Division of Labour: August 2011 Archives
August 31, 2011
More Evidence on the Relationship Between Council Size and Government Spending
As noted in a previous post, there is some evidence on both sides of this issue (known as the law of 1/n in the literature) including a couple of papers supporting the proposition co-authored by me and JC Bradbury. The latest edition of the American Economic Journal: Economic Policy has an article by Stephen Coate and Brian Knight that finds support for the law of 1/n (see their table 4).
Voting With Their Feet
Posted by E. Frank Stephenson at 08:46 PM
Grover Cleveland, The Last Libertarian President
That's the title of Larry Reed's piece in tomorrow's IBD.
Posted by E. Frank Stephenson at 08:25 PM
Irene as Stimulus
So says Fox News's Peter Barnes. At the 0:35-0:45 part he sounds almost giddy. Perhaps Don Boudreaux can extend his generous offer to Peter Morici to Mr. Barnes.
Posted by E. Frank Stephenson at 08:20 PM
CNN.com Headline Writers
I can predict it now even without a blood test
South Carolina Woman Scammed Into Buying a Fake iPad Made of Wood
Posted by E. Frank Stephenson at 09:29 AM
Sheryl Crow Is Not a Suspect
Posted by E. Frank Stephenson at 09:21 AM
August 30, 2011
Miami International Airport has led the way in the latest technology for airport security. One airport passenger learned this the hard way when he was trying to sneak seven exotic snakes onto a plane…in his pants.
What is it with people stuffing things down their pants? And the worst part--the critters were detected by one of the TSA's porno scanners.
Posted by E. Frank Stephenson at 12:57 PM
The Real Scandal of Dead Peasant Insurance
The kerfuffle du jour is the accusation that Rick Perry sought to have Texas profit from a scheme known as dead peasants insurance. Under these plans people can be the life insurance beneficiaries of people they do not know (in Perry's case, Texas teachers). The programs do not cause investor/beneficiaries to kill random school teachers to up their payoffs. So what's the problem? I answered that question a few years ago in the Independent Review.
Posted by E. Frank Stephenson at 09:06 AM
August 29, 2011
Sex Offenders as Babysitters
Cornelius Osborne may not seem like baby-sitting material.
Like other govt failures the answer will probably be to give the offending agency a larger budget.
Posted by E. Frank Stephenson at 10:02 AM
Fight of the Century, Part Deux
We've all seen Keynes and Hayek duke it out. So what comes next for John Papola and Russ Roberts?
My suggestion--a 10-rounder between Paul "broken windows" Krugman and Austan Goolsbee. Krugman's belief that events such as 9/11 or an alien invasion might be stimulative are well documented; he might even have said a bigger DC would have provided more stimulus. Goolsbee, by contrast, seems to think such events are disruptive; here's what he said on "Hannity" last week:
Now, at the beginning of this year, we get earthquakes, tsunamis, revolutions in the Middle East, European financial crises. Now we got earthquakes outside of Washington, D.C. I mean, we've got a series of things that have put some heavy blows and slowed the economy back down again.
Lace 'em up gents! (For the record, I think Goolsbee is correct except that in this context he is using the disasters as an excuse for harmful Obama admin policies.)
Posted by E. Frank Stephenson at 08:44 AM
"Price Gouging" at NJ Best Buy
Apparently a NJ Best Buy did a bit of
This seems like a good time to give another well-deserved plug to The Price of Everything by Russ Roberts.
August 25, 2011
What - or Who - Started the Great Depression?
Mises Academy course on Economic Freedom
Economic Freedom Around the World
This course will consist of five lectures about the concept, measurement and consequences of economic freedom. The Economic Freedom of the World index, published by the Fraser Institute and co-authored by James Gwartney, Robert Lawson, and Joshua Hall, will be the focus of the course. Topics will include (1) the Concept and Measurement of Economic Freedom, (2) Economic Freedom and Growth, (3) Economic Freedom and Human Right Violations, (4) The Hayek-Friedman Hypothesis on Economic Freedom and Political Freedom, (5) The Freedom to Travel.
August 20, 2011
More Hooverite Nonsense
Just as Munger has a running "grand game" on KPC, I'm thinking of starting a "spot the idiot" meme. Today's winner--for spouting the usual nonsense about Hoover being a budget cutter--would be one David Osterberg who wrote that "Hoover’s mistake was to cut budgets in the face of terrible unemployment and poverty in America."
So here's the letter that I sent to the Des Moines Register:
In his column “Congress needs a Herbert Hoover reminder” (Aug. 16), David Osterberg states that Hoover “cut budgets in the face of terrible unemployment and poverty in America.” This claim is just plain wrong. A quick glance at Hoover’s actual record indicates that spending rose some 50%, from $3.1 billion in 1929 to $4.6 billion in 1932, during Hoover's term. (See Table 1.1 of this government document: (http://www.whitehouse.gov/sites/default/files/omb/budget/fy2008/pdf/hist.pdf.)
While I'm riding my Hoover horse, Steve Horwitz's recent post on "Annie" and the origins of the Hoover myth is a must read.
Reverse Rent Extraction: How Refreshing
Rent extraction is the idea that policymakers (regulators, legislators, etc.) can threaten the people they regulate into certain actions that benefit the policymakers. For example, "milker bills" get proposed routinely for the sole purpose of signalling to certain business or other interests that unless they provide certain favors like campaign contributions life will become more difficult. Fred McChesney is largely responsible for the idea, which is extended from Gordon Tullock's rent-seeking concept as developed in George Stigler's classic 1971 paper, "A Theory of Economic Regulation." There are good introductions to rent extraction here and Chapter 10 here. Lucian Bebchuck applies rent extraction to how CEOs bargain with Directorates.
So along comes the other day this funny little article that, at first, looks a little bit like rent-extraction. It has that same feel of extortion mixed with some vague implausibility. But on closer look, it's actually reverse rent-extraction. "Starbucks Claims Widespread Support for CEO's Call to Boycott Campaign Donations."
Starbucks claimed Wednesday that it has rallied “hundreds” of people in support of a call by CEO Howard Schultz to suspend campaign contributions to Congress and the president until Washington produces a long-term deficit reduction plan.
Never mind that the free rider problem of getting interest groups to stop contributing is worse than the free rider problem of getting interest groups to contribute. Still a neat idea.
August 18, 2011
Pa. lawmaker suggests spread of STDs 'amongst womenfolk' a side effect of natural gas drilling
Fracking causes clap--who knew! Them boys must be doing some kinky stuff with those drills.
Posted by E. Frank Stephenson at 11:54 AM
Demand curves slope downward. (A continuing series.)
Minimum Wages and Teen Employment: A Spatial Panel Approach
Abstract: The authors employ spatial econometric techniques and Annual Averages data from the U.S. Bureau of Labor Statistics for 1990-2004 to examine how changes in the minimum wage affect teen employment. Spatial econometric techniques account for the fact that employment is correlated across states. Such correlation may exist if a change in the minimum wage in a state affects employment not only in its own state but also in other, neighboring states. The authors show that state minimum wages negatively affect teen employment to a larger degree than is found in studies that do not account for this correlation. Their results show a combined direct and indirect effect of minimum wages on teen employment to be -2.1% for a 10% increase in the real effective minimum wage. Ignoring spatial correlation underestimates the magnitude of the effect of minimum wages on teen employment.
August 16, 2011
Beam Me Up, Kruggy!
So Paul Krugman apparently thinks we need a bunch of free spending space aliens to jump start the economy (the only difference between said aliens is some Tang, a spacesuit for the president, and a nanoo-nanoo or two, but I digress).
August 15, 2011
Better to Have No Jobs Than Low Paying Jobs?
Apparently CNN thinks so. Here's part of a piece called "Rick Perry's Texas jobs boom: The whole story":
But that doesn't mean that all is well with employment in the Lone Star State. Texas leads the nation in minimum-wage jobs, and many positions don't offer health benefits.
I have no particular affinity for Rick Perry--or any of the other 2012 Presidential candidates--but this just reads like lefty smear. Maybe I need to bump Tim Groseclose's new book a couple of notches up my reading list.
Posted by E. Frank Stephenson at 10:01 AM
August 13, 2011
Iowa Straw Poll: Dumbest Event in Politics
It's hard to imagine a dumber event in American politics than the Iowa Straw Poll. Or more precisely, it's hard to imagine anything dumber in American politics than the attention paid to the Iowa Straw Poll.
Read More »
If you are not familiar with the Iowa Straw Poll, well, it a poll of a group of Republicans in Iowa, on their favorite to win next year's presidential nomination. There's more, but we'll get to that in a bit. Let's start with the latest results of Poll, held today in Ames, Iowa.
Minnesota Congresswoman Michele Bachmann won this year's poll with 28.5% of the vote, edging Texas Congressman Ron Paul, who garnered 27.6%. Former Minnesota Governor Tim Pawlenty was a distant third, with 13.6%.
Just three months ago, D.C. sage George Will argued on This Week that only Pawlenty and Indiana Governor Mitch Daniels (who later decided not to run) had a chance to be the GOP nominee (this was also, of course, before Texas Governor Rick Perry's entrance to the race today.) Pawlenty has been a front runner and would still seem to be - he's a two-term governor from a reasonably large, "purple" state, a candidate at least generally satisfactory to all elements of the GOP coalition. Yet now, according to the Washington, D.C. insider must-read, The Politico, this
So what exactly is the Iowa Straw Poll? Well, back in 1979, Iowa Republicans decided they could have some fund, draw some attention, and raise a little more money by taking a poll at their annual mid-summer fund-raiser for the Party. And the key element, here, is that the "poll" is still primarily - at least for the Party - a fundraising ploy. Thus, anyone who pays to attend can vote, but no pay/no vote. Nor does it matter who pays - so campaigns can (and virtually all do) bus in their supporters to vote, and pay their entrance fee. Candidates can do the old 18th century campaign style trick of plying voters with food and drink, a tents they have to pay for, with the candidate who agrees to pay the most getting the most favorable location. Needless to say, this neither replicates any type of scientific polling, nor even an actual U.S. election.
Nor does it represent many people. This year there were 16,892 votes. Congresswoman Bachmann received 4823. On this basis, fewer than 17,000 Iowans voting in a poll bearing no resemblence to a real election, Politico now dubs her the "front-runner," at least to win the Iowa caucuses. And poor Governor Pawlenty, with 2293 votes, has gone from "top tier" to toast.
Even more amazing, the Iowa Straw Poll doesn't even have a good track record of picking the winner. In that first 1979 poll, George H.W. Bush defeated Ronald Reagan and a gaggle of other Republicans. Bush went on to win the Iowa caucuses in early 1980, but if memory serves, someone else won the nomination - maybe that Reagan dude. In 1987 (no poll in 1983, 1991, and 2003, when GOP incumbents ran basically unopposed), Pat Robertson won the Straw Poll, but Bob Dole won the caucus, and George H.W. Bush won the nomination. In 1995, Phil Gramm and Dole tied in the Straw Poll. Gramm, of course, went nowhere - Dole actually won both the Iowa Caucus and the nomination. In 1999, George W. Bush won the Straw Poll and went on to wins in the caucus and the nomination, but in 2007, Mitt Romney's 32%-18% win over Mike Huckabee mattered naught - Huckabee won the caucuses 5 months later, and John McCain, of course, the nomination. Note that only once has a Straw Poll winner won the presidency, and only twice has the Poll winner even won the nomination.
But if winning the poll doesn't mean much, losing it - or doing worse than expectations - can apparently be the kiss of death, as the press writes the candidate off and funding dries up. It looks like that might happen to Pawlenty.
Meanwhile, Mitt Romney decided not to blow money, or risk his front runner status, this year. He chose not to compete in Iowa, but was listed on the ballot and finished 7th with 567 votes, or 3.4%. Given all the good he got from winning the Straw Poll four years ago (that is, none), probably a wise decision. Perry, who declared for the nomination this morning, picked up 718 write-in votes, good for 4.3% and 6th place. Feel the momentum!
Ron Paul's campaign was celebrating his close second place, insisting this made the Texas libertarian a serious, "first-tier" candidate. I like Ron Paul, I've done legal work for Ron Paul (and also Romney, by the way) in 2008. I'm not convinced he's in the "first-tier." But hey, it looks like he'll outlast Pawlenty.
In fourth place, with 9.8%, was Rick Santorum, a very smart, thoughtful, and decent man who has no chance of winning the nomination. In 5th was former Godfather's Pizza CEO turned talk-radio host Herman Cain, with 8.6%. Behind Perry and Romney came Newt Gingrich, the once powerful speaker reduced to sideshow status, John Anderson- oops, I mean Huntsman, and Michigan Congressman Thad McCotter, whom you've probably never heard of, let alone knew was running for President. Poor Gary Johnson, the libertarian, former New Mexico Governor, the "thinking man's Ron Paul" who can't get any traction with Paul in the race, was down in the "scattering" category.
So the top two Republican candidates, Perry and Romney, don't compete. Their presumptive main rival, Pawlenty, is left on life support. Bachmann and Paul will try to turn this fundraising show into real momentum.
Man, this is no way to run a railroad.
« Close It
August 12, 2011
On Interstate Purchases of Medical Insurance
Allowing interstate purchases of medical insurance has been suggested as one way to make insurance less expensive. The findings of a recent paper (gated) in Applied Economics finds that "a 1 percentage point increase in the average market share of the largest five [medical insurance] carriers in a market leads to a 10% increase in [medical]expenditures." Since interstate purchases might reduce market shares, it stands to reason that this paper's findings imply that interstate competition would push down health insurance expenses.
Posted by E. Frank Stephenson at 02:44 PM
Public Choice Has A High R^2: Super Committee Edition
Nothing like a bit of rent extraction eh?
Posted by E. Frank Stephenson at 09:12 AM
August 10, 2011
A Bank Goes Galt
Posted by E. Frank Stephenson at 03:44 PM
Some things that have caught my attention in the last day or two:
2. Price controls are causing shortages of cancer drugs. (BTW, the piece was written by Rahm Emanuel's brother who presumably is not some free marketer.)
3. This NPR story attributes the London riots to "the most severe public spending cuts since the Second World War." Baloney. My guesses: It's just a form of stimulus because baseball bat sales are way up (or maybe cricket has fallen out of favor) or maybe the Brits are trying to be as happy as the car burning French.
Posted by E. Frank Stephenson at 11:55 AM
August 06, 2011
It's the Spending, Stupid.
August 04, 2011
Joey Ramone's "Maria Bartiromo"
Since Wall St is in the news today ...
Posted by E. Frank Stephenson at 08:20 PM
The Tax Hell That Is New York
This story about New Yorkers fleeing the state because of its high taxes reminded me that I had not blogged some related observations from a recent trip to the Empire State.
1. President Obama, who thinks ATMs cause unemployment, would be pleased that the NY State Thruway (aka I-90) has not used machines to replace people handing out tickets as one enters the road. Feeling a bit puckish at one entrance, I decided to tell the person handing me a ticket that I was surprised that I didn't just get the ticket from a machine. Her response: "I get it from the machine and then give it to you." Obama would be so proud.
2. My admittedly non-scientific comparison of NY hotel rates with those in PA and on the Canadian side of Niagara Falls indicates that NY rates are considerably higher. It's possible that the difference, if it in fact exists, is caused by demand side factors but my hypothesis is that it arises from some sort of business tax that NY hotels are passing along (at least in part) to travelers. There's a paper to be written in here somewhere.
3. NY's cigarette tax is nearly $3 more per pack than PA's ($4.35 vs. $1.60). So, kiddies, what do you think NY smokers do? Among other things, they drive to PA to buy cigarettes (they can buy gas too since PA's gas tax is $0.12 per gallon lower than NY's). I took the photo below at the last northbound exit on I-81 in PA. It's a mile or two south of the NY state line and maybe 10 miles from Binghamton. The car at the window has a NY license plate. (UPDATE: DOL friend Todd Nesbit co-authored a recent study of cigarette smuggling.)
Posted by E. Frank Stephenson at 09:24 AM
Andy Zimbalist Needs The Diff
Well not exactly--his mistake isn't subtraction per se--but his discussion of interleague play in the recent Freakonomics discussion of MLB realignment does have a math problem. Here's Zimbalist:
Then there’s the question of what to do about the fact that the NL has 16 teams and the AL has 14, and more unequal still, the NL Central has 6 teams, while the AL West has 4. [snip]
Two interleague series happening at the same time doesn't solve the problem of having an odd number of teams in each league. If two teams from each 15 team league are playing in interleague series then that leaves 13 teams in each league to play intraleague. This doesn't work because there could be six intraleague series for each league but each league would then have one team left over. One must have an odd number of interleague series taking place at any time in order to solve the scheduling problem.
Background on The Diff reference is here.
Posted by E. Frank Stephenson at 08:54 AM
August 02, 2011
Competition and Teacher Pay
A couple of months back I had this letter run in the WSJ:
Why does Randi Weingarten (“Markets Aren't the Education Solution” April 25) assume that educational choice—markets—amounts to demonizing teachers? Currently, teacher pay largely depends on the number of years of experience and educational credentials obtained, factors that may not be strongly correlated with student achievement. Instead of a one scale fits all pay approach, teachers, at least the good ones, should benefit from a more competitive labor market in which school administrators could offer salaries commensurate with expected student performance rather than being determined by an arbitrary salary scale.
As if on cue, here's the abstract of a new NBER WP by C. Kirabo Jackson (emphasis added):
I analyze changes in teacher turnover, hiring, effectiveness, and salaries at traditional public schools after the opening of a nearby charter school. While I find small effects on turnover overall, difficult to staff schools (low-income, high-minority share) hired fewer new teachers and experienced small declines in teacher quality. I also find evidence of a demand side response where schools increased teacher compensation to better retain quality teachers. The results are robust across a variety of alternate specifications to account for non-random charter entry.
Posted by E. Frank Stephenson at 08:05 PM
Hippies for Sound Money, or Does Ron Paul Wear Tie Dye?
Looks like the Ben Bernank has lost the hippie crowd. (HT to a colleague who took this picture at Sunday's Furthur show in Atlanta.)
Posted by E. Frank Stephenson at 10:19 AM
Woodpecker-Saving Daughter Costs Mom $500, Possible Jail Time
Wow--story here. The kid saves a baby bird from a cat and is slapped with a fine for endangering the bird. As Angus says, holy crap people!
Posted by E. Frank Stephenson at 10:10 AM
Yuppie Puppy 911
BTW, Shawn also has a nice piece in Grist on allowing enviromentalists to bid on federal land.
Posted by E. Frank Stephenson at 09:42 AM
August 01, 2011
About That "Balanced Approach"
This cartoon from the Rome News-Tribune's Mike Lester reminds me of Phil Gramm's admonition (during his 1996 presidential campaign) that there are too many people riding in the wagon and not enough pulling it. And now 15 years later ...
Posted by E. Frank Stephenson at 02:16 PM
Don't Bet on This
Someone might want to check on Prof. Krugman, however, because he seems unwell.
Posted by E. Frank Stephenson at 01:39 PM
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
Our BloggersJoshua Hall
E. Frank Stephenson
Michael C. Munger
Lawrence H. White
Edward J. Lopez
By Author:Joshua Hall
E. Frank Stephenson
Michael C. Munger
Lawrence H. White
Ralph R. Frasca
Edward J. Lopez
By Month:November 2013
Site design by