Division of Labour: August 2010 Archives
August 31, 2010
"Oh No, I Have To Miss Class To Travel!"
Travel for academic purposes is now a lot easier. Instead of lining up a substitute, you can simply assign a lecture or two or three from the Mises Institute's YouTube Channel, FEE, or EconTalk (among many others). My Mises U lecture from 2009 covers a comparative advantage example that students and instructors might find useful, and my favorite EconTalk podcast is still Mike Munger's 2007 discussion of recycling. Probably the most useful video I've seen is Roger Garrison's lecture on the Austrian Theory of the Business Cycle, which I've used in my economic history class and which I will probably use in other upper-level courses in the future.
August 28, 2010
Cigarette Tax Hike Backfires in Balkans
Cash-strapped Bulgaria and Romania hoped taxing cigarettes would be an easy way to raise money but the hikes are driving smokers to a growing black market instead.
Tax Avoidance Native American Style
New York's Oneida Indian Nation moved a cigarette-manufacturing plant to their upstate reservation to shield smokers from steep taxes that Governor David Paterson has vowed to impose.
Source. NY has hiked cigarette taxes $1.60 and is trying to crack down on untaxed sales on Indian reservations.
August 27, 2010
The Cash Boat
When I hear Quantitative Easing 2, of course like many people I think "QE2." (Helicopter Ben gave a non-speech this afternoon, from Jackson Hole).
And like many people, QE2 sounds to me like the Queen Elizabeth 2, the Cunard Line cruise ship.
But that makes me think of the "Love Boat." (Only Kevin Grier and I would do this; we like to sing, badly and loudly). So I sang "Cash....Exciting and new..." on the Takeaway radio show this morning.
Posted by Michael Munger at 04:23 PM
Un Gringo En Transantiago
Article (en espanol) on Transantiago. They say "Gringo" is not an insult. They SAY it is not.
August 26, 2010
Andy Young points to an article about the ratings agencies and it occurs to me that rating inflation is a lot like grade inflation. As governments place more emphasis on grades (e.g., Georgia's HOPE program), we get more grade inflation.
Here's the quote Andy pulled with my changes:
If the importance of the
Yup, sounds about right my way too.
Posted by Robert Lawson at 12:51 PM
August 24, 2010
I'm a bit late getting around to blogging this, but we're pleased to have Lauren Heller, a recent graduate of UNC, as the newest member of our department. Yesterday was her first day of classes and she hit the ground running.
In other news, two of our recent graduates have landed nice positions. Shawn Regan is working at PERC and Erin Wendt has joined Berry grad Keri Anderson at IHS.
The most important accomplishment: grads Justin Neal and Andrew Chupp (and their Berry grad wives) welcomed their first children this summer. We look forward to seeing them in the class of 2032.
Posted by E. Frank Stephenson at 08:38 AM
More on Yuppie 911
My former student Shawn Regan had a piece in Regulation; now the NYT has an article on the phenomenon. The increased risk taking associated with using satellite devices, cell phones, etc. brings to mind J.R. Clark and Dwight Lee's paper on rescue Laffer curves (jstor).
August 23, 2010
George Will vs. Robert Reich on Hooverism
George Will, one of my favorite columnists, smacks down Robert Reich's fictional account of Herbert Hoover in this segment of ABC's weekend chat show. The fun begins around 1:20.
Russ Lays It Down
Appallingly, I mispronounced the name of Chile's president at least twice. "PiñerO": Now I'll talk about President "Abamo" and act like it's all on purpose.
Posted by Michael Munger at 09:10 AM
August 22, 2010
Easterly Quote of the Evening
We have a big opportunity here to educate perverts about economic development.
For my second Easterly link of the day, see this.
Easterly on Reversing Conditional Probabilities
Here's a great post from William Easterly in which he points out a fundamental statistical mistake that a lot of opponents of Park51--aka "Ground Zero Mosque"--and similar projects are making.
In short, we're getting our conditional probabilities wrong. A lot of terrorists are Muslims. This does not mean that a lot of Muslims are terrorists. Consider a similar example. Rhodes is now in possession of an interesting collection of papers from a former KKK leader in Tennessee. The papers are mostly from the late 1960s and early 1970s. If I remember correctly, the gentleman in charge was also a prominent member of his church (director of the Sunday School program, I believe). Their local chapter paperwork included a line item for the number of ministers enrolled. If you took a census of KKK members at virtually any time in the organization's history, it's a fair guess that very high percentage would identify themselves as Christians. The probability that one identifies as a Christian given that he or she is a member of the KKK is very high. It would absurd to infer from this that the probability that one is a member of the KKK given that he or she identifies as a Christian is also very high.
I've been following the mosque controversy and participating in the discussion because I view it as a teachable moment (I have a Forbes piece or two or three in the pipeline). Not only does it teach us about institutions, history, theology, and economics, it's a very useful lesson in statistics. I suspect that p(terrorist|Muslim), just like p(Klansman|Christian), is pretty low.
August 21, 2010
Good stuff from CollegeHumor.com
The Second World War and social media. Enjoy it here.
August 20, 2010
What is the cross-price elasticity of demand...
If a sheep belches and no one’s around to hear it…
…will it still be taxed?
The nation’s carbon-trading project was expanded in July to require energy producers to pay for their emissions. By 2015, the system will include agriculture, forcing farmers to pay for emissions their cows and sheep make through belching.
The NZ gov is paying sheep farmers to plant forests as carbon sinks, instead. Mo’ money quote:
Even the government says the program will have little impact on global greenhouse gas emissions. …. Rather, the government introduced carbon trading to enhance the country’s green image, boost exports, attract tourists and increase influence in global climate talks, Prime Minister John Key said on Television New Zealand in June.
‘Cuz, of course, the reason I haven’t scratched that itch to fly from Arkansas to Auckland is that the Kiwis aren’t green enough. It has nothing to do with the wallet-crushing price of airfare.
There’s just so much more goodness in this article, but I’ll leave the pleasures of further discovery to the reader. It’s worth it.
The Economist on Georgia
The Economist has a very nice story about the continuing progress being made in Georgia, the country not the state. As many know, I am a big fan of the country having visited my good friends at the New Economic Schoolseveral times for lectures and events. The progress since my first trip in 2005 til my most recent trip this past summer is visible to the naked eye.
FOUNTAINS dance, children play and families stroll along Batumi’s five-mile seafront boulevard, lined with palm trees, hammocks and playgrounds. Less than a decade ago, Ajaria, a verdant south-western corner of Georgia of which Batumi is the regional capital, was the personal fief of Aslan Abashidze, a strongman who seemed to own the place more than run it. He never appeared without an army of goons, and closed the streets when his son felt like racing his Lamborghini. Cut off from the rest of Georgia by checkpoints, the economy was stagnant.
Stimulus in Action
Posted by E. Frank Stephenson at 05:00 AM
August 19, 2010
10 Commandments for Drinking
from a good friend who has started a new blog. A taste:
6. Thou shalt not covet thy roommate’s girlfriend. Breaking this one can only leave you unsatisfied with your own life and possibly cause you to miss the subtle invitations you are receiving from all the beautiful girls around you who are NOT in a relationship—but might want one with YOU. Additionally, breaking this one will guarantee failure should you get locked out of your dorm and need to appeal to your roommate for help.
August 18, 2010
Give Me Liberty, or Give Me Zoning!
Now, I have been to the LSS before, myself. It is way out in the country. It is held on the grounds of a very large (40 acre) plot of land. The main structures on the plot are some outbuildings, and a legally zoned bed-and-breakfast.
No one parks on the street, and nothing is visible from the street.
Now, it is true that they have amplified speeches, and amplified music on Saturday night.
But the local gubmint thugs are after them for:
1. Health concerns. So they had the food professionally catered, instead of cooking it on bbq grills as in the past.
2. Sanitation concerns. So they had port-o-potties brought in, in the proper ratio for such an activity, with that many people.
3. Ex post giant d*ckhead concerns about this being a permanent commercial activity. Hard to predict the ex post part, to the tune of a $50k fine. This is already a commercially zoned property, by the way, because of the b-n-b. And the Institute for Liberal Studies is a registered non-profit. The LSS breaks even, every year. What makes it commercial? If five of us split the cost of some chicken, and cook it, would that be commercial? This was less than 75 people, one event per year, for two nights. Sure, if it was every weekend, that might be commercial.
But this is just thuggery. The local government is doing this because they can.
Bobby Thomson's Passing and Sign Stealing by the 1951 NY Giants
Much of the news coverage of Bobby Thomson's passing earlier this week has mentioned that the 1951 NY Giants were stealing signs during the second half of the season. For example (emphasis added):
More than a half-century later, it was revealed the Giants during the season had used a buzzer-and-telescope system to steal signals from opposing catchers. Helped by the inside information, the Giants overcame a 13½-game deficit to the Dodgers, won 37 of their final 44 games and forced a playoff.
Just one problem--there is no evidence that the sign stealing actually helped the Giants win. In fact, my recent paper in the Atlantic Economic Journal found that the Giants' runs per game decreased after they started stealing signs. An excerpt from that paper is below the fold (the third paragraph is lightly edited).
Read More »
To determine if the Giant offense benefited from the sign-stealing, I estimate a straightforward regression model of runs scored (RS) by the Giants. The game is the level of analysis and there are 157 observations. Explanatory variables include HOME, a binary variable taking a value of unity for Giant home games, POST, a binary variable taking a value of one for games played on or after July 20, and an interaction variable HOME*POST. Since signs were stolen only for home games on or after July 20, a positive coefficient on HOME*POST would indicate that the Giants benefited from stealing signs.
So why did the Giants pull of such a dramatic comeback? Pitching--they allowed 1.4 fewer runs per game during the period they were stealing signs. Of course, the decrease in runs allowed was merely coincidental to the sign stealing.
« Close It
August 17, 2010
"Hooverism" in Denmark
Denmark better brace itself for a blast from Kruggybaby, DeLong, and company:
But now Denmark, which allows employers to hire and fire at will while relying on an elaborate system of training, subsidies for those between jobs and aggressive measures to press the unemployed into available openings, is facing its own strains. As a result, it is beginning to tighten up.
August 16, 2010
Jerry O'Driscoll: artificially low interest rates are not helping
Incisive analysis from O'Driscoll on today's WSJ op-ed page :
[O]ur lingering crisis and economic weakness was brought on not by a Keynesian failure of effective demand, but by a Hayekian asset boom and bust.
To paraphrase Mark Twain
The rumors of the Cincinnati Reds death have been greatly exaggerated.
NPR understands the reason for campaign finance laws
The headline: Report: Too Much Money Going To State Court Races
The punchline: Former Wisconsin Supreme Court Justice Louis Butler was the first incumbent in the state in more than 40 years to lose his court seat.
Repeat after me: Campaign finance restrictions are all about, and only about, incumbent protection.
August 13, 2010
Paris in the Terror
I am always working my way through several books simultaneously - I trust I am not alone in this. One of my current reads is "Paris in the Terror" by Stanley Loomis.
I read this passage earlier tonight:
The Girondins had been in "charge" for about a year before they started to lose power - eventually 21 of them would be sent to the guillotine in one day (I note that the bracketed term referring to the Girondins is Loomis, not me). The Law of Suspects was crafted by one Robespierre and seems very similar to the laws of other authoritarian systems. The "means of support" clause seems to be aimed at Danton (Robespierre's main rival for control) who, it was suspected, had been taking a little extra from the government till.
However bad the preceding "law" seems to be, it gets worse:
The third article in this list was particularly odious. It stated that persons who had not received "good citizenship certificates" from their local Section leader were also to be considered suspect.Now, students of public choice should be able to fill in what comes next. The remainder is below the fold:
Read More »
The Vigilance Committees of each Section - to whom the unhappy resident of Paris had to apply in order to obtain his certificate - were, in Taine's words, "composed of social outcasts and perverts of every known sort, subordinates full of hate and envy, vagabonds off the street and idlers who lived in drinking shops...many of whom adopted the Revolutionary faith only because it offered them means to sate their appetites and fill their pockets." The power given by their prerogatives to issue "good citizenship certificates" was an open invitation to these people to fill their pockets: "The Vigilance Committees were very profitable. The men who sat on them trafficked in certificates of civism and warrants of arrest. People paid them not to be included in the list of suspects; they paid to be released; they paid to have their records mislaid. The only way to save oneself was to pay one's potential executioners by gradual installments, to pay them like wet nurses by the month, on a scale proportional to the activity of the guillotine."
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Nick Saban Understands the Economics of Prohibition
“Where you have prohibition, you have bootleggers,” Saban said. “It’s always been that way.”
HT: Trey Noland.
Posted by Art Carden at 09:37 AM
Government Spending: Real or Fake
A fun vid from Michelle Muccio. While watching keep in mind Brad DeLong's admonishment that "anything that boosts the government's deficit over the next two years passes the benefit-cost test--anything at all."
Another vid of Michelle in action is here.
Posted by E. Frank Stephenson at 08:18 AM
Anything that will happen already has
Two more things:
1. One by Bruce Bartlett. I don't always agree with Bruce, but he makes some good points here. Bruce is always worth reading... (Lagniappe: Bruce B also wonders about my pal Tino Sanandaji, an interesting Iranian-Swedish grad student at UC's Harris School)
2. Another by Lawrence Reed. It was written in 1998, but it's truly prophetic, unfortunately.
August 12, 2010
New working paper
Another working paper rolls off the mill, this one concerning the evolution of the residential real-estate market in Las Vegas. As always, comments and suggestions are appreciated:
Paging Mr. Laffer
New York state's cigarette tax revenue from convenience stores fell in the first six weeks after a steep tax increase, as consumers turned to Native American reservation stores, a convenience store group said on Wednesday.
August 11, 2010
My appearance on Freedom Watch
My "Freedom Watch" appearance on Monday 8/9/10, answering Judge N's questions about monetary and fiscal issues in two-sentence bites, is available here . If you want, you can skip forward to my segment by running your mouse over the initial screen, clicking on the link to Part 2, then sliding forward to 11:30 of Part 2.
Listen closely for the moment when the Judge calls me "Black" rather than "White". Also listen for the moment when I mutter "that's a straw man" in response to Nancy Skinner's misrepresentation of Adam Smith. Note that I could not see any of the other participants. I was alone in a DC studio, seeing only at a black screen that read "LOOK HERE".
Bully Hosts Anti-Bullying Summit
Yep ladies and gents, your overbearing federal government is holding an anti-bullying summit today and tomorrow in DC. Maybe next week arsonists can conduct a fire prevention workshop.
Posted by E. Frank Stephenson at 01:34 PM
Rent (Subsidy) Dissipation
A crowd of people hoping to get federal housing assistance became unruly Wednesday morning with reports of fights breaking out in the crowd.
Posted by E. Frank Stephenson at 01:27 PM
August 10, 2010
Hooray for government! ...hey, wait a minute...
The State of Arkansas (my home) made its budget for 2010 with $24 million left over. Democratic Gov. Beebe and the Democratically-controlled legislature cut existing spending, resisted new spending, and turned in a "flat" budget for next year, all without news taxes (I think) or layoffs, or any sutrm-und-drang we see in other states.
In all sincerity, way to go, Gov. Beebe & the Ledge! Arkansas is a small, poor state with a history of policy stupidity, but at this moment and in this instance, this is good governance. I'm shocked that I ever typed that sentence.
For all of their hard work (and an excellent example that Democrats CAN be fiscally responsible), what do they and the Arkansas taxpayers get? The right to be taxed by the Federal government to bail out profligate states whose governments don't have the will or the skill of the Arkansas state government.
Hellooooo, moral hazard. Why, if Beebe ever does something so fiscally responsible again, I'll light a bag of dog poop on fire on his doorstep.
Posted by Noel Campbell at 11:38 AM
"Hooverism" in Canada
From a piece by Jason Clemens in the WSJ (it's gated but reproduced here):
But change really began to take off in 1993. A socialist-leaning government in Saskatchewan started by reducing spending and moving towards a balanced budget. This was followed by historic reforms by the Conservatives in Alberta, who relied on spending reductions to balance their budget quickly.
Canada doesn't seem to have experienced the negative consequences that Keynesians would have us expect. In fact, the cuts started when Canada was in a mild recession (GDP peaked in 1991) yet the results were far from some sort of Krugmanesque replay of the Great Depression.
"Hooverism" is in quotes, of course, because Hoover did not cut spending and did not adhere to balanced budgets.
August 09, 2010
Police: Man had beer in pants
That's the headline on the website of the local fishwrap. I was going to wonder aloud which of my friends/co-bloggers might be the culprit until I saw this paragraph in the article:
Police said Whitehead took a 12-pack of Budweiser Light valued at $9.69 and hid it in his pants leg.
Wow, I'd like to see those pants.
We're from the Government and We're Here to Help
From the abstract of a new NBER WP by Chris M. Herbst and Erdal Tekin:
Using data from the Kindergarten cohort of the Early Childhood Longitudinal Study, our instrumental variables estimates suggest that children receiving subsidized care in the year before kindergarten score lower on tests of cognitive ability and reveal more behavior problems throughout kindergarten. However, these negative effects largely disappear by the time children reach the end of third grade.
Something to keep in mind next time some pol bleats about caring for children. Thankfully the damage doesn't appear to be lasting.
Deadweight Loss--Snooki's Tan Edition
In a preview for the reality-TV show’s second season, Nicole “Snooki” Polizzi criticized President Barack Obama’s policies as anti-tanning.
August 06, 2010
Paper Idea: African-American Seminary in Memphis?
From the 1916-1917 edition of the Negro Year Book, page 21:
Southern Baptists Pledge Fifty Thousand Dollars for Theological School for Negroes
I think this eventually became American Baptist Theological Seminary in Nashville (now American Baptist College). So here's the paper idea: how did the Seminary end up in Nashville and not Memphis?
August 05, 2010
What could possibly go wrong?
From the Washington Post:
President Obama and congressional Democrats -- out of options for another quick shot of stimulus spending to revive the sluggish economy -- are shifting toward a longer-term strategy that promises to tackle persistently high unemployment by engineering a renaissance in American manufacturing.
So, let's raise the costs of corporations that have factories in the US but also abroad. Students: Can you spell out a route by which this approach might have the unintended consequence of reducing US hiring by multinationals?
HT: Don Boudreaux
August 04, 2010
(1) The great champion of liberty Manuel Ayau has died. Vaya con dios, Muso.
(2) "Malts in the Cafeteria" in The Freeman written by my lovely wife.
(3) "Human Rights and Economic Liberalization" in Business and Politics with Art Carden.
(4) "Objectivism v. Subjectivism: A Market Test" in the Journal of Economic Behavior and Organization with Josh Hall and Pete Calgagno.
August 03, 2010
Monkeys Getting High for Science
Just one of many dubious stimulus projects is a study of how cocaine use affects monkeys. But, hey, Brad DeLong tells us "anything that boosts the government's deficit over the next two years passes the benefit-cost test--anything at all" so it must be ok.
Posted by E. Frank Stephenson at 11:08 AM
Dispatches from the Bolivarian Paradise
In Venezuela, socialist President Hugo Chavez frequently touts his country as a workers' paradise, where workers run nationalized companies and the oligarchs are kept in check.
Paying kickbacks for jobs ... maybe some greedy, exploitative capitalist should emulate Senor Chavez's paradise.
Posted by E. Frank Stephenson at 09:21 AM
August 02, 2010
Building Brand Equity: Carden & Lawson, "Human Rights and Economic Liberalization"
DOL co-blogger Robert A. Lawson and I have a paper in the new issue of Business & Politics entitled "Human Rights and Economic Liberalization." The paper is available here. Here's the abstract:
Using several case studies and data from the Economic Freedom of the World annual report and from the CIRI Human Rights Data Project, we estimate the effect of human rights abuses on economic liberalization. The data suggest that human rights abuses reduce rather than accelerate the pace of economic liberalization.
Carry on baggage fees: An idea whose time has come?
From today's Associated Press:
Spirit Airlines: no hitch with carry-on fees By ANDREW VANACORE August 2, 1010 7:06 am EDT
I first proposed this little idea in the February, 2000, issue of The Freeman.
As is, overhead bin space is allocated on a first come first served basis. A better system would allocate first to those with the highest value on time, risk-abatement, and comfort, and then to others who can claim left-over space or place them underfoot or simply check them in advance at the ticket counter.
More preliminary EFW results
My buddy/boss Mike and I are looking at GDP variability and economic freedom.
Economic freedom builds strong connections among nations' economies. Freedom opens up your economy to instability in other countries (contagion). However, freedom may also encourage the development of diverse, robust, flexible links, allowing open free economies to weather fluctuations better than unfree economies.
So far: Economic freedom does not directly effect GDP variability; however more freedom tends to lead to more "openness" to trade with other nations. The increased openness increases GDP variability. However, the size of the effect is much smaller than freedom's direct effect on economic growth.
It would be like saying to India's government, "Look, if you adopt policies that increase your EFW value by one standard deviation, over the next 15 years, your economy will grow by an additional $27.3 billion. But we warn you, it might grow by only an extra $26.5 billion to an extra $28.3 billion."
Posted by Noel Campbell at 11:43 AM
August 01, 2010
Another Example of French Happiness
Something else for President Sarkozy to factor into his happiness flavored measure of GDP:
Grenoble - A group of police officers have been forced to take time off after receiving death threats and coming under fire in the French city of Grenoble, officials said on Tuesday.
Previous post here.
Incentives Matter: Filtered Cigar Sales Edition
Filtered cigars that resemble cigarettes in appearance, if not taste, are fast gaining appeal with smokers struggling under budgets strained by tobacco tax hikes.
Insurance Payments as Manna
Great newspaper, and I would like to comment on a letter by Shawn Regan in Saturday's paper. Shawn, it is not 1848, and Frederic Bastiat's observations of that time do not apply today. We have electricity, phones, radio, TV, running water, paved roads, vehicles and resources available to draw upon in time of emergency beyond Mr. Bastiat's ability to even conceive of. In 1848 when a local disaster struck, the local community had to deal with it without outside help. Today, with modern insurance companies drawing from nationwide assets, the drain upon the local community is not only reduced, the inflow of outside aid funds actually stimulates the local economy.
The broken window fallacy has nothing to do with TVs, paved roads, or running water. Instead it has to do with opportunity cost and applies just as much today as it did in 1848. Insurance companies don't send payments out of kindness; they charge premiums in exchange for those services. The premiums reflect the risk of hail storms and other damages so towns like Bozeman do not reap a "windfall of insurance money" after a storm. Insurance therefore changes nothing about the broken window fallacy; it merely separates the timing of the damage and the payments to repair it. Alas, Mr. Fick seems to think insurance payments arrive like manna.
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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