Division of Labour: July 2013 Archives
July 31, 2013
For Soccer Geeks

I've recently learned of the website Football Perspectives which publishes short, non-technical summaries of scholarly studies of soccer.

One particularly clever paper that is summarized is a study of home field advantage "Is familiarity with the stadium more important for home advantage than crowd support?" by Niels van de Ven. The paper looks at matches between two pairs of teams (one in Rome and one in Milan) who share the same stadium. The teams alternate being home and away, and ticket sales go primarily to supporters of the designated home team (as part of season ticket packages). The author finds that there is no home field advantage for these matches, a finding that suggests field familiarity is more important than crowd support. I haven't looked at the statistical nuts and bolts and the sample size is rather small (64 matches), but I applaud the cleverness of the idea.

Posted by E. Frank Stephenson at 04:12 PM

July 30, 2013
Just Wondering ...

Many commenters are blaming Detroit's bankruptcy on the decline of the auto industry. Here's an example from John Tamney of Forbes:

The mainstream punditry will talk about unions, crime and high taxes as the causes of Detroit’s bankruptcy, but the real answer is rooted in something far more basic: cars are easy to make, and Detroit’s biggest employers make cars.

If this is the case, then shouldn't several other cities and towns near Detroit also be having bankruptcy problems? My guess is that several municipalities near Detroit are at least as dependent on the auto industry and autoworkers as Detroit is. Are these towns also in bankruptcy? Maybe some are; if so, that'd buttress the argument that the auto industry led to Detroit's decline. If not, then maybe something about Detroit--maybe its crummy governance--might be more to blame than the decline of the auto industry.

And a footnote: The "auto industry" is not just the 3 large firms headquartered near Detroit. Several plants are located in other parts of the country; those plants and the towns that host them seem to be doing just fine.

UPDATE (8/1): As this post from Mark Perry points out, Oakland County Michigan--just across 8 Mile Road from Detroit--has a growing population and a AAA bond rating.

Posted by E. Frank Stephenson at 04:07 PM

Do slums matter? Location and early childhood preventive care choices among urban residents of Bangladesh

Congratulations to my colleague Lauren Heller whose paper of that title is forthcoming in Social Science and Medicine. Lauren sent along the following blurb about the paper and would be happy to email a copy to anyone interested (lheller[at]berry[dot]edu):

One particularly salient finding, in my view, is that if you want to increase the demand for perinatal care in an urban area of Bangladesh, the solution is not to build more health care clinics. Things like sanitation and community infrastructure matter far more. The theory behind this is that if families think their kids have a better “shot” in terms of decreased child mortality from better sanitation, they’ll invest more into preventive care for that child on their own. Regardless of how I measure it, more health clinics don’t seem to matter, so the solution is definitely not the “Field of Dreams” approach to development (build it and they will come…).
Posted by E. Frank Stephenson at 03:49 PM

No Vans Land

That's the name of a documentary about commuter van entrepreneurs in NYC and their struggle to compete against special interests. The trailer is embedded below; the full film is here.

Posted by E. Frank Stephenson at 03:30 PM

July 29, 2013
Does Christina Fernandez Read the Journal of Political Economy?

I'm sure she doesn't, but the headline below reminds me of Russ Sobel's 1999 JPE paper (JSTOR). In his paper, Sobel explains that the short run income gain from a minimum wage hike is larger than the long run income gain from a minimum wage hike because the demand for labor is less elastic in the short run. One implication is that a vote buying pol such as Fernandez can maximize the electoral benefit of raising the minimum wage by doing so shortly before elections. Argentina has elections in October so--presto!--August brings a minimum wage hike.

Cristina Fernandez on campaign for October mid term elections hikes minimum wage 25.5%

Posted by E. Frank Stephenson at 04:20 PM

July 26, 2013
Stuart Banner on Baseball's Antitrust Exemption

One of my favorite books is Stuart Banner's Who Owns the Sky?, a book tracing the legal evolution of property rights in the sky. Banner's latest offering is The Baseball Trust: A History of Baseball’s Antitrust Exemption. John Charles Bradbury reviews it here. Add another book to my "read me" pile.

Posted by E. Frank Stephenson at 08:06 AM

July 25, 2013
Mike Lester on Mickelson's Tax Bite

From the RN-T:

Lester on Mickelson.jpg

Posted by E. Frank Stephenson at 01:56 PM

On Pols and Distractions

Some of the stuff that pols say leaves me feeling like the Aflac duck in the clip below. For example, yesterday in Illinois President Obama said, "But with this endless parade of distractions and political posturing and phony scandals, Washington's taken its eye off the ball. And I'm here to say this needs to stop." But isn't this the same President Obama who just last week took to the podium to comment on the Zimmerman verdict? I'm all for politicians being distracted from their mischief ("look it's a squirrel"), but it takes a supersized helping of chutzpah to then come out a just few days later bemoaning a "parade of distractions."

I don't really mean this as a partisan thing--Repubs say lots of jawdropping stuff too (see: Republican Senate candidates re abortion).

Posted by E. Frank Stephenson at 10:25 AM

July 24, 2013
A Royal Drive Thru Delivery?

So the newest member of Britain's royal family was born Monday afternoon and was then taken home Tuesday evening, just a bit more than 24 hours after his birth.

Let me see if I've got this right. The British National Health Service (which according to Paul Krugman "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.") is home of the drive thru delivery. Barely 24 hours before mum and baby are out the door. I thought only nasty old American insurance companies did such things.

UPDATE (7/26): A reader informs me that the hospital where the child was born is a private hospital not an NHS hospital. He adds that NHS hospitals do have 24 hour maternity stays so there is a bit of silver lining to my post, but I stand corrected. Many thanks.

BTW, sharing the name of George III, Alexander II, and Louis XVI isn’t a very auspicious start to life—sort of a trifecta of misfortune. There were, of course, other monarchs with those names. (Tim Worstall has more thoughts on the royal baby's names.)

Posted by E. Frank Stephenson at 02:29 PM

Podcast on Occupational Licensing

A few days ago I recorded an episode of Econ Journal Watch audio with Larry White. The topic of the chat is my 2009 EJW paper with Erin Wendt on the coverage of occupational licensing in labor econ textbooks.

The podcast also provides a bit of an update to our paper. Since our paper was published, two of the three labor books that had not covered occupational licensing have added coverage. Details are here. Of course we can't claim that our paper caused the authors to include occupational licensing in their textbook revisions, but it's good to see occupational licensing included in more texts regardless of the authors' impetus.

Lastly, here are a couple of OL items I noticed recently:

--San Francisco wants to require licenses for dog walkers.

--Pennsylvania's licensing requirements for cosmetologists are stiffer than the training requirements for judges. (I think I owe Mark Perry a HT for this item but it's been a few days since I first saw it.)

Posted by E. Frank Stephenson at 12:44 PM

Politics Without the Romance: Texas Cigarette Tax Edition
Small tobacco companies are suing the state of Texas over a new law that they say unfairly taxes them as a favor to Big Tobacco.

On June 14, Governor Rick Perry (R) signed Texas House Bill 3536, which levies a tax of 2.75 cents for each cigarette sold or distributed in Texas by small cigarette manufacturers. The Texas Small Tobacco Coalition responded with a lawsuit claiming the law is unconstitutional because it does not mandate the same tax on large tobacco companies.

When he signed the bill, Perry said the law “was designed...to protect the market share of the Big Tobacco manufacturers.”

The plaintiffs agree, saying Big Tobacco’s lobbyists pushed lawmakers into adopting the legislation.


Posted by E. Frank Stephenson at 10:43 AM

July 23, 2013
Georgia, Trees, and The Lorax

A couple of factoids on trees in Georgia: Georgia has more trees than it did 75 years ago and it has the more acres of privately owned forest land than any other state. I suspect these factoids are not coincidental; contra The Lorax, private forest owners have an incentive to care about the future condition of their land.

Speaking of The Lorax--don't forget about the 2000 Journal of Private Enterprise article written by Berry grad Mike Hammock and my former Berry colleagues Wilson Mixon and Mike Patrono.

Posted by E. Frank Stephenson at 09:56 AM

July 22, 2013
An Open Letter To Valerie Schoepf

Dear Ms. Schoepf,

I came across your recent letter to the editor in which you wrote, "Minnesota just raised its cigarette tax by $1.60 per pack, leaving me in envy of our neighbor's efforts to help people quit smoking."

Since you are envious of people who are receiving coercive assistance "to help" them avoid unhealthy behavior, you shouldn't stop with increased cigarette taxes. Just think how thrilled you'd be for the North Dakota government to assign a person to monitor your activities 24/7. Some of the things that such a person might do "to help" you include monitoring your driving to make sure you do not speed or follow other cars too closely, supervise your food choices and caloric intake, require you to engage in sufficient exercise, prevent you from skydiving, snowmobiling, and other risky activities, and even overseeing your intimate encounters to be sure that they do not involve unhealthy behaviors. Of course, the person assigned to you would be accompanied by his/her own monitor so you'd actually benefit from having several people helping you live healthily.

Just as you applaud North Dakota for being "proactive" in planting trees to break the wind, as a "public health advocate" you no doubt see the immediate and long-term benefits that would come from having the North Dakota government proactively assign each person an individual health monitor.

Best regards,
Frank Stephenson

Posted by E. Frank Stephenson at 01:33 PM

Climate Change Policy: What Do the Models Tell Us?

That's Robert Pindyck's question; here's his answer:

Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models' descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading.

But they're scientific models right?

Posted by E. Frank Stephenson at 12:13 PM

July 19, 2013
Are bigger governments better providers of public goods? Evidence from air pollution

I use the term paper envy for what I think are particularly clever papers that I wish I'd thought of (your mileage may vary of course). Thomas Bernauer and Vally Koubi's paper (the title of which is the title of this post) in the current edition of Public Choice is one such paper. The abstract:

Theories explaining government size and its consequences are of two varieties. The first portrays government as a provider of public goods and a corrector of externalities. The second associates larger governments with bureaucratic inefficiency and special-interest-group influence. What distinguishes these alternatives is that only in the former is governmental expansion generally associated with an increase in social welfare. In the latter, the link between government size and public goods provision (or social welfare) is negative. We study the empirical significance of these competing claims by examining the relationship between government size and a particular public good, namely environmental quality (notably, air quality measured by SO2 concentrations), for 42 countries over the period 1971–1996. We find that the relationship is negative, even after accounting for the quality of government (quality of bureaucracy and the level of corruption). This result may not prove conclusively that the growth of government has been driven by factors other than concern for the public good, but it creates a presumption against the theory of government size that emphasizes public good provision.
Posted by E. Frank Stephenson at 01:49 PM

San Jose State suspends collaboration with online provider

That's the title of a piece in the LA Times; here's its subtitle: "San Jose State suspends its project with Udacity to offer low-cost, for-credit online courses after many students fail to pass them."

While my liberal arts self is fairly skeptical that online ed is a good substitute for traditional classes (at least well done ones), I'm not sure that students failing to pass their courses is a good indicator about online ed. Maybe it means that in person classes are more susceptible to grade inflation than are online courses.

UPDATE (7/22): Here is an institution that seems to be inflating grades to pass along poorly performing students. Note that it is not faculty members but administrators concerned with state appropriations who are supposedly lowering standards.

Posted by E. Frank Stephenson at 12:57 PM

Football Frenzy: The Effect of the 2011 World Cup on Women’s Professional Soccer League Attendance

That's the title of the paper that my former students Allie LeFeuvre and Sara Walcott and I have forthcoming in the Journal of Sports Economics. The abstract:

The dramatic play of the American team in the 2011 Women’s World Cup tournament brought much attention to women’s soccer in the United States. This article uses match-level data from the Women’s Professional Soccer (WPS) league to analyze the effect of the World Cup on WPS attendance. The results indicate that attendance for matches played after the World Cup roughly doubled and that matches involving star players Hope Solo and Abby Wambach received an additional 33% attendance bump although this effect is imprecisely estimated.
Posted by E. Frank Stephenson at 12:10 PM

Pure Detroit

With Detroit having filed for bankruptcy, here's a parody of those "Pure Michigan" travel ads. See also this 2011 piece from Shikha Dalmia.

Posted by E. Frank Stephenson at 11:47 AM

July 18, 2013
Inflation Adjusted Mug

A colleague who is taking a well-deserved vacation sends along this photo:


Posted by E. Frank Stephenson at 06:28 PM

The Kid Must Have Ordered a Happy Meal

Family Finds Marijuana, Pipe In Burger King Kids Meal

Fast food joints seem to have gotten more interesting--all I remember in kids meals were cheap plastic toys.

Posted by E. Frank Stephenson at 09:32 AM

Let's Hope He Doesn't Get Any Sexual Assault Training

From the local fishwrapper (bracketed part added):

A Floyd County police officer who was demoted and placed on probation after he was found to have been under the influence of alcohol during a [DUI] training session ...
Posted by E. Frank Stephenson at 09:06 AM

July 16, 2013
The Price System Comes to the Health Care System
That is, the price of surgery is a total mystery unless you go to the Surgery Center of Oklahoma in Oklahoma City. They post their prices online.

Founded nearly 15 years ago by Dr. Keith Smith and Dr. Steven Lantier, the clinic has thrived on its promise of “price transparency,” KFOR-TV reports.

“What we’ve discovered is health care really doesn’t cost that much,” said Smith. “What people are being charged for is another matter altogether.”

The company started posting its all-inclusive surgery prices online four years ago:

“When we first started we thought we were about half the price of the hospitals,” Dr. Lantier said. “Then we found out we’re less than half price. Then we find out we’re a sixth to an eighth of what their prices are. I can’t believe the average person can afford health care at these prices.”

By being upfront about their prices, the KFOR-TV report explains, the clinic hoped to win over customers by defeating its competition in a price war.

The Oklahoma doctors were successful on both accounts.

“Their first out-of-town patients came from Canada; soon everyday Americans caught on,” the report reads. “A handful of other Oklahoma medical facilities have started joining Surgery Center of Oklahoma in price transparency.”

“Surgery Center of Oklahoma does accept private insurance, but the center does not accept Medicaid or Medicare,” the report continues. “Dr. Smith said federal Medicare regulation would not allow for their online price menu.”

Source. Pay particular attention to the last bit there--Medicare regs make it difficult for consumers to comparison shop and stifle competion among providers.

I have not yet read John Goodman's Priceless, but my impression is that it deals extensively with the lack of price transparency in medical care.

Posted by E. Frank Stephenson at 09:31 AM

July 15, 2013
More Evidence on the Bennett Hypothesis

The abstract of a new paper in Economics of Education Review (bold added):

Numerous studies have examined the enrollment responses of traditional undergraduate students to the introduction of government-provided tuition subsidies, but far less attention has been devoted to the elasticity of demand for graduate education. This paper examines how the tax code and government education policies affect graduate enrollment and persistence rates along with the ways in which students fund their graduate education. Our empirical methodology is based on exogenous variations in the availability of an income tax exemption for employer-provided tuition assistance for graduate courses. We find that graduate attendance among full-time workers age 24-30 is higher when the tax exemption is available, mostly due to higher persistence in public universities and vocational course work. The use of employer aid for individuals enrolled in full-time and public part-time graduate programs also increases. We present some evidence that universities may adjust tuition to capture part of the incidence.

Related post here.

Posted by E. Frank Stephenson at 11:04 AM

Incentives Matter: Swedish Death Tax Edition
In response to the repeal of the Swedish inheritance tax people postponed death to avoid taxes. This is an example of the far-reaching behavioral effects of economic incentives and of unintended consequences of policy changes. Using individual data, including information on taxable estates, we find that deceased with, compared to those without, tax incentives to postpone death were 10 percentage points more likely to die the day after rather than the day before the repeal. An extended analysis suggests that the timing of deaths was affected not only during these two days but during a longer surrounding period.


Posted by E. Frank Stephenson at 10:12 AM

Land Titles and Happiness

The abstract of a new paper on land titles and happiness:

This paper investigates the contribution of property rights (land title ownership) to happiness in Brazil by analyzing the household response to an exogenous change in formal ownership status. It uses a quasi-experimental design to analyze a unique dataset based on Papel Passado, a Brazilian government land-titling program affecting over 85,000 families. The causal role of legal ownership is isolated by comparing two geographically close and demographically similar communities in Osasco, a town of 650,000 people in the São Paulo metropolitan area, where some residential units were allocated property titles and others were not. Survey data were collected from households in both types of units before and after the granting of land titles, with neither type knowing ex ante whether it would receive land titles. The multinomial probit technique was applied and the results show that land title ownership increases by 13 points the probability of a household qualifying for a happier group. Furthermore, it decreases 21 points the probability of belonging to the “lower level” group.

For consistency, I should note that I'm still not a big fan of happiness research.

Posted by E. Frank Stephenson at 10:09 AM

July 12, 2013
A Rather Gross Markets in Everything ...

... is below the fold. Click at your own risk.

Read More »

Posted by E. Frank Stephenson at 12:48 PM

July 11, 2013
The Greedy Hand: Colorado Pot Tax Edition
The taxes on recreational marijuana might go a lot higher than first thought. Smokers buying at shops in Denver may pay up to 35 percent in taxes.

Colorado voters will be asked to approve two state taxes totaling 25 percent on all retail marijuana sales in the November election. They may be asked to approve an additional city tax for Denver.


Posted by E. Frank Stephenson at 11:14 AM

July 10, 2013
Demand Curves Slope Downward: Politically Incorrect Edition

Rich guy suggests lowering the cost of being homeless might increase the number of homeless people. Gets predictable reaction.

Posted by Robert Lawson at 05:05 PM in Economics

Everyone calm down, there is no “bee-pocalypse”

That's the title of my former student Shawn Regan's piece in Quartz. Read it here.

Posted by E. Frank Stephenson at 02:10 PM

Great Moments in Publik Skooling

From the RN-T:

A Long Island school district has released a summer reading list riddled with spelling errors.

F. Scott Fitzgerald's "The Great Gatsby" is misspelled as "The Great Gypsy." And author Emily Bronte is listed as Emily Bonte.

According to Newsday and News 12 Long Island (http://bit.ly/13K9UKg), those are just a few of the more than 30 errors on the list provided by the Hempstead Public Schools.

Posted by E. Frank Stephenson at 12:15 PM

She Should Have Had a Concealed Carry Permit

A news headline:

Woman Who Hid Gun In Vagina Gets 25 Years

Posted by E. Frank Stephenson at 10:44 AM

July 09, 2013
Keystone and the Canadian Train Crash

The horrible train derailment and subsequent inferno raise a question: Will there be lives lost and environmental damage from train accidents as a results of the government not approving the Keystone pipeline? I'm not assuming that this particular accident could have been avoided if the Keystone pipeline were approved and operating, but I am wondering if oil produced in North Dakota and Alberta could be more safely transported by pipeline than by train. It's a risk-risk tradeoff, not a free lunch.

Posted by E. Frank Stephenson at 01:06 PM

NEA Comes to ATL

The big teachers union held its annual meeting in Atlanta last week. I wonder if it featured a plenary session by Beverly Hall on improving student performance. /snark

Posted by E. Frank Stephenson at 01:00 PM

Abbott and Costello on Unemployment

A friend sent along an email with the following exchange between Abbott and Costello on the unemployment rate. This version was attributed to Glenn Blomquist of the University of Kentucky; some previous versions are here.

COSTELLO: I want to talk about the unemployment rate in America.

ABBOTT: Good Subject. Terrible Times. It's 7.8%.

COSTELLO: That many people are out of work?

ABBOTT: No, that's 14.7%

COSTELLO: You just said 7.8%.

ABBOTT: 7.8% Unemployed.

COSTELLO: Right 7.8% out of work.

ABBOTT: No, that's 14.7%.

COSTELLO: Okay, so it's 14.7% unemployed.

ABBOTT: No, that's 7.8%.

COSTELLO: WAIT A MINUTE. Is it 7.8% or 14.7%?

ABBOTT: 7.8% are unemployed. 14.7% are out of work.

COSTELLO: If you are out of work you are unemployed.

ABBOTT: No, Congress said you can't count the "Out of Work" as the unemployed. You have to look for work to be unemployed.


ABBOTT: No, you miss his point.

COSTELLO: What point?

ABBOTT: Someone who doesn't look for work can't be counted with those who look for work. It wouldn't be fair.

COSTELLO: To whom?

ABBOTT: The unemployed.

COSTELLO: But ALL of them are out of work.

ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you're off the unemployment rolls that would count as less unemployment?

ABBOTT: Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don't look for work?

ABBOTT: Absolutely it goes down. That's how they get it to 7.8%. Otherwise it would be 14.7%. Our govt. doesn't want you to read about 14.7% unemployment.

COSTELLO: That would be tough on those running for reelection.

ABBOTT: Absolutely!

COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have people stop looking for work.

ABBOTT: Now you're thinking like an Economist.

COSTELLO: I don't even know what the hell I just said!

ABBOTT: Now you're thinking like Congress.

Posted by E. Frank Stephenson at 12:51 PM

July 08, 2013
Lazy Journalist Picks Up on Lazy Congress Theme

Now Bloomberg is picking up on the lazy Congress bit:

Since the 113th Congress convened in January, the Senate has been in session 80 days and the House 84 days. Lawmakers passed 15 bills that were then signed by the president. That’s eight fewer than in the first six months of the last Congress and 19 fewer than in the same stretch of the 111th Congress.

As I said last week, judging Congress by the number of bills it passes is silly. Take the same bill but slice it into many pieces and, voila, Congress looks like it is getting more accomplished. (Just to please the herd of beltway journalists, maybe Congress should pass a flurry of bills naming assorted boondock post offices in honor of local dignitaries.)

This Bloomberg snip actually ups the silliness ante with the "signed by the president clause." Congress could be running 24/7 to pass bills (a chilling thought no doubt) but would look lazy if few got signed by the president.

Posted by E. Frank Stephenson at 11:04 AM

What Irrelevant Stats Cannot Tell Us About Obamacare

From Robert Frank's recent NYT column "What Sweden Can Tell Us About Obamacare" extolling Swedish health care (bold added):

The United States spends more than $8,000 a person per year on health care, well more than twice what Sweden spends. Yet health outcomes are far better in Sweden along virtually every dimension. Its infant mortality rate, for example, was recently less than half that of the United States. And males aged 15 to 60 are almost twice as likely to die in any given year in the United States than in Sweden.

I'm not a health economist but it seems to me that one of the worst ways to compare health systems across countries would be the age 15-60 male mortality rate. Many of the leading causes of death for men in these age brackets--car crashes, homicides/suicides, workplace injuries--have little to do with the quality or financing of health care. The Sweden's policies for health care may or may not be better than ours, but I doubt one can make any meaningful determination from looking at 15-60 year old men's mortality rates.

BTW, infant mortality rates may also lead to misleading comparisons if countries have different definitions of live births.

Posted by E. Frank Stephenson at 09:15 AM

July 05, 2013
Mike Lester on the IRS Scandal

From the RN-T:

Lester IRS Snooping.jpg

Posted by E. Frank Stephenson at 12:49 PM

Federal Regulation and Aggregate Economic Growth

That's the title of a recent paper in the Journal of Economic Growth by my grad school colleague John Dawson and advisor John Seater (SSRN download here). I'm pleased to see the paper out because they've been working on it for about two decades. The paper uses a hand collected measure of regulation--the number of pages in the Code of Federal Regulations--that John Dawson spent several months compiling while we were in grad school.

The results of this paper are profound: "GDP at the end of 2011 would have been $53.9 trillion instead of $15.1 trillion if regulation had remained at its 1949 level." This is a staggering price to pay for the regulatory state--aggregate output is only about one-third of what it would be if regulations had held at their 1949 level instead of increasing roughly seven-fold between 1949 and 2005.

The Dawson and Seater paper is fairly technical. For a non-technical take, Niall Ferguson's new book, The Great Degeneration reaches a similar conclusion: "Our markets are hindered by overcomplex regulations that debilitate the political and economic processes they were created to support."

Posted by E. Frank Stephenson at 12:44 PM

Pot Belly Pigs?

I'm ganna go out on a limb and guess that these headlines from Seattle are related:

Police Rescue Pig Wearing Sweatpants From Hot Car

A new take on 'grass-fed' meat: Pig farmer markets pork raised on marijuana

A colleague says the money line from the seond article is the farmer's statement that "the pigs that are fed the marijuana just lie around and barely lift their heads."

Posted by E. Frank Stephenson at 11:14 AM

July 03, 2013
Trade Deficits: If the Media Can Learn, Maybe Peter Morici Can Too

So Reuters is showing signs of understanding that trade deficits are not bad economic news (HT Bryan Riley):

In another sign of improving domestic economic conditions, the U.S. trade deficit widened sharply in May, as stronger U.S. demand pulled in more imports, a report from the Commerce Department showed.

Of course trade deficits also correspond to inflows of foreign investment. Having folks want to invest in your country--either financial assets or things like auto plants--is a positive sign.

Natch, our favorite Chinese copier salesman is still up to his old tricks; here's a snip from his analysis of the same trade report:

The Commerce Department reported the May deficit on international trade in goods and services jumped to $45.0 billion from billion $40.1 billion in April. Overall, the deficit is up from $25 billion when the economic recovery began in mid-2009 and poses the most significant barrier to stronger economic growth.

If the media can learn, you'd think he might be able to as well.

Posted by E. Frank Stephenson at 02:47 PM

Economic Freedom and Labor Market Conditions

My colleague Lauren Heller and I have a paper on economic freedom forthcoming in Contemporary Economic Policy. The abstract:

Using 1981–2009 data for the 50 states, this article examines the relationship between economic freedom and the unemployment rate, the labor force participation rate, and the employment-population ratio. After controlling for a variety of state-level characteristics, the results from most specifications indicate that economic freedom is associated with lower unemployment and with higher labor force participation and employment-population ratios.

The paper is available here for those with access to CEP; anyone else can drop me an email and I'll send along a copy.

The paper's punchline is pretty straightforward: A one point increase in a a state's economic freedom rating (using the EFNA index) is associated with the unemployment rate being about 0.8 percentage points lower (though some specifications find larger effects) and the labor force participation rate being about 1.5 percentage points higher. Examination of the sub-components of the EFNA suggest that labor market regulations per se are less important than the overall size of government. For some perspective, a one point difference in the EFNA ranking is the diffierence between Georgia and Pennsylvania.

Posted by E. Frank Stephenson at 12:12 PM

July 02, 2013
Maybe a Lazy Congress Is a Good Congress

A snip from the WaPo's Wonkbook blog:

Six months into its term, there’s little evidence that the 113th Congress will be the worst Congress ever. But they might be the laziest.

On Monday, simply by doing nothing, they allowed the interest rate on student loans to double, from 3.4 percent to 6.8 percent. That might be permissible if they were busy with more important things, like inventing a cure for cancer that’s also a source of endless clean energy. But they’re not even working this week.

The 112th Congress passed 220 laws. That’s the fewest of any Congress since we began keeping track in 1948. But the 113th Congress is on track to pass even fewer laws than that. “Just 15 bills have become law this year, compared to 23 over the same period in 2011,” writes Dashiel Bennett at the Atlantic Wire. It’s the do-nothingest Congress ever!

Judging a Congress by the number of bills it passes has to be one of the poorest ways of doing so (and, in fairness, Wonkbook does not think the current Congress is the worst). After all, identical legislation can be passed in one omnibus bill or in several smaller bites.

Regardless of the number of bills, the nature of the political process is such that outcome will usually be a politicized hash that is inimical to freedom and prosperity. While there are some genuine problems that need resolving, I suspect an activist Congress would make them worse rather than better (how's that Affordable Care Act working out?). So here are at least two cheers for a lazy Congress.

UPDATE: I should have made clear that the Wonkblog post I was referrring to was authored by Ezra Klein and Evan Soltas since there are multiple contributors to the blog.

Posted by E. Frank Stephenson at 05:48 PM

Jim Couch

While traveling over the past couple of weeks, I was saddened to learn that Jim Couch of the University of North Alabama had died (obituary here). I didn't know Jim well--we crossed paths maybe a half dozen times including my giving a talk at his place and his giving a talk at Berry--but he was a great guy who did some interesting work (especially on the political economy of the New Deal with Bill Shughart). My thoughts go out to his family and colleagues.

Posted by E. Frank Stephenson at 04:26 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

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