Division of Labour: December 2010 Archives
December 29, 2010
On Coase's Centennial
This important reminder from Shawn Regan, via Frank's phone: "Today is Coase's 100th b-day."
Shawn provides this link to Terry Anderson's blog post in honor of the occasion.
A Coasean view of the environment focuses on who owns the environment. When property rights are well defined and enforced, markets can work their magic. When property rights are not so clear, environmental entrepreneurs who clarify them do good for the environment while doing well for themselves.'
December 28, 2010
My son Kevin gives us the scoop on hipness: it's costly signals. Makes sense, though, 'cause EVERYTHING is about costly signals.
Check it out. Article starts on p. 110.
December 25, 2010
The Greenwood Lake Philosopher c. 1910
From the Dec. 25, 1910 NYT:
- Hustle is the yeast that causes a man to rise in the world.
The Gentle Cynic c. 1910
From the Dec. 25, 1910 NYT:
- The man who borrows trouble never gets out of debt.
On the customer is always right c. 1910
An amazing story from the Dec. 25, 1910 NYT:
St. Louis - Enraged because a steak he had ordered in a restaurant was not served promptly, John Bennett, aged 18 years, a newsboy, this afternoon drew a revolver and killed James Costas, an employe of the restaurant.
Raising rivals' costs c. 1910
From the Dec. 25, 1910 NYT:
The project of a third major baseball league club for Chicago would be seriously affected by an ordinance passed by the City Council last Monday, designed to insure the safety of baseball crowds.
Actually, the last paragraph is not correct, I believe. Couldn't the third team play, but just in a park smaller than 5,000 people - or in a park with no grandstand. Of course, a team playing in such an environment would likely have a hard time competing and surviving.
December 24, 2010
Here's Ohio State Athletic Director Gene Smith's lame excuse for the OSU players who have been suspended for selling memorabilia to pay for tattoos:
"The time this occurred with these young men was a very tough time in our society," he said. "It's one of the toughest economic environments in our history."
Translation: the recession made it hard for players to afford tattoos. Nice.
The big fat cartel known as the NCAA also deserves a raspberry for its lame rationale for allowing the players to play in their upcoming bowl game instead of having the suspensions start immediately:
The NCAA did not suspend the players for the Sugar Bowl because the "student-athletes did not receive adequate rules education during the time period the violations occurred."
Of course, if the players really didn't receive adequate rules education then maybe they should not be suspended at all. Call me cynical, but this smells like a Sugar Bowl protection scheme.
Posted by E. Frank Stephenson at 09:49 AM
Dept. of Unintended Consequences
From yesterday's WSJ:
Members of the Screen Actors Guild recently read in their health plan's newsletter that, beginning in January, almost 12,000 of its participants will lose access to treatment for mental-health and substance-abuse issues.
Something that is often overlooked is that the optimal mix of products in the marketplace might include some lower quality options. Parity laws such as this one and occupational licensing laws that get rid of low quality providers limit consumer choices to high quality (or parity) or parity options or no coverage whatsoever.
December 23, 2010
Final National Congressional Vote Totals
Courtesy of Richard Winger's Ballot Access News, we now have the final national vote totals for the U.S. House of Representatives in the fall election. Here we go:
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Party Total Votes Percentage of Total
Republicans won 53.44 percent of the two-party vote.
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December 21, 2010
Christmas Extravagance c. 1910
A letter to the editor in the Dec. 21, 1910 NYT reminds us that the "Buy Nothing Day" folks are nothing new:
It is astonishing to see what lengths some people will go to in giving presents at Christmas. I am told they will borrow, go in debt, or even steal to gratify their desires. The ladies get the worst of it, of course. It requires great skill to manage the whole business successfully and economically. I was told by a lady friend not long ago that in her exchanges last Christmas one of her friends returned, through a mistake, the gift she had sent to her the year before.
File this in the "things never change drawer:" Complaints about over-indulgence in materialism during Christmas and the horrors of re-gifting are nothing new.
On the rationally ignorant voter c. 1910
From the Dec. 21, 1910 NYT:
NORTH ADAMS, Mass. - After many years in the license column, this city, at the annual election to-day, swung over into the no-license ranks by a majority of 1 vote. The result was a general surprise for the city has so long had a "yes" majority that it was looked upon as "safe," and there had been little work done to get out the voters on either side.
Just to clarify, the city voted to go "dry," I am sure to the utter shock and amazement to the good folks who were in the bar while the polls were open.
And 90 years later the Simpsons will parody this:
Kent Brockman: "The controversial bill passed by only a single vote."
December 20, 2010
I'm in love with Hayek
As we lawyers say, "res ipsa loquitur."
December 17, 2010
The Broken Roof Fallacy?
We take you to Minnesota, home of the snowed in Metrodome:
Backed by dump trucks and loaders, dozens of workers hoisting shovels and blowers attacked the snowdrifts covering the University of Minnesota's stadium Wednesday in a determined push to have it ready to replace the snow-damaged Metrodome for Monday night's game between the Vikings and Bears.
Wonder how long it will take the Krugster and the rest of the Keynesian crowd to start praising the job creating effects of the roof collapse or, better yet, to suggest creating more jobs by paying the folks to return the snow to the stadium after the game is played. Maybe Minnesotans should routinely damage the Metrodome roof every winter in order create dozens of jobs.
Posted by E. Frank Stephenson at 08:57 AM
December 16, 2010
Not Exactly Made in China
I tell my students that I think the single most misleading economic statistic is the bilateral trade balance between any two countries. An article in yesterday's WSJ makes (at least part of) my point:
Trade statistics in both countries consider the iPhone a Chinese export to the U.S., even though it is entirely designed and owned by a U.S. company, and is made largely of parts produced in several Asian and European countries. China's contribution is the last step—assembling and shipping the phones.
December 15, 2010
APEE 2011 YOUNG SCHOLARS PROGRAM
APEE has received a grant to help young faculty and graduate students attend our annual meeting April 10-12, 2011 in Nassau, Bahamas . These funds are designed to encourage younger scholars to consider the advantages of APEE membership. Funds are limited and a strong preference will be given to first time attendees, though second time attendees will remain eligible. People who have received multiple awards in the past should not expect to receive funding.
Successful applicants will have their registration fees reduced to $75 (normally $411) and be eligible for a stipend to help offset travel expenses. To apply applicants must supply us with the following: (1) a short essay (250-300 words) explaining why the applicant wishes to attend the meeting; (2) a short letter of reference, preferably from an APEE member or someone known to APEE indicating why support should be provided to the nominee, and (3) a brief letter from the applicant's department chair or graduate director indicating the level of departmental support that the applicant can expect for this trip. Some of the applicants may be on the program and preference will be given to these applications. The deadline for applying is January 21, 2011. Those selected will be notified within two weeks of that date. Successful applicants will be required to register for the conference (at the reduced rate of $75) by February 19, 2011.
Please send applications to Dr. Frank Stephenson at email@example.com . If you have questions, you may email him or call him at (706) 238-7878.
Posted by Robert Lawson at 03:36 PM
December 14, 2010
Norman Borlaug Rap
Lyrics and audio here. A nice tribute to one of the world's most underappreciated people.
Premium Seating, Elizabethan Style
From Bill Bryson's Shakespeare (p. 139):
Spectators [at The Blackfriars Theater] could, for an additional fee, sit on the stage--something not permitted at the Globe. With stage seating, audience members could show off their finery to maximum effect, and the practice was lucrative ...
I wonder if Elizabethan theaters also sold personal seat licenses.
Property Rights Matter: Elizabethan Edition
From Bill Bryson's Shakespeare (p. 48):
The [London] authorities repeatedly issued edicts that new housing was not to be erected within three miles of City walls, under pain of demolition, but the fact that the edicts had so often to be renewed shows how little they were regarded. The one effect the laws did have was to discourage the erecting of buildings of quality outside City walls, since they might at any moment be condemned. Instead London became increasingly ringed with slums.
Sounds a bit like a certain Argentine property rights study, no?
December 13, 2010
I swear I don't make this stuff up c. 1910
Reading the paper from 100 years ago often makes me feel like I have run down a rabbit hole where sixes are sevens and some things are backwards but almost everything is sadly familiar. Take this op-ed from the Dec. 13, 1910 NYT:
Really? This is how far we have come in 100 years?
On Capital-Labor Tradeoffs c. 1910
The Dec. 13, 1910 NYT reports that the Pennsylvania Railroad "is beginning to equip its 6,000 locomotives with an automatic stoker, which saves much of the work of firemen and practically disposes of the smoke problem." Sounds great, no? Innovation (perhaps pushed by local regulation concerning smoke) looks to kill a number of birds with one stone, but alas, the story goes on:
The automatic stoker feeds the coal from under the fire, thus causing a great saving of fuel. It is estimated that it saves 90 per cent. of the work of firemen, but this will not throw firemen out of work, because of the laws requiring two men in the cabs of locomotives.
At least the firemen had less work to do while they sat in the cab of the locomotive, with fewer distractions I trust there was a substantial reduction in railroad accidents.
[Updated: December 14 - see below the fold]
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One reason I like the c. 19XX posts is that I occassionally receive feedback from DoL readers concerning the historical context of a post. Obviously when I read the paper from 100 years ago I am rarely in a position, either because of a lack of time or a lack of comparative advantage, to do any particular article full justice. However, it has never been my intention to do more than post an article and a snide remark or two and then move on - hoping the reader gets something (although I am not sure what) out of my efforts.
Yesterday I received an amazing email from a DoL reader concerning trains and capital-labor tradeoffs. With his permission, I post his response for the benefit of others.
I assume that I am likely among an extremely small number of (regular) Division of Labour readers who actually has direct experience with steam locomotives, including some time as a student fireman on both manually “hand-bombed” and stoker-fired locomotives as a volunteer in a museum setting.
The New York Times was inherently wrong in this article on several counts and it appears one should regard the verity of the “old Grey Lady” of 1910 with the same suspicion one would afford it today.
The first is that the assertion that the fireman has less work with a stoker. There is less physical labor, but not less work with the stoker. Even after widespread deployment, only larger locomotives were equipped with stokers. Locomotives intended for switching and light-duty service required more shoveling, but the “scoop” is required for proper fire management on all locomotives. The work involved with firing a “crack” passenger train over mountainous terrain is inherently more difficult than switching cars in a yard or running a few freight cars over a branch line.
In any locomotive, while the most obvious and most visible function of a fireman is to keep the fire burning, the most important job is to maintain sufficient water in the boiler. Without sufficient water, the locomotive will be equally crippled-but low water presents the additional peril of a boiler explosion. The most recent "catastrophic pressure vessel failure" occurred in Gettysburg PA in 1995 and resulted in a rewriting of decades old federal locomotive regulations. It served to remind train and engine crews of that danger even in relatively low intensity operations. In addition to maintaining a hot enough fire, pressure and water level suitable for the requirements that will be incurred, the fireman must be alert to the road ahead, (especially when the boiler obscures the engineer’s vision going around curves), know the rather extensive operating rules and also be aware of the constantly changing mechanical condition of the locomotive. The crude nature of even the most advanced steam locomotive means that two individuals need to be in the cab, not due to law, but to ensure safety. A stoker was essentially to a fireman what an adding machine was to an accountant of the time.
The story was also wrong with regard to the stoker’s effects on cleanliness and consumption. The principal reason that the “Pennsy” and other railroads opposed the stoker was that it was LESS efficient and LESS clean than manual firing, especially when performed by an “old hand”.
Since a stoker inevitably pulverizes a great deal of coal, it inevitably results in less efficiency as fine particles are sent through the firebox and out of the smokestack without fully combusting-losing energy and creating a dirtier fire. If a locomotive is small or in less intense service, an experienced fireman will use less coal and create less smoke and cinders.
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December 11, 2010
"Divided We Vote," forthcoming Public Choice
Pete Calcagno's and my paper, "Divided We Vote," is now forthcoming at Public Choice.
Abstract: Divided government is known to correlate with limited government, but less is understood about the empirical conditions that lead to divided government. This paper estimates the determinants of continuous and categorical measures of divided government in an empirical macro political economy model using 30 years of data from the American states. Voters support more divided government after increased government spending per dollar of tax revenues, but more unified government after worsening incomes and unemployment rates. Only conditional support is found for the strategic-moderating theory (Alesina and Rosenthal 1996) that focuses purely on midterm cycles and split-ticket voting absent economic conditions.
You can download a freshly revised copy at SSRN.
December 10, 2010
Two articles... Op-ed about "end the DAFT!" in the south Florida Sun-Sentinel today.
Second, my friend Bill Lumaye acted all hinky when I called him a "Keynesian" on air on WPTF Monday for supporting temporary extensions of the Bush tax cuts. Bill, if you won't believe me, maybe you'll believe that lefty Charles Krauthammer. Short-term, uncertain duration "tax cuts" are not tax cuts at all, but deficit-financed spending.
As I say in the Sun-Sentinel article: If you hate taxes, cut spending.
December 09, 2010
The Broken Window Fallacy
From this blog
Some interesting and some terrifying comments over at Reddit
On Campaign Financing c. 1910
A report in the Dec. 9, 1910 NYT provides an interesting contrast to today's campaign financing:
That the race is not always to the rich nor the battle to the well-heeled appears in the statements filed to-day with the clerk of the House of Representatives by the Republican and Democratic Congressional Committees, showing the expenses of each during the recent campaign. It cost the Democratic committee $27,771 to gain the next House, and the Republicans $74,373 to lose it. As Camp Clark observes, the Republicans seem, comparatively speaking, not to have "got their seed back."
The folks over at eh.net provide the following conversions to 2009 dollars:
$27,771 = $647,000
Anti-Obamacare c. 1910
A letter to the editor in the Dec. 9, 1910 NYT provides something to think about:
In a recent editorial article you state: "Just now the Government at Washington, in seeking to direct too many affairs in widely scattered portions of the confederation of States, has permitted its own affairs to be managed extravagantly. It is to-day in as bad a condition as any of the States - in worse condition, even."
How Economics Saved Christmas
My latest Forbes piece offers a Rothbardian take on a holiday classic.
December 08, 2010
How the Fed Has Failed
I gave a ten-minute talk on Capitol Hill yesterday, at an event sponsored by FreedomWorks and the Atlas Economic Research Foundation, on "How the Fed Has Failed". Co-panelists included Judy Shelton, Rep. Mike Pence (R-IN), and Rep. Paul Ryan (R-WI). Nobody warned me in advance, but C-SPAN was there to cover it. Their video is here. I go on around the 46:00 mark. I was mostly summarizing, without nuance, my current working paper "Has the Fed Been a Failure?" with George Selgin and William Lastrapes. The paper is available here in the Cato Working Papers series .
On banning smoking c. 1910
An article in the Dec. 8, 1910 NYT reports that the Atchison, Topeka and Santa Fe Railroad was planning on ending the employment of smokers - and without any pressure from the government or insurance programs:
The managers of the great railway systems have long insisted that their employes abstain from the use of intoxicating liquors. Now it is announced that the Atchison, Topeka & Santa Fe Railroad is discharging those of its men whose "yellow fingers" betray their addiction to the habit of smoking cigarettes. Beginning with this month, no more cigarette smokers will be employed.
Hans Rosling's story
The incredibly vivid presenter, Hans Rosling, does it again. Here he tells the story of global growth and stagnation (since 1800) in an entirely new way that incorporates his many past innovations. In my view, this 5 minute video would be useful to show in any economics class, undergraduate or grad, micro or macro, Austrian or neoclassical, whatever. Not to mention history, politics, law, philosophy, etc. Kudos to Dr. Rosling! HT Amy Willis, Steve Pejovich, Russ Roberts.
Good Grief, It's a Trash Can People
An elderly Manhattan woman living on Social Security was slapped with a $100 ticket -- just for throwing away a newspaper in a city trash can.
Posted by E. Frank Stephenson at 09:38 AM
December 07, 2010
Funny headline of the day c. 1910
From an article in the Dec. 7, 1910 NYT:
MEMBERS OF BATHTUB TRUST ARE INDICTED
The trust was essentially 16 firms that controlled 85% of the market for bathtubs, sinks, and the sort. The cartel controlled about $10,000,000 in output per year. So, as far as anti-trust cases go, this one doesn't sound nearly as sexy as AT&T, IBM, or Microsoft.
Moreover, these are just indictments so it is not clear that anything will come of them anyway. However, it is interesting that there is a much more regular mention of anti-trust activity in the paper of old when compared to today. I wonder if that is a supply-side or demand-side issue.
Naivety c. 1910
From a letter to the editor in the Dec. 7, 1910 NYT:
A year or more ago there developed in this "Greatest City of a Great Country" a violent agitation looking to the prohibition by law of speculation in theatre tickets, but our city fathers were evidently unable to find a way out of the difficulty. I am informed that the City of Chicago has recently passed an ordinance compelling all theatre tickets to have the price printed on them, and making it a punishable offense to sell any tickets above this figure. This would seem to be an effectual remedy for the evil.Wow - either the writer was extremely naive or us economists missed the boat on this one. I am fairly confident that printing the price of admission on tickets has done nothing to slow down the speculation on tickets.
I like the jab at the end - buying low and selling high is "evil"?
How is this going to work out?
From an e-mail sent by the library on campus:
No more general collections fines! Beginning in the Spring semester students will no longer be charged late fees for general collections items checked out from Atkins Library. We will still enforce/collect fines for lost items, late Inter-Library Loan books, Course Reserves materials, recalled books and laptops.I wonder if that means that there are very few books turned in late, or there are fewer books checked out of the library? I wonder how incentives will change and the implications. This sounds like a quasi-natural experiment of some sort, but I haven't the time at the moment to figure out how to take advantage of it - I'm thinking along the lines of moral hazard in the absence or reduction in penalties.
Anyone else experience something like this on their campus?
December 06, 2010
Selgin on the Fed
My co-author George Selgin talks to Russ Roberts about the Federal Reserve's historical record, based our paper "Has the Fed Been a Failure?"
Paging Dr. Lopez...
Wow! I have never heard of eminent domain being exercised on transportable capital! Furthermore, thank goodness those Taunton (MA) city-council members know so much more about how capital can best be used than do markets! Wait a minute.... didn't we try this basic framework in Tito's Yugoslavia? Let's see how well that worked ou... never mind.
Posted by Noel Campbell at 01:57 PM
When in doubt, go bigger!
Is anyone surprised that Mr. Bernanke has announced the $600B of QE2 probably won't be enough, and more cash will be needed? My fave: while announcing further destabilization of the dollar, Mr. Ben jabs at China for defending its fixed exchange rate.
Posted by Noel Campbell at 01:51 PM
December 05, 2010
Tyler Cowen on Bourgeois Dignity
Tyler finds Deirdre McCloskey's latest convincing. I've read several versions of this in draft form and am about halfway through the published version. McCloskey's "Bourgeois Era" series is the kind of game-changing work we get into this business to do. As I read it, Bourgeois Dignity is basically her 1981/1996 piece on the development of Britain expanded to over several more millennia, the entire world, and some 500 pages. And she comes to what I think is a pretty convincing answer.
December 03, 2010
Yale vs. Harvard c. 1910
From the Dec. 3, 1910 NYT:
The football that was kicked and carried about Yale field by the Harvard and Yale players on Nov. 19 and which failed to cross the goal post bar at either end of the field is practically an outcast or a "dead ball" as far as the two universities are concerned, as neither team desires it as a trophy of the scoreless game.What would it be worth today?
On Journalism c. 1910
From a short bit in the December 3, 1910 NYT:
JACKSON, La: A decided novelty in the way of newspaper publication is soon to be introduced at Jackson. It will be issued by inmates of the State Insane Asylum here. The paper will be called the Bulletin, and will be published "Every Once in a While."
December 02, 2010
For the first time in 44 years, FIFA has created the bonanza of awarding two World Cups to eager countries in one day, with today’s announcement of the 2018 and 2022 hosts not only holding the hopes of nine nations in thrall today in Zurich, but also further complicating a process already snarled by tales of corruption.
Ladies and gents this means the FIFA honchos now have the opportunity for a bit of good old fashioned logrolling. Continues the NYT:
The United States is competing against bids from Qatar, Australia, Japan and South Korea. The 2018 event will go to England, Russia or joint bids by Portugal and Spain and the Netherlands and Belgium. The voters will be members of the 24-member FIFA executive committee, because two of those members have been barred from voting because of the latest corruption scandal.
Just another illustration of the fact that the R-square value of public choice is high.
UPDATE: Apparently Russia and Qatar are the winners.
Yet Another Reason the Guvmint Shouldn't Make Medical Decisions
Fewer than half of Americans have had an AIDS test since guidelines were expanded to include routine screening, according to a government report released Tuesday.
Routine testing incurs costs. For, say, a 44 year old who has been in a monogamous releationship for nearly two decades and has never had any relevant symptoms, there is simply no reason to use scarce resources on HIV tests.
Life Insurers as Bootleggers
Glenn Reynolds points to this item:
A new report from a trade association representing family-owned businesses fighting against the estate tax says a giant life insurance lobby is a key force pushing against repeal of the estate tax as the tax creates demand for their insurance.
Posted by E. Frank Stephenson at 09:08 AM
December 01, 2010
No, Officer I Have No Idea What That Car-Shaped Mound of Dirt in My Yard Is
A Silver Creek man was arrested Monday on a charge of tampering with evidence after he allegedly tried to hide a car involved in a wreck by covering it with dirt, reports stated.
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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