
Hosting the Super Bowl helps to secure (partial) public funding for the stadium? Check.
Hosting the Super Bowl helps the team to secure commitments for naming rights, advertising and so forth? Check.
Hosting the Super Bowl is an intangible for the host community? Ch...Wait, what!?!
That's not the normal tune sung by team owners and event promoters. Hosting premier events like the Super Bowl are supposed to bring hundreds of millions of dollars to the local economy (says the NFL) or tens of millions of dollars, if any at all, (say the economists). Now we hear from the Dallas Cowboys that hosting the Super Bowl helps them make money but generates "excitement" for the local community?
Is the level of excitement in Arlington worth $325m in stadium construction costs?
Who is helping whom?
A forthcoming article with Darren Grant is posted at the early-view section of Economic Inquiry (gated, unfortunately). However, in the list of articles, ours comes immediately behind a tounge-in-cheek article by Nobel winner Paul Krugman.
I wonder how many more people will take a look at our article after finding his (and vice-versa).
March 11, 2010
From Tyler's MR post on alternative burial methods:
Pencils made from the carbon of human cremains. 240 pencils can be made from an average body of ash - a lifetime supply of pencils for those left behind.
Posted by E. Frank Stephenson at 07:37 PM
The Slippery Slope is Greased with Trans Fats
Quoth a Facebook friend, in linking this piece about a proposed ban on salt in New York restaurants:
"Just when I thought people protesting the trans fat ban using a slippery slope argument were being ridiculous, some jackass goes & proves them right.
Art Carden, enjoy the sweet salty taste of vindication."
I assume this was in reference to my last Forbes piece, which considered bans on trans fats. I think the people who are really vindicated here are Mario Rizzo and Glen Whitman, who have pointed out that the new paternalism leads us down a slippery slope. Here's the last of Glen Whitman's blog posts summarizing the points in the paper.
Mr. Smith Returns to Washington to Discuss Citizens United
Yesterday I was back in Washington to appear before the Senate Judiciary Committee. As these things go, it was a pretty lively event, as Jeff Patch of the Center for Competitive Politics describes below the fold.
Read More »
From Jeff Patch:
Today's Senate Judiciary Committee hearing on Citizens United v. Federal Election Commission contained a sober exchange of views on campaign finance jurisprudence—and a few fireworks.
CCP Chairman Brad Smith, the father-in-law of a Vermonter, unintentionally triggered the ire of Chairman Patrick Leahy of Vermont by characterizing the response of some Green Mountain State legislators to the Supreme Court's decision as "freaking out."
The New York Times blog "The Caucus" reports:
Is it hyperbole to describe people's reactions to a Supreme Court decision on campaign finance as "freaking out?"
Some senators at a Senate Judiciary Committee hearing this morning seemed to freak out at the very use of the term itself.
And we're not even talking about the back-and-forth of late between Chief Justice John G. Roberts Jr. and the White House.
At issue is the fallout from Citizens United, a Supreme Court decision this year that has lifted restrictions on corporate and labor spending on election communications... And that's where a debate on language came in:
One witness, Bradley Smith, a former chairman of the Federal Election Commission who supports the ruling in Citizens United, noted how rarely a decision by the nation's highest court had provoked such hysteria.
And perhaps he wanted to stir it up a bit, because he then singled out Vermont—the beloved home of the Judiciary chairman, Senator Patrick Leahy, as a place where lawmakers have just been "freaking out" in the wake of the ruling.
Mr. Leahy took immediate umbrage—interrupting Mr. Smith in a loud bark...
When Mr. Smith, who now teaches law at Capital University in Ohio, was able to speak again, he retorted that he had been called before the Senate panel specifically to offer his opinion, and indeed, in his opinion, "they're freaking out."
In February, Senate President Pro Tempore Peter Shumlin, D-Windham, proposed a bill responding to Citizens United that would have required sponsors to identify themselves in political ads every five seconds, according to a Burlington Free Press report on their vt.Buzz blog. "I suspect the court would look skeptically on the requirement of every five seconds," said Vermont law school professor Cheryl Hanna in an understatement of how "freaking" ridiculous the proposal is.
Sen. Shumlin also proposed draconian penalties for campaign finance violations of up to $100,000 in fines and five years in prison. If that's not "freaking out" over a court decision that didn't even change the state regulations in Vermont, what is?
The exchange between Smith and Sen. Leahy runs from 44:20 to 46:02 at this webcast linked at the Senate Judiciary Committee website. A rough transcript:
Leahy: Mr. Smith, thank you for taking the time.. Please go ahead.
Smith: Thank you, Chairman Leahy, ranking member Sessions and members of the committee. I appreciate the opportunity to be here this morning. Rarely does a decision provoke as much—I can't use another word—but hysteria, as Citizens United. For example, many states, which have long allowed unlimited corporate spending- Vermont is one of those states—have suddenly swept in, in great alarm, in their legislature to say "Oh, now we must do something." A month ago—well, I guess I should say two months ago—nobody in Vermont was clamoring to change the states election law to prevent unlimited corporate spending in campaigns. Now because the Supreme Court comes down, merely saying "Vermont, this case doesn't affect you at all," the people of the legislature of Vermont seem to be "freaking out," for lack of another word. Now...
Leahy: Professor Smith, and this will come out of my time. Why don't you let me talk about the reactions of the Vermont legislature? I think I understand it one heck of a lot better than you do.
Smith: My point, my point, Mr. Chairman, is that there's been a great deal of reaction by people, and I could use another state, we could use Maryland if you would prefer.
Leahy: These are a group of very hard-working citizen legislators. They don't "freak out," to use your expression. This is a very much of a typical, far more taciturn, New England legislature. We don't freak out, to use your term.
Smith: Senator, I've been called here, I think, to offer my expert opinion. In my expert opinion, they're freakin' out.
Later in the hearing, Smith drew verbal fire from Sen. Al Franken of Minnesota, who, as the Minneapolis Star Tribune reported, "engaged in a fairly high-brow tussle over election law with a former chair of the FEC—a disagreement that prompted the one-time official to accuse Franken of "showmanship."":
Franken introduced a response bill this January that bars companies from political spending if, among other things, a foreign entity controls 20 percent of their business.
In written testimony, former FEC chair Bradley Smith, now with the Center for Competitive Politics, said that such a provision would unfairly allow a "non-controlling [foreign] shareholder" to limit American political spending...
Franken took issue with Smith's classification of a 20 percent shareholder as "non-controlling" ...
(The ensuing argument is complicated, but it boils down to Smith saying that state laws defining corporate control are irrelevant to their discussion. Franken contends that they are relevant since, due to Citizens United, lawmakers will have to define what constitutes a "controlling" shareholder in terms of federal election spending.)
The tone of the discussion escalated when Franken began asking for "yes or no" answers (a tactic that has led to heated exchanges in the past).
Franken: So let's look at how states define a controlling shareholder. Yes or no, please. Do you know how Delaware, the leading state for corporate law, defines a controlling shareholder?
Smith: No I don't, nor do I think it is relevant to the question of whether it is control.
Franken: I asked you to respond yes or no sir, and you said no.
Smith: The question is whether you actually want serious answers or whether you're engaged in a little showmanship. If it's the latter, I'll accept that.
Leahy interjected: All right, Mr. Smith, that ranks with your put down of the Vermont legislature.
[It is probably worth noting that for all our disagreements on this issue, and the tremendous importance it has to him, Sen. Feingold was very gracious and professional during the hearing. - Brad Smith]
« Close It
March 10, 2010
The Yugo: The Rise and Fall of the Worst Car in History
That's the title of a new book by Bridgewater College history prof Jason Vuic. Yesterday, Prof. Vuic gave a lively talk at Berry about his book. The book is reviewed in the WSJ and The Economist. BTW, he doesn't think the Yugo was actually the worst car in history. The communist bloc offered up several other gems.
Casey Mulligan on the Minimum Wage and Job Losses
Otteson on Smith and Marx
James Otteson speaks to the FEE 2010 Homeschool Debate Tournament. You can get his Powerpoint here (HT: James Otteson).
More Student Opportunities
Eric Daniel emailed me some additional opportunities for students which (I think) I forgot to post.
1. The Clemson Institute for the Study of Capitalism three-day conference, which includes room, board, tuition, books, and travel money.
2. The Fund for American Studies offers summer internships.
Socialism is inefficient? Is the Pope Catholic?
History is strewn with intellectuals who imagined that they could save the world -- and created hell on earth as a result. The pope counts the socialists among them, and Karl Marx in particular. Here was an intellectual who imagined that salvation could occur without God, and that something approximating the Kingdom of God on earth could be created by adjusting the material conditions of man.
Of course, free-market types (like myself) are often guilty of imagining the same thing: "if you protect private property, keep gov't spending and taxes low, etc., you'll achieve material heaven on earth." I think there is a fundamental difference: socialists claim their vision of proper institutions will guarantee a utopia; classical liberals claim their vision of proper institutions will maximize our potential to get as close to utopia as possible, while it will always be unattainable. "The poor you will always have with you." For socialists, abolition of private property is sufficient; for liberals, protection of private property is necessary but not sufficient.
Quoting Sirico quoting Benedict:
[Marx] thought that once the economy had been put right, everything would automatically be put right. His real error is materialism: man, in fact, is not merely the product of economic conditions, and it is not possible to redeem him purely from the outside by creating a favourable economic environment.
My favorite line: the moral problem with socialism is more profound: It exalts theft as an ethic and overlooks the human right of freedom.
Of course, the comments are always good for a laugh.
Quote of the Morning
"Many mistakes really are hard to see until you actually make them. But socialism wasn't one of them." That's Bryan Caplan on the "New Socialist Man" argument.
March 09, 2010
Three cheers for Adam Smith!
The first edition of An Inquiry into the Nature and Causes of the Wealth of Nations was published on this date in 1776.
The Good Morning Burger is a Reality
Scott Beaulier eplains. San Francisco is one of the culinary capitals of the world; I'm now really intrigued by SF McDonald's restaurants offering the Mc10:35. Here's Jeff Tucker on competition between McDonald's and Burger King. Art Diamond has been blogging about creative destruction based on Ray Kroc's Grinding It Out: The Making of McDonald's and emphasizing the role of franchisees in innovation.
Sweatshops and Development in China
The Oregonian offers an interesting and informative look at increasing prosperity among workers in Chinese "sweatshops." HT: Steve Horwitz. Politicians and self-styled humanitarians have been trying to repeal the law of comparative advantage forever. They have been unsuccessful.
Here's the very important chapter 14 of Gregory Clark's excellent A Farewell to Alms. The entire chapter isn't part of the Google Books preview, but some of the key information is there. This passage sums it up:
"Marx and Engels, trumpeting their gloomy prognostications in The Communist Manifesto in 1848, could not have been more wrong about the fate of unskilled workers." (Gregory Clark, A Farewell to Alms, p. 272).
The Kids are Alright
Jacob and I were out for a stroll yesterday and had an interesting conversation with some of the kids from the neighborhood. Two had disappeared beside a neighbor's house, another appeared to be directing from the street.
Me (trying to strike up a conversation): What are you up to?
Neighborhood Kid 1: Nothing. We're just trying to do...something.
Me (prepared to learn that they're planting explosives or something): Well, what kind of 'something' are you trying to do?
I learn that they are doing some filming based on A Book With No Words.
Me: Interesting. Is this for a school project?
Neighborhood Kid 2: No, we have our own production company. We're making TV shows and movies.
Me (impressed): Wow, that's pretty impressive.
Neighborhood Kid 2: Yeah, you can find all of our stuff at www.aandmore.com.
So not only do they have a production company, they have a website from which you can buy episodes of the show they're working on via Paypal.
We then talked about books I enjoyed when I was younger (William Sleator). One of my favorite Sleator books was Interstellar Pig; I was pleasantly surprised to learn that one of these burgeoning movie-makers has it. I came away with a downwardly-revised estimate of the probability that western civilization is doomed.
Posted by Art Carden at 10:46 AM
March 08, 2010
New paper on exclusivity in wireless telecomm
By Everett Erlich, Jefferey Eisenach, and Wayne Leighton. Paper here. Abstract below.
Catching Up With the Internet
2. More wisdom on aid from William Easterly. How much do aid agencies waste trying to be all things to all people?
3. Mises Dailies in Spanish (HT: Manuel Lora).
4. Today's EconTalk is essential: Katherine Newman discusses low-wage labor.
5. Here's Emily Schaeffer on Toyota. This is a classic example of why markets work and governments don't. Market processes don't mean we won't have problems or that people won't make mistakes. Market processes do mean that when problems occur and when mistakes are made (or when fraud is committed), they will be identified as such.
Capitalism and Socialism Bleg
I'm giving a lecture at the end of April on "Common Objections to Capitalism" and wanted to collect answers to a few questions. Your contributions will be acknowledged; please email me your answers to the following questions:
How do you define "capitalism?" Do you find it objectionable? If so, why? How do you define "socialism?" Do you find it objectionable? If so, why?
March 07, 2010
Cavalcade of Miscellany: Race and Rational Voters
1. I was thinking about something like this earlier today (HT: Steve Haptonstahl). As people get more mobile and as lines dividing ethnic groups keep blurring, "where are you from?" will take on new meanings.
2. Here's Bryan Caplan on voting and the prospects of meaningful reform for Medicare and Social Security. Here's where I think there's an important aspect of wisdom in the Tea Party movement: our current pattern of government spending is unsustainable, and a lot of what has been proposed and implemented in the last several years is only making it less sustainable. Unfortunately, it looks like a lot of the Tea Partiers are most exercised about areas of government spending (like foreign aid and welfare) that are very, very small relative to, say, what we're spending on the military.
March 06, 2010
Folks, the joke was about Eric Holder
I always find it amazing how we can honestly and legitimately misconstrue what others mean. In my post here, I linked to a Washignton Independent story that detailed how the DC shooter apparently had a Mises Institute-related email address.
I did not mean to associate the Mises Institute with the DC shooter.
The Mises Institute fights the endless fight for personal liberty at a time when fewer seem willing to listen. More than anything, the story reminded me of the (sarcasm) great benefit (/sarcasm) Grand Wizard David Duke did for the Republican Party when he began to run for public office as a Republican. Just as David Duke undid years of GOP outreach to minorities, this sociopath could undo years of effort by the Mises Institute. And, of course, this sociopath was as closely related to the Mises Institute as Duke was to the mainstream GOP.
Of course, even the Washington Independent pointed out that the shooter's expressed views were incompatible with classical liberalism.
The other point I wanted to make was to highlight the disturbing trend of recent & current administrations to label anyone opposed to creeping statism as dangerous domestic terrorists, on even the flimsiest of pretexts; hence, the Eric Holder remark.
I thought writing it all out as I've just done would seem dour. So, I tried for "snarky black humor." Apparently, I failed. I should have stuck with dour.
Posted by Noel Campbell at 11:13 PM
March 05, 2010
DC shooter a Mises fan?
Alas, the Mises Institute! With psycho nutjob friends like these....
I'm making book on how long it'll be before Eric Holder puts the Mises Institute on a domestic terror list.
HT: Reverend Ed
Posted by Noel Campbell at 08:14 PM
Local radio station WEVL is having it's annual Spring Concert at the Hi-Tone at 10:00 PM on Saturday night. Family responsibilities will prevent me from attending, but the lineup sounds pretty good based on what I heard on the drive home yesterday (Jack-O and the Tennessee Tearjerkers, Mouserocket, and The New Mary Jane). In taking a break a minute ago I looked to see if The New Mary Jane has an album I could buy solely on the strength of their song "Murder is Easy." I couldn't find an album, but you can listen to them at their Myspace Music Page. Here's are the Myspace Music Pages for Jack-O and the Tennessee Tearjerkers (European readers, they're coming your way in May and June) and Mouserocket. I can't find anywhere to buy any of their music online, so a trip to Goner Records might be in order this weekend.
Out of Context c. 2010
Okay - I can't help but laugh at the out-of-context clip of Sen. Reid on the Senate Floor discussing how 36,000 people lost their jobs and that is "good:"
Perhaps Harry Reid will be unseated this fall, perhaps not. However, the following clip is ready-made for his political opponent, whomever it might be: Just roll tape, rewind, repeat.
Link from Drudge - but funny nonetheless.
Minimum Wages and the Economic Way of Thinking
Steve Horwitz offers a short discussion of the changing employment situation. There are some interesting comments. I've written a lot about the minimum wage, and I have a draft of an article I'm going to finish at some point making the case for why economists care so much about it even though the employment and efficiency effects might be relatively small. In short, the debate over the minimum wage is probably the most vivid example of the conflict between the economic and the anti-economic way of thinking--or between truth and truthiness.
A few months ago, Price Fishback made extensive comments on my survey of Southern economic history (which I'm now revising) and kindly directed me to his 1998 Journal of Economic Literature survey paper on the operation of American labor markets at the beginning of the twentieth century. It's definitely going on my syllabus the next time I teach economic history, and it might even go on my intro syllabus. There are a couple of key takeaway points: markets usually worked the way we would expect them to, company towns/sharecropping/company unions were rational responses to transaction costs rather than purely exploitative arrangements, safety regulations often codified existing practices, and people could (and did) use the state to satisfy their tastes for discrimination (cf. Jennifer Roback's papers on Jim Crow labor law and segregated streetcars).
March 04, 2010
This for that
Not a bad introduction to how money can naturally emerge from the barter economy:
I wonder what Prof. White has to say about this video?
A little dated but still funny and germane:
Caplan on Crony Capitalism
In a series of posts, Bryan Caplan has been discussing why free markets are unpopular (1, 2, 3). Bryan has probably thought more about this issue than anyone I know, so when he speaks (writes), I listen (read).
I think he's basically right. The objections to free markets are objections to free markets per se, not objections to cronyism that is mistakenly conflated with free markets. My casual observation is that people generally see government corrupted by money rather than money corrupted by government. To better understand this and to prep for my Spring class on Classical & Marxian Political Economy, I'm going to be reading a lot of Karl Marx over the rest of the year. I'm beginning with David Harvey's online course on volume I of Capital. Here's Doctor J on unscrambling The Bearded One.
There's an entire suite of Caplania out there at a variety of prices. You can buy his book in hardcover, paperback, or for Kindle, read a condensed version from the Cato Institute, or listen to podcasts in which he talks about voter preferences and labor market discrimination.
March 03, 2010
Bogus Bidding for Oil and Gas Leases
That's the topic of an article my student Shawn Regan had published by PERC.
Shawn also has a nice piece forthcoming in Regulation.
Posted by E. Frank Stephenson at 10:56 PM
Josh Hall, Pete Calcagno and I have a new paper. The abstract:
The terms objective and subjective are considered antonyms, and yet “objectivists”, associated with the ideas of Ayn Rand, and “subjectivists”, associated with the ideas of Ludwig von Mises, are both associated with the same political philosophy: classical liberalism. There are however important apparent differences between the “objectivist” approach of Rand and the “subjectivist” approach of Mises. Who is right? And which intellectual has the greater place in the classical liberal tradition? We propose to test these questions using data from a unique housing development in Charleston, South Carolina. We find objective evidence in favor of Mises’s subjectivism.
Before you Randroids start sending us e-mails, please take note of where we submitted the paper.
Building Brand Equity: Trans Fats and The Substance of Style
1. At Forbes.com, why should we stop at trans fats? Here are Chidem Kurdas's thoughts. Along similar lines, Glen Whitman and Mario Rizzo are doing the Lord's work by taking apart arguments for the New Paternalism.
2. At Lifehack.org, thoughts on Virginia Postrel's excellent The Substance of Style. I'm waist-deep in a revisions on a paper featuring lots of growth regressions, and I'm less and less convinced that correlates-to-growth exercises like this are a good guide to policy. Postrel highlights some of the reasons why.
Does the U.S. Need More College Graduates?
That was the topic of a debate featuring DOL friends George Leef and Rich Vedder on the negative side and Margaret Spellings and Michael Lomax on the affirmative side. Leef's recap of the event is here. I come down on the enough or too many already side, which is one reason why I'm not much bothered by the possibility that Georgia's public colleges are likely to take large budget cuts this year. Another reason, of course, is that Berry is private.
Posted by E. Frank Stephenson at 01:22 PM
The American Dream
"I give you the American Dream: a billionaire using public funds to build a private playground for the rich and powerful."--C. Montgomery Burns
Here's Reason.TV on the Atlantic Yards Project in Brooklyn (HT: Nick Gillespie):
Seventy-Nine Years Ago Today ...
... President Herbert Hoover, a radical proponent of laissez-faire [/sarcasm], signed legislation designating "The Stars-Spangled Banner" as the national anthem.
Posted by E. Frank Stephenson at 09:18 AM
Justices Set to Make Gun Ownership a Right?
You've gotta love the LA Times, which has a big banner headline today, "Justices signal they're ready to make gun ownership a national right." Well, there is that Second Amendment thing...
March 02, 2010
Building Brand Equity: Foreign Aid & Growth, Entrepreneurs in Memphis
I just found out that my paper "Economic Progress and Entrepreneurial Innovation: Case Studies from Memphis" was accepted by the Southern Journal of Entrepreneurship. The revised version is here.
Also, the editors were kind enough to allow me to post the published version (as it appeared in the journal) of my paper "Can't Buy Me Growth: On Foreign Aid and Economic Change," which appeared in the Journal of Private Enterprise at the end of 2009. The published version is here.
Cross-posted at the Beacon and the Mises Blog.
Food Production and Delivery As a Rent-Seeking Society
Here's Jamie Oliver's TED Talk on food (HT: Teresa Beckham Gramm). I certainly agree with his identification of the problems, but I'm skeptical of his proposed solutions (see my post below on rent-seeking and public choice).
On Larry Summers and Unemployment
Unemployment data are normally seasonally adjusted, but maybe this February was worse than usual.
In any case, this cartoon poking fun at Summers's warning about the weather increcreaing unemployment is definitely worth a click.
Foreign Aid as a Rent-Seeking Society
Distilled by William Easterly.
How important are public choice issues and rent-seeking? Policy advocacy based on the assumption that there is a group of moral and intellectual elites that can rise above their own interests AND solve the intractable knowledge problems that come with central planning reminds me of a cartoon you've probably seen: two scientists are standing at a chalkboard filled with math. "AND THEN A MIRACLE OCCURS" is written in the middle of the board. I think that's roughly what we're doing when we're talking about policy without taking rent-seeking and public choice issues seriously.
Along these lines, here's James Otteson at Forbes.com on Adam Smith and the great mind fallacy. Here's his paper "Adam Smith and the Great Mind Fallacy" in Social Philosophy and Policy.
Building Brand Equity: Carden and Hall 2010
Carden, Art and Josh Hall. 2010. Why Are Some Places Rich While Others are Poor? The Institutional Necessity of Economic Freedom. Economic Affairs 30(1):48-54.
March 01, 2010
To recover or not recover?
Reuters sums up the atmosphere of pervasive uncertainty in this nifty piece:
The U.S. Federal Reserve and Bank of Japan both meet in the coming week, but far from unwinding the easy money policies embedded over the past few years to ignite economic growth both are likely to admit implicitly that the job is far from done.
Precisely on point.
Posted by Noel Campbell at 09:14 PM
Creative Destruction in Action: Legal Opinions on Google Scholar
The business of publishing legal opinions is an old one. The technology of publishing them has taken a recent turn, with to Google's foray into case law last fall. I have not done my homework on how Lexis and Westlaw have responded. But I found an interesting statement by the founders of AltLaw, a startup of sorts that seems to have acquiesced entirely to Google's comparative advantage:
Everything we have done or planned to do with AltLaw, Google has does [sic] better. What else would you expect? Search is their core business; they have hundreds of brilliant engineers, a vast computing infrastructure, and billions of dollars invested in it.
You can almost feel the sense of relief in these words. As if this "small academic group" says, finally now we can go and just be academics and focus on what we do best. There is an underappreciated economic lesson here: while the downside of innovation is usually thought of as "destruction" of the old ways of doing things, it is also simply freeing up resources to be used in better ways. Some instances of creative destruction illustrate this better than others. I thought this was one of them.
With a straight face ...
(or so I presume), House Majority Leader Steny Hoyer said, according to The Hill, “No one likes raising revenue, and understandably so."
Stimulus package simile of the week
Kevin A. Hassett on Bloomberg.com:
The truth is, economic stimulus is like a very expensive box of chocolates. You get a sugar high, and a caffeine rush, but when the chocolates are gone, you have nothing but fat to show for it. You are worse off than you were before and still need to find real nutrition.
Who You Callin' Greedy, Willis?
We hard-hearted small-government guys are often damned as selfish types who care nothing for the general welfare. But, as the Greek protests make plain, nothing makes an individual more selfish than the socially equitable communitarianism of big government: Once a chap’s enjoying the fruits of government health care, government-paid vacation, government-funded early retirement, and all the rest, he couldn’t give a hoot about the general societal interest; he’s got his, and to hell with everyone else.
Posted by E. Frank Stephenson at 03:48 PM
What Executives Should Say When They're Hauled in Front of Congress
I caught parts of the Toyota hearings at the airport a few days ago. To learn the implications for our economic future, Google "regime uncertainty" and read Robert Higgs's 1997 article very carefully. At Reason.com, Steve Chapman discusses how small the risks associated with Toyota's troubles are relative to (say) drunk driving and other driver errors. That said, here's an exchange I would like to see during a Congressional hearing:
Q (from Politician or Regulator): "Why are you putting profits before people by making unsafe cars?"
A (from Executive): "If you think our cars are so unsafe and if you think we're willing to sacrifice our reputation and our company's future in order to save a few dollars in the short run, then why are you here asking me questions instead of using your superior knowledge to earn enormous profits by producing better, safer cars at the same price?"
Quote of the Morning
My point is that "broadly accepted" is irrelevant to "right thing to do." Broadly accepted can't be the standard, in a civilized nation, of the set of the things citizens can be forced to do at gunpoint.
Therein lies one of the fundamental differences between libertarianism/classical liberalism and statist ideologies like progressivism and conservatism, and it's a Smithian/Hayekian point that Thomas Sowell has made repeatedly in books like Knowledge and Decisions, A Conflict of Visions, The Vision of the Anointed, The Quest for Cosmic Justice: when you're talking about what "the state" should do or the policies "the state" should implement or "the kind of society we want to build," you're fundamentally talking about when, where and how one person should force his or her will on another person at gunpoint.
In this case, whether you agree or disagree with the homeschoolers' values or whether you think cultural diversity is good or bad is precisely irrelevant to the question of whether you have the right to threaten them with violence if they do not allow you to substitute your judgment for theirs. If you're willing to ignore (or even support) those who come for the homeschoolers, don't be surprised when they come for you.
The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith
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