The free market is a harsh mistress, but a fair one. Big Government, on the other hand, is always for sale to the powerful.
Thursday, December 24, 2009
Tuesday, December 22, 2009
Of course, young entrepreneurs also are likely to face their own hurdles. "Having the skill set to become an entrepreneur is different than any thing you learn in school," says Susan Amat, the executive director of the Launch Pad at the University of Miami, an entrepreneurship-support program based out of the campus career center.
To that end, it's important for young entrepreneurs to seek the necessary help to get started. For current students or recent graduates, it might be easiest to reach out for assistance on campus. Many schools have campus incubators or offer start-up competitions, like Babson College's annual Entrepreneurship Forum, which offers cash, consulting, legal and Web services to winning business plans. Other schools have business incubators that help students—and sometimes outsiders—hone business ideas and, in some cases, support them financially or with other resources.
Monday, December 21, 2009
All told, Connolley created or rewrote 5,428 unique Wikipedia articles. His control over Wikipedia was greater still, however, through the role he obtained at Wikipedia as a website administrator, which allowed him to act with virtual impunity. When Connolley didn’t like the subject of a certain article, he removed it — more than 500 articles of various descriptions disappeared at his hand. When he disapproved of the arguments that others were making, he often had them barred — over 2,000 Wikipedia contributors who ran afoul of him found themselves blocked from making further contributions. Acolytes whose writing conformed to Connolley’s global warming views, in contrast, were rewarded with Wikipedia’s blessings. In these ways, Connolley turned Wikipedia into the missionary wing of the global warming movement.
Sunday, December 20, 2009
Saturday, December 19, 2009
The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending.You might almost think that the supply side people were on to something.
All these findings suggest that conventional models leave something out. A clue as to what that might be can be found in a 2002 study by Olivier Blanchard and Roberto Perotti. (Mr. Perotti is a professor at Boccini University in Milano, Italy; Mr. Blanchard is now chief economist at the International Monetary Fund.) They report that “both increases in taxes and increases in government spending have a strong negative effect on private investment spending. This effect is difficult to reconcile with Keynesian theory.”
A group of suspected Somali pirates detained on a Dutch warship has been released because no country has agreed to prosecute them.Some of the European countries are eager to try Bush officials for crimes against humanity, but no one wants to try the pirates. What a funny world we live in.
Friday, December 18, 2009
Saturday, December 12, 2009
A welfare state is in one sense a big Ponzi scheme. Without increasing numbers of people entering the scheme, there is no money to pay the people receiving the money.Do people who fret about overpopulation have any idea of what fertility rates are in the developed world and what they tell us about the future?
China, meanwhile, is worried about its one-child policy and is finding that people do not want a second child:
Even one child makes huge demands on parents' time, he said. "A mother has to give up at least two years of her social life." Then there are the space issues -- "You have to remodel your apartment" -- and the strategizing -- "You have to have a résumé ready by the time the child is 9 months old for the best preschools."For a previous post on this, see here.
Most of his friends are willing to deal with this once, Chen said, but not twice.
"Ours is the first generation with higher living standards," he said. "We do not want to make too many sacrifices."
Thursday, December 10, 2009
It is generally accepted that a doubling of CO2 will only produce a change of about two degrees Fahrenheit if all else is held constant. This is unlikely to be much to worry about.
Yet current climate models predict much higher sensitivities. They do so because in these models, the main greenhouse substances (water vapor and clouds) act to amplify anything that CO2 does. This is referred to as positive feedback. But as the IPCC notes, clouds continue to be a source of major uncertainty in current models. Since clouds and water vapor are intimately related, the IPCC claim that they are more confident about water vapor is quite implausible.
There is some evidence of a positive feedback effect for water vapor in cloud-free regions, but a major part of any water-vapor feedback would have to acknowledge that cloud-free areas are always changing, and this remains an unknown. At this point, few scientists would argue that the science is settled. In particular, the question remains as to whether water vapor and clouds have positive or negative feedbacks.
The notion that the earth's climate is dominated by positive feedbacks is intuitively implausible, and the history of the earth's climate offers some guidance on this matter. About 2.5 billion years ago, the sun was 20%-30% less bright than now (compare this with the 2% perturbation that a doubling of CO2 would produce), and yet the evidence is that the oceans were unfrozen at the time, and that temperatures might not have been very different from today's. Carl Sagan in the 1970s referred to this as the "Early Faint Sun Paradox."
For more than 30 years there have been attempts to resolve the paradox with greenhouse gases. Some have suggested CO2—but the amount needed was thousands of times greater than present levels and incompatible with geological evidence. Methane also proved unlikely. It turns out that increased thin cirrus cloud coverage in the tropics readily resolves the paradox—but only if the clouds constitute a negative feedback. In present terms this means that they would diminish rather than enhance the impact of CO2.
If the EPA can regulate carbon dioxide because of the greenhouse effect, could it also regulate water vapor?
Wednesday, December 9, 2009
To find out, Tom McDade of Northwestern University in Evanston, Illinois, and colleagues turned to health surveys, which began at birth, of 1534 children in Cebu City in the Philippines, where western levels of sanitation are generally not found. When these people reached 20, McDade's team were able to test their blood for C-reactive protein (CRP), a marker of chronic inflammation.
They found that the more pathogens the people had encountered before age 2, the less CRP they had at age 20. Every episode of diarrhoea back then cut the chance of higher CRP later by 11 per cent; every two months spent in a place with animal faeces cut it by 13 per cent. Being born in the dusty, dirty dry season cut the chance by a third (Proceedings of the Royal Society B, DOI: 10.1098/rspb.2009.1795).
Back in 2007, Congress enacted a three-stage increase in the minimum wage from $5.15 to $7.25, the last installment of which took effect just last July. This was done with the best of intentions, of course. But what it meant in practical terms was that, at the height of a savage recession, the government essentially imposed a substantial tax increase on hiring. No wonder the unemployment rate among black teenage males is at an all-time high of 57 percent.The reaction of the commenters is interesting. The majority berate the idea with invective with comments like these:
If Obama and Congress were really as serious as they say they are about reducing unemployment, they would at least be willing to discuss rolling back last July’s minimum wage increase. It would create some jobs for those who need them most, and it would not cost taxpayers a dime. Yes, those who get hired at a reduced minimum wage would have to work for less. But at least they'd be working.
Mr. Lane, I would suggest that you experience of joy and comfort of living on a minimum wage salary for a few months, and then write an article about it. People like you are what got our country where it is now economically. President Obama, with the grace of God, will heal your years of abuse.I wonder if they have any idea of how stupid they appear to those who actually know some economics.
Meanwhile, Tigerhawk is worried about the increase in costly regulations and its effect on hiring:
Already our economy is struggling against health care "reform," massive new regulation and/or taxation on any business that emits carbon, the proposed "Employee Free Choice Act," new regulation in financial services, new corporate "governance" requirements, fiscal catastrophes in all the large states controlled by the Democrats, and huge new tax increases for the people who actually decide to hire people (whether they are corporate tools or individual entrepreneurs). Do we really need "an array of 90 rules and regulations" from the Labor Department on top of all that?I thought this comment especially interesting:
Just when you think "they can't keep making it harder," they do.
I just bailed out of a deal to buy a company which has gone from a money-making position to a money-losing position in the past two years and is in need of a turn-around. The services provided by this company are extremely carbon-intensive. There is just no way I can justify risking capital on a business like this in this regulatory environment.
There are no other buyers on deck. I suspect this business will be liquidated within 6 months. Another 150 jobs gone. Way to go, Obama.
This is what you get when nobody in the Administration has any private sector experience.
Monday, December 7, 2009
"I asked the IRS lady straight upfront — 'I don't have anything, why are you auditing me?' " Porcaro recalled. "I said, 'Why me, when I don't own a home, a business, a car?' "
The answer stunned both Porcaro and the private tax specialist her dad had gotten to help her.
"They showed us a spreadsheet of incomes in the Seattle area," says Dante Driver, an accountant at Seattle's G.A. Michael and Co. "The auditor said, 'You made eighteen thousand, and our data show a family of three needs at least thirty-six thousand to get by in Seattle."
"They thought she must have unreported income. That she was hiding something. Basically they were auditing her for not making enough money."
Seriously? An estimated 60,000 people in Seattle live below the poverty line — meaning they make $11,000 or less for an individual or $22,000 for a family of four. Does the IRS red-flag them for scrutiny, simply because they're poor?
Driver quickly determined the IRS was wrong in how it was interpreting the tax laws. He sent in the necessary code citations and hoped that would be the end of it.
Instead, the IRS responded by launching an audit of Rachel's parents.
"I was floored," says Rob Porcaro, 59. "I get audited now and then in my business, so I've been through it before. But to have them go after me because of my daughter, well, I've never heard of anything like it."
Sunday, December 6, 2009
Has a young Harvard graduate student in economics dealt a deadly blow to Max Weber’s theory that Protestantism favours economic development? Davide Cantoni has just produced a brilliantly argued paper which takes economic data from Catholic and Protestant cities in Germany from 1300 to 1900, subjects them to meticulous multivariate analysis, and finds no evidence that Protestantism per se made people richer.the whole paper is available in pdf format here.
If you cannot see how it ends, click it.
The prices at intrade does not reflect the polling results. The probability that Obama will be re-elected in 2012 is at 61.5% and shows little trend. That is just a bit below the probablily that the Democrats will maintain control of the House of Representatives in 2010, at 62.6%, though that has been trending downward.
Saturday, December 5, 2009
Acquiring wind rights for a wind energy project is necessary to ensure that winds have unimpeded flow to turbines.The issue has caught the attention of TheVolokh Conspriacy, which is interested in the eminent-domain aspect of the project.
“Wind rights place limitations relating to the height of obstructing structures,” Nierengarten said.
A landowner who sells wind rights agrees to refrain from building wind-obstructing structures within defined setback requirements.
As a practical matter in rural areas, this would mean that landowners selling wind rights couldn’t erect their own towering wind turbines within a certain distance of a city-operated turbine on an adjacent property.
Should we feel sorry for him? Las Vegas exists to separate fools from their money. "The money you bring to Las Vegas stays in Las Vegas."During a year-long gambling binge at the Caesars Palace and Rio casinos in 2007, Terrance Watanabe managed to lose nearly $127 million.
Sunday, November 29, 2009
Investigators are trying to determine who drove six-inch nails into hundreds of red pine trees near Backus. They think the vandals might have thought they were saving the trees from logging; about 100 of the 600 trees were slated to be cut down and sold this month. But now the entire forest will be cut down because of safety concerns, the authorities said. Mike Diekmann of the Cass County Sheriff’s Office said that if a saw hit one of the nails, “it would explode like a gun going off” and could cause serious injury.The report from Minnesota is here.
Thursday, November 26, 2009
Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.
Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. While not a complete private property system, the move away from communal ownership had dramatic results.
This change, Bradford wrote, had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. Giving people economic incentives changed their behavior. Once the new system of property rights was in place, the women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.
Wednesday, November 25, 2009
Monday, November 23, 2009
Employers already are squeezed by tight credit, rising health care costs, wary consumers and a higher minimum wage. Now, the surging jobless rate is imposing another cost. It's forcing higher state taxes on companies to pay for unemployment insurance claims.More unemployment raises unemployment insurance costs for employers, making them less willing to hire, causing more unemployment--a positive-feedback loop or, in the terms popular in macroeconomics, an automatic destabilizer.
Some employers say the extra costs make them less likely to hire. That could be a worrisome sign for the economic recovery, because small businesses create about 60 percent of new jobs. Other employers say they'll cut or freeze pay.
The press's view on global warming rests on an appeal to authority: the consensus among scientists that it is real, dangerous and man-caused. But the authority of scientists rests on the integrity of the scientific process, and a "consensus" based on the suppression of alternative hypotheses is, quite simply, a fraudulent one.Update: Now the issue is on youtube. A few years ago the gatekeepers of the main stream media could have shut down this whole discussion. The Internet has democratized the flow of information.
In the United States, every year, 21.5 million jobs disappear. ... If you look at it on a daily basis, the extent of the carnage is striking: every working day, the United States loses 90,000 jobs.... [F]ortunately, this perspective only tells half the story...every day, the United States creates 90,000 jobs....
Europe will become increasingly less important in the world, while Asia will grow in importance, at least for much of the next century. Why? Demography.
Sunday, November 22, 2009
It is not because we care about children and it is not because we have a vision of a great public school for every child. NEA and its affiliates are effective advocates because we have power.If the choice is between protecting the jobs of its members or educating students, which will they choose?
And we have power because there are more than 3.2 million people who are willing to pay us hundreds of millions of dollars in dues each year, because they believe that we are the unions that can most effectively represent them, the unions that can protect their rights and advance their interests as education employees.
This is not to say that the concern of NEA and its affiliates with closing achievement gaps, reducing dropout rates, improving teacher quality and the like are unimportant or inappropriate. To the contrary. These are the goals that guide the work we do. But they need not and must not be achieved at the expense of due process, employee rights and collective bargaining. That simply is too high a price to pay.
What exactly is the justification of public-sector unionism?
Thursday, November 19, 2009
Every lawsuit filed or even threatened under a California law aimed at electing more minorities to local offices - and all of the roughly $4.3 million from settlements so far - can be traced to just two people: a pair of attorneys who worked together writing the statute, The Associated Press has found.
The law makes it easier for lawyers to sue and win financial judgments in cases arising from claims that minorities effectively were shut out of local elections, while shielding attorneys from liability if the claims are tossed out.
Tuesday, November 17, 2009
Often the authors will use a specific example to illustrate a broader point. In a chapter on how the poor put together usefully large sums of money, they write:
Take a household like Sultan and Kanon's. This Bangladeshi couple rented a yard where they sorted and sold waste scavenged in their Dhaka slum, but Sultan was in his fifties and ailing, and the income he raised was rarely more than $1.50 a day. Just before the research year their 15-year-old daughter Sweetie had found a job in a garments factory at $28 a month plus occasional overtime, much of which she saved for her wedding while contributing her bit to the housekeeping: she married and left home just before the end of the year. (p. 99)Sweetie was working for a sweatshop! If people in the West did not buy products from sweatshops, that garments factory would have been shut down and Sweetie would not have been exploited by the evil factory owners. Right?
Thursday, November 12, 2009
Does it illustrate the problems of fiscal policy or of economic development?
(It is a bit unsettling that Al Jazeera has better youtube clips on the world economy than any of the American networks.)
An article in The Wall Street Journal asks if football helmets have made football more dangerous. That possibility seems counter-intuitive to noneconomists who usually do not consider that changes in risk will change in behavior.
Andrew McIntosh, a researcher at Australia's University of New South Wales who analyzed videotape, says there may be a greater prevalence of head injuries in the American game because the players hit each other with forces up to 100% greater. "If they didn't have helmets on, they wouldn't do that," he says. "They know they'd injure themselves."
"Without the helmet, they wouldn't hit their head in stupid plays," says P. David Halstead, technical director for the Nocsae, the group that sets helmet-safety standards. But without helmets, the game "wouldn't be football," he says.
Wednesday, November 11, 2009
Chanos and the other bears point to several key pieces of evidence that China is heading for a crash.
First, they point to the enormous Chinese economic stimulus effort — with the government spending $900 billion to prop up a $4.3 trillion economy.
Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books
the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.
Monday, November 9, 2009
Friday, November 6, 2009
And since we on Wall Street have all seen this movie before, what comes next has been highly predictable. I’m a portfolio manager at a large hedge fund so I make my living predicting results not hoping for growth. That has made Obama a boon for me personally.
As an American I’d love it if he’d embrace the free market reality and start doing things that would actually help create jobs. But the economy will recover eventually no matter what he does. In the meantime, as a professional investor I’m delighted to see him embrace the bat guano. It’s bad for America but good for me personally.
I have a friend who is a currency trading legend (and also a major AEI money man) whose conservative credentials are beyond doubt. He’s a little older and can remember what it was like to trade the markets during the Carter administration. When I was lamenting Obama’s impending election with him last year he said to me, in a glass half full fashion which is typical of him:
“It’s never easier to make money in the markets than when there is a Democrat in the Whitehouse who thinks he’s smarter than everyone else”.
So far he’s been dead on, but I think it would be better for all of us if he wasn’t.
How does one invest in a way that bets against the economy? What are they doing?
Thursday, November 5, 2009
But traditional agriculture began to fall apart in the 1960s after Yemen was flooded with cheap foreign grain, which put many farmers out of business. Qat began replacing food crops, and in the late 1960s, motorized drills began to proliferate, allowing farmers and villagers to pump water from underground aquifers much faster than it could be replaced through natural processes. The number of drills has only grown since they were outlawed in 2002.
Mr. Amer, the farmer based here, proudly showed visitors his efforts to irrigate fruit and tomato fields using rubber tubes, instead of just funneling it through earthen ditches that allow most of the water to evaporate unused. Little hoses spray the crops with water instead of wastefully soaking them.But he also pointed out two local wells where the water is dropping at the astonishing rate of almost 60 feet a year, causing the land to subside. Nearby, sinkholes in the arid soil of his property are growing longer and deeper every year.
Wednesday, November 4, 2009
Friday, October 23, 2009
Thursday, October 22, 2009
Victoria University professors Brenda and Robert Vale, architects who specialise in sustainable living, say pet owners should swap cats and dogs for creatures they can eat, such as chickens or rabbits, in their provocative new book Time to Eat the Dog: The real guide to sustainable living.
"If you have a German shepherd or similar-sized dog, for example, its impact every year is exactly the same as driving a large car around," Brenda Vale said.
Friday, October 16, 2009
Thursday, October 15, 2009
I never have understood why someone would want to be a bodyguard for the president, but I am glad there are people with that preference.
Wednesday, October 14, 2009
A poet lured her husband into woodland for a drug-fuelled sex session and then slit his throat, a court was told yesterday.
Joanne Hale, 39, left him for dead so she could see a man she had met on the internet, a jury heard.
Hale gave her 43-year-old husband Peter a dose of a natural aphrodisiac called 'horny goat weed' before she blindfolded him and led him into local woods to act out her fantasy, it was alleged.
....Hale publishes her poetry on the internet and, according to her website, likes to write verse about 'people, animals, love and everything that people care about'.
The Hales were said to have been affected by stress after Mr Hale 'totally messed up' his PhD studies.
And then there are stories with headlines like "Scammonden farmer fined for keeping cows in the dark."
The student audience, which at first clapped enthusiastically as Reich started to tell his unspeakable “truths” stopped clapping by the end. Reich had uttered the fundamental heresy. You really can’t have something for nothing. Pulling in one direction meant giving way in another. He went on to say that America was hopelessly addicted to fantasy; that anyone who got up on stage and reeled off the points he had made was politically dead.Read the whole thing.
Zachary’s offense? Taking a camping utensil that can serve as a knife, fork and spoon to school. He was so excited about recently joining the Cub Scouts that he wanted to use it at lunch. School officials concluded that he had violated their zero-tolerance policy on weapons, and Zachary was suspended and now faces 45 days in the district’s reform school.
Monday, October 12, 2009
Saturday, October 10, 2009
The current woes of higher education have been ascribed to declines in endowment and a much more competitive market for intellectual capital. People just aren’t willing to pay huge amounts of money for a credential that doesn’t give them real marketable skills any more.
Those are serious factors, but there’s a bigger threat. The process of knowledge exchange and mentoring is rapidly going online, not only through posted documents but over collaborative platforms. People are learning skills for which no degree granting course exists and without going to universities. I’ve seen projects formed, software built, meetings held and mentoring proceed apace without the participants ever meeting each other once in person. Sooner or later this process will reach a critical mass and begin to rival the formal schooling system, at least in certain spheres. How much longer before students begin wondering whether the Ivy League model will be ripped apart by the digital revolution?
I teach more economics on-line than I do in the classroom.
Wednesday, October 7, 2009
Tuesday, October 6, 2009
The world may think the US is making serious mistakes because there are reports of a concerted effort on the part of many nations to move away from the dollar.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.One of the huge advantages of having the global currency is that other countries give us an interest free loan of about $500 billion by holding dollars that earn no interest. It is good to be king, or have the king currency.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
Update: Some people are fretting over the embarrassment coming from the rejection of Chicago's Olympic bid, especially since the president personally intervened. It is an embarrassment for President Obama but not much else. The Olympics are a politician's dream but a taxpayer's nightmare. The rejection of the dollar as the global currency would be much more than an embarrassment; it would have important and real economic and political consequences. Pundits should worry more about it and forget the Olympics. The charge of being unpatriotic would makes sense if people cheered about this matter. It does not for the Olympics.
Update 2: A denial:
Big oil producing nations denied a British newspaper report on Tuesday that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.
Update 3: More here, asking who was trying to destabilize the dollar with the original story, and also noting that the story has become believable. A few years ago no one would have paid attention to it.
Monday, October 5, 2009
College kids do some strange things--or at least they look strange to those of us who are well beyond college age--but sometimes those strange things are part of the romance of college life. This past weekend some students at Saint Joseph's College took part in a competition for a 32-inch television. It was not a contest of strength or quickness, but of endurance and ability to conquer pain and sleepiness.
To stay in the competition, the students had to keep a hand on a school van. There were some scheduled bathroom breaks, but other than that, the contestants just stood next to the van and kept a hand on it. Initially there were either 17 or 19--I got both numbers when I asked how many had started-- but 14 hours into the competition, when I stopped by, only two remained.
It struck me that this competition seems to be a form of the entrapment game, which is normally explained as a type of auction. In a normal auction, only the winner pays--the losers pay nothing. In the entrapment game, everyone who bids pays whatever they bid whether or not they win the auction. Imagine such an auction for a $20 bill:
Suppose that anyone who bids at the auction of our $20 bill must pay the amount of the bid whether he wins or not. Someone will open the bidding low at $.50 in hopes of getting a real bargain. Someone else will top the bid with a $1 bid. Bidding will usually proceed up to about $10 and then pause. The second bidder must now decide whether to lose his $8 or $9 bid, or continue. If he continues, the bidding will usually advance up to $20 and then pause again. The second highest bidder now realizes that he is not going to gain anything on this auction, but has the potential for a substantial loss, so he has a strong temptation to up his bid beyond $20. Here is how Frank and Cook describe this game:Can you see how this competition with the van is similar? There is no payment in money, just time. Some of those who entered probably enjoyed the camaraderie of being in the contest for a few hours before they went home. When you are 14 hours in, it is no longer much fun, and each additional hour probably is more and more unpleasant. All the time that is spent is lost, whether or not you win the contest. The total value of the time spent by all those entered in probably is greater than the value of the prize."One might be tempted to think that any intelligent, well-informed person would know better than to become involved in an auction whose incentives so strongly favor costly escalation. But many of the subjects in these auctions have been experienced business professionals; many others have had formal training in the theory of games and strategic interaction. For example, psychologist Max Bazerman reports that during the past ten years he has earned more than $17,000 by auctioning $20 bills to his MBA students at Northwestern University.... In the course of almost two hundred of his actions, the top two bids never totaled less than $39, and in one instance totaled $407."
A competition that would be more similar to a regular auction would be to have the television won by a waiting line or queue. If you begin the line and stay there until the deadline, you win. If you leave the queue, someone else can replace you. In this case there would be an incentive to become second in line only if you thought there was a good chance that the person first in line would drop out. The person who would be first in line would tend to be the one who valued the television most in terms of time.
When the price of the item is time rather than money, there is a social loss because no one else gets the money--the time lost by those waiting is not gained by anyone else.
I asked the two guys still standing and the judges about what had happened in the contest. They said that a couple of the people had been eliminated when they got careless. One girl dropped her cell phone and stooped over to pick it up. taking her hand off the van. Another girl had a blanket for warmth, and it slipped. She reached to stabilize it and took her hand off the bus without realizing what she was doing. A few had dropped out in the very early morning, probably because they decided they needed some sleep.
I suppose all those who took part in it will have a story to tell their kids and grandkids about the stupid student stunts that they did when colleges were real places and not just destinations on the Internet.
Update: The contest ended early Saturday afternoon, 18 or 19 hours after it started. The end came not by one of the contestants dropping out, but by an error. One of them was making some changes in his iPod music selections, and then reached down to grab an umbrella, momentarily taking his hand off the bus.
There is always next year.
Friday, October 2, 2009
The graph begins with the Jan-Feb 2006 change and ends with the Aug-Sept 2009 change. The data were found at http://data.bls.gov/cgi-bin/surveymost?bls. The series chosen was the series Civilian Employment (Seasonally Adjusted) - LNS12000000. In January of each year, data are affected by changes in population controls, so the Dec-Jan changes may be erratic.
This graph seems much less encouraging concerning the end of the recession than graphs showing changes in unemployment. Below are the month-to-month changes in employment used to construct the graph.
Jan-Feb 2006 . . . 295
Feb-Mar 2006 . . . 289
Mar-Apr 2006 . . . 50
Apr-May 2006 . . . 329
May-Jun 2006 . . . 266
Jun-Jul 2006 . . . -111
Jul-Aug 2006 . . . 397
Aug-Sep 2006 . . . 162
Sep-Oct 2006 . . . 483
Oct-Nov 2006 . . . 298
Nov-Dec 2006 . . . 402
Dec-Jan 2006/7 . . . -6
Jan-Feb 2007 . . . 9
Feb-Mar 2007 . . . 275
Mar-Apr 2007 . . . -620
Apr-May 2007 . . . 268
May-Jun 2007 . . . 142
Jun-Jul 2007 . . . -85
Jul-Aug 2007 . . . -240
Aug-Sep 2007 . . . 471
Sep-Oct 2007 . . . -336
Oct-Nov 2007 . . . 798
Nov-Dec 2007 . . . -371
Dec-Jan 2007/8 . . . 23
Jan-Feb 2008 . . . -242
Feb-Mar 2008 . . . -52
Mar-Apr 2008 . . . 234
Apr-May 2008 . . . -283
May-Jun 2008 . . . -236
Jun-Jul 2008 . . . -142
Jul-Aug 2008 . . . -323
Aug-Sep 2008 . . . -244
Sep-Oct 2008 . . . -372
Oct-Nov 2008 . . . -513
Nov-Dec 2008 . . . -806
Dec-Jan 2008/9 . . . -1239
Jan-Feb 2009 . . . -351
Feb-Mar 2009 . . . -861
Mar-Apr 2009 . . . 120
Apr-May 2009 . . . -437
May-Jun 2009 . . . -374
Jun-Jul 2009 . . . -155
Jul-Aug 2009 . . . -392
Aug-Sep 2009 . . . -785
Update: Below is a graph showing total employment from January 2006 until September 2009.
In November of 2007 the number employed was 146,665,000. In September, 2009 the number employed was 138,864,000. Employment has dropped by 7,801,000 in that time. A couple of interesting sub-periods: since November 2008 employment has dropped by 5,280,000 and since January 2009 it has dropped by 3,235,000.
Drop in employment = jobs lost.
Wednesday, September 30, 2009
The execs who had such hopes for the president are now wondering fearfully just how radical he really is.Plus there is this bit of humor at the end:
The funniest story I've heard lately came from a former Wall Street executive and longtime Democrat who anxiously recounted a recent conversation with Obama.
The executive said he told the president that he's at a disadvantage because he's relatively inexperienced in economic matters during a time of economic crisis. "That's why I have Valerie," came Obama's reply.
"Valerie" is senior adviser Valerie Jarrett -- a Chicago real-estate attorney and one of Obama's closest friends, who has deep ties to the Windy City's Democratic political machine.
Now you know why Wall Street is so nervous.
Some people who get paid a lot of money for being smart did not see what was obvious to the hicks in the hinterland.
Tuesday, September 29, 2009
The internecine squabbling in France and elsewhere has done little to position Socialist parties to answer the question of the moment: how to preserve the welfare state amid slower growth and rising deficits. The Socialists have, in this contest, become conservatives, fighting to preserve systems that voters think need to be improved, though not abandoned.What the article and Europe do not recognize is that the welfare state is not sustainable when a country goes into demographic decline--a decline that the welfare state encourages. The European Union has a fertility rate of 1.51--they will gradually fade away.
Going green is the new socialism:
Mr. Winock, the historian, said, “I think the left and Socialism in Europe still have work to do; they have a raison d’être, and they will have to rely more on environment issues.” Combined with continuing efforts to reduce income disparity, he said, “going green” may give the left more life.
Tuesday, September 22, 2009
With the globalization of the auto industry, American companies have joined the game. Until recently, Chrysler Group LLC imported Dodge Sprinter vans made in Düsseldorf, Germany, by former owner Daimler AG. The engine, transmission, axles and wheels were removed, allowing the truck bodies to cross the border as auto components, which aren't subject to the tax. Daimler then reassembled the vehicles at a factory in Ladson, S.C.
Thursday, September 17, 2009
Mr. Latimer said he found it surprising that the president seemed to equate the conservative movement, which has a proud pedigree stretching back to Robert Taft and Barry Goldwater, with the candidacy of Mr. Bauer, a second-tier figure who had little impact on the 2000 presidential primaries. Mr. Bush, sensing his speechwriter was perplexed, finally filled in the blanks. "Look, I know this probably sounds arrogant to say," Mr. Bush said, "but I redefined the Republican Party."That may explain a lot of what has been wrong with the Republican Party in the last few years.
Tuesday, September 15, 2009
Back when I did computer tech support, we had a rule of thumb for evaluating the significance of reports of unusual and previously unreported failures .
- One report of a failure is a fluke.
- Two reports of a failure is a coincidence. It might just be two users making the same error.
- Three reports indicates a pattern of failure that arises from the hardware or software itself.
She then applies that principle to the ACORN videos.
Monday, September 14, 2009
The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year.
Friday, September 11, 2009
Thursday, September 10, 2009
Tuesday, September 8, 2009
I have a solution, discussed here.
Saturday, September 5, 2009
John Carney writes at The Business Insider:
The Obama administration "expended great effort to line up the support of health-care insurers, pharmaceutical makers and care providers, believing that by keeping them around the table, they could win over Republicans and stop the kind of industry-led attacks that helped sink the Clinton plan," writes the Journal team.
It was supposed to be a simple formula. Win over the health care industry shepherd, and the Republican will follow like sheep. But it didn't work.
What seems to have gone wrong can be described as a failure of the imagination: Obama's administration just never believed Republicans would stand up for their limited government principles if that meant opposing business interests. They were apparently assuming that Republicans and conservatives could be won over by winning over "business interests," as if free market and anti-government positions were just rhetorical cover for policy making at the behest of business.
If what he writes is correct, liberals really do not understand conservatives at all. Maybe that is why the two sides so often seem to be talking past each other.
The "progressive" states that built their enormous public burdens by soaking the wealthy will hit the wall first and hardest. California, which extracts more than half its income taxes from a fraction of 1% of its citizens, is extreme but hardly alone in its overreliance on a few, highly mobile taxpayers. Both individuals and businesses are fleeing soak-the-rich states already. Those who remain in high-tax states will be making few if any capital gains tax payments in the years to come. Even if the stock market comes roaring back to life, the best it could do is speed the deduction of recent losses.
In 20 years, Mr. Murtha has successfully doled out more than $150 million of federal payments to what is now being called the airport for no one.
Friday, September 4, 2009
Lobster fishermen have feuded for generations over who can set traps, and where. To protect their fishing grounds, the lobstermen here have been known to cut trap lines, circle their boats menacingly around unwelcome vessels and fire warning blasts from shotguns.This year there has been violence as outsiders have infringed on those informal property rights.
Update: The teenage unemployment rate rose by 1.7% from the previous month to 25.5% and now is at an all-time high. The rise is consistent with the hypothesis that a rise in the minimum wage will result in job loses for those who have the least skill.
Update: The alterntive measures of unemployment are now at http://www.bls.gov/news.release/empsit.t15.htm
Tuesday, September 1, 2009
The Federal Reserve also shared this Keynesian viewpoint. It provided unprecedented monetary stimulus, increasing the monetary base by more than $1 trillion. Much of this increase corrected for its major mistake: allowing Lehman Brothers to fail. After 30 years of bailing out almost all large financial firms, the Fed made the horrendous mistake of changing its policy in the midst of a recession. That set off a scramble for liquidity and heightened the public's distrust in the market.
But today feels a bit like the end of an era. Ted Kennedy, like his brothers, was a champion of civil rights, women’s rights, and the welfare of the “least of these.” He strongly and eloquently opposed the war in Iraq. Because his life (and the lives of others in his family) embraced the great Catholic social justice tradition, they have made me proud to be a Catholic.Patrick Madrid responds on his blog:
At best, Mr. Kennedy was highly selective as to which of "the least among us" he would deign to defend. Case in point: Abortion. The senator established his record squarely on the extremist position of defending the legality of abortion.A post at America Magazine finds his post boorish and offensive:
Many are not aware that he was originally publicly pro-life (I comment on the details of his transformation from pro-life to pro-abortion here).As a result of Ted Kennedy's indefatigable championing of the pro-abortion movement, tens of millions of the "least among us" — unborn girls and boys — were killed through abortion under his senatorial auspices.Whatever his positive qualities may have been, and no doubt he had some, the tragic reality is that Senator Kennedy's long political career was squandered by his vociferous, relentless promotion of abortion. And that, sadly, will be his enduring legacy.
Someone named Patrick Madrid, who runs a blog and is involved with something called the Envoy Institute at Belmont Abbey in North Carolina, decided to attack my colleague at NCR Sister Maureen Fiedler for her post remembering the late Senator. "Maureen, with all due respect," he begins, words that reek of condescension.If you are damning someone for being condescending and boorish, should you be so blatantly condescending and boorish?
Who are these people? To what level of boorishness have the spokespeople for the pro-life community descended? And, it is any wonder we keep losing the political fight for life when some of our own exercise such obvious, callous, inhumane indecency as to ignore a lifetime of good works, render judgment not just on a man’s ideas but on his soul, and to speak ill of the dead when the body is still warm. It is shameful. And, I hope the bishops recognize that it is counter-productive to the pro-life goals we should share. Hatefulness is not attractive or persuasive.
One of the comments caught my attention:
Senator Kennedy did more for the unborn by turning Catholic Social Teaching into law than anyone in the pro-life movement. Had it not been for his list of accomplishments in the social welfare area, the abortion rate would have been much higher, as people would have been poorer, felt more trapped and resorted to abortion more often.I can make arguments for and against markets and socialism, but I have no idea how you can argue that social-welfare legislation increases national wealth to the extent that this comment suggests. It is not government social programs and welfare programs that create wealth. Inventors and entrepreneurs working in the private sector create wealth. It is discouraging to see comments that betray this complete lack of understanding of why we are a wealthy country, but I suspect that in some intellectual circles that sort of sentiment is acceptable.
Elizabeth Scalia reflects on the exchange at First Things.
Wednesday, August 26, 2009
What he shows is consistent with what I see happening around me.
Paul Krugman says not to worry, that it is "bad but not horrific." Does anyone think he would say the same thing if it were a Republican administration piling up the debt?
Monday, August 24, 2009
All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.
But health insurance is different from every other type of insurance. Health insurance is the primary payment mechanism not just for expenses that are unexpected and large, but for nearly all health-care expenses. We’ve become so used to health insurance that we don’t realize how absurd that is.
There was nothing natural or inevitable about the way our system developed: employer-based, comprehensive insurance crowded out alternative methods of paying for health-care expenses only because of a poorly considered tax benefit passed half a century ago.
Is this really a big problem for our health-care system? Well, for every two doctors in the U.S., there is now one health-insurance employee—more than 470,000 in total.
Many hospitals still exist in their current form largely because they are protected by regulation and favored by government payment policies, which effectively maintain the existing industrial structure, rather than encouraging innovation.
Read the whole thing if you want a good summary of why health care is the mess that it is.
Measuring the progress in appointments depends on what positions are counted and who is doing the counting. The White House Transition Project counts 543 policymaking jobs requiring Senate confirmation in four top executive ranks. As of last week, Mr. Obama had announced his selections for 319 of those positions, and the Senate had confirmed 236, or 43 percent of the top echelon of government. Other scholars have slightly different but similar tallies.Much of the problem is the vetting process:
“Anyone who has gone through it or looked at this process will tell you thatevery administration it gets worse and it gets more cumbersome,” Mrs. Clinton said last month. “And some very good people, you know, just didn’t want to be vetted.” She added: “You have to hire lawyers, you have to hire accountants. I mean, it is ridiculous.”Isn't there a lesson here, that trying to solve one problem with ever more regulation can create a new, more serious problem elsewhere?
Thursday, August 20, 2009
Despite incessant repetition of the fact that millions of Americans do not have medical insurance, hardy souls who have actually read the mammoth medical-care legislation being rushed through Congress have discovered all sorts of things there that have nothing whatever to do with insuring the uninsured — and everything to do with taking medical decisions out of the hands of doctors and their patients, and transferring those decisions to Washington bureaucrats.Wasn't part of the pro-abortion position that the government had no business getting between a woman and her doctor? Of course all the choice arguments were there for the rubes--they were not what the elites actually believed, but it still is striking that in the current debate about health care there have been few if any references to intrusion by the government into the patient-doctor relationship.
Many people who are uninsured have incomes from which medical-insurance premiums could be paid without any undue strain. But they choose to spend their money on other things. Many young people, especially, don’t buy medical insurance, and elderly people already have Medicare. The poor have Medicaid available, even though many do not bother to sign up for it until they are already in the hospital — which they then can do.
Wednesday, August 19, 2009
Although administration officials are eager to deny it, rationing health care is central to President Barack Obama's health plan. The Obama strategy is to reduce health costs by rationing the services that we and future generations of patients will receive.The key problem facing the government is the the explosion of costs in Medicare and Medicaid in the future.
There is, of course, no reason why limiting outlays on Medicare and Medicaid requires cutting health services for the rest of the population. The idea that they must be cut in parallel is just an example of misplaced medical egalitarianism.He then goes on to explain how the present system of tax deductions and credits encourage too much spending on health care.
Like virtually every economist I know, I believe the right approach to limiting health spending is by reforming the tax rules. But if that is not going to happen, let's not destroy the high quality of the best of American health care by government rationing and misplaced egalitarianism.
Monday, August 17, 2009
Sunday, August 16, 2009
In their 2006 book, "The Business of Health," economists Robert L. Ohsfeldt and John E. Schneider set out to determine where the U.S. would rank in life span among developed nations if homicides and accidents are factored out. Their answer? First place.
In Britain, by contrast, having guaranteed access to care doesn't mean you'll actually get it. Twenty percent of British cancer patients who might be cured become incurable while awaiting the treatment they need.
Friday, August 14, 2009
Obama has made them scared. Everywhere I go I hear the same story. Business owners know the little details that academics and pundits don’t, and they know what not to do. They know, for example, that payroll taxes are not only scheduled to rise, but already have risen. And they know all too well that government-mandated unemployment compensation is funded by employers through an unemployment-compensation payroll tax. As a result, they know not to hire.A problem with that explanation is that it does not explain the drop in the hire rate that predates the election of Barack Obama.
The Obama administration has done at least a respectable job, and maybe much better than merely respectable, on the demand side in trying to end the recession. They do not seem to see need to do anything on the supply side, which does create an interesting test for economics.
Thursday, August 13, 2009
If we had a press that was not so politicized (which reporter broke the story that John Edwards, the Democratic VP candidate in 2004, had an affair and fathered a child?), it would be investigating some intriguing questions. For example, why did Mrs Palin decide to use Facebook as her way of communicating her views? If at the time of her announcement of resignation from the governorship, you had asked people if relying on Facebook as the principal interface with the public was a sound idea, I am quite confident that most of them would have thought that a crazy idea. Yet she is doing it and doing it effectively. Did she see something that almost everyone else missed? Of did she stumble on this solution by accident? What are the pros and cons of doing what she is doing? Is this something other politicians should think of adopting, or is it something that will only work for unusual cases such as Mrs. Palin? There are fascinating questions here but I do not expect to see them answered in the mainstream press.
There is another set of questions that is also interesting. Most mainstream pundits said after her resignation that she was finished politically. However, people who are politically dead do not get much attention, even when the clamor for it. (Consider Rod Blagojevich.) So if Palin really is politically dead, why the fascination with her? And it is not just her fan base that is interested--the Left is obsessed with her. The left blogosphere exploded with articles when she posted her "death panels" comments on Facebook. Why? People who spend the time to read these posts and make comments sometimes write things like, "Why does anyone care what she says?", and do not recognize that their very act of reading and commenting indicates that they care about what she says. Some of her fans say that the Palin-obsession of the Left indicates that they fear her. Perhaps, though any fear is at a subconscious level. I do not expect to see anything very perceptive from the mainstream press on these issues either.
Update: A related post with some interesting comments.
Update 2: It is only a month late, but Politico notices that private citizen Palin is a Facebook phenom, and it is the most read post of the day. Maybe there is truth in this American Spectator piece.
I could not resist the temptation to add a couple comments, but forgot that the word "data" is plural.
Sunday, August 9, 2009
Wednesday, August 5, 2009
I have not read economists on the program, but I am confident most of them, other than some of the extreme partisans, would give it thumbs down. Economists have certain criteria by which they evaluate programs. One of them is equity or fairness. Who does the program benefit? The problem that this program has from an equity point of view is that it seems largely arbitrary. It is as if the government held a lottery and gave random people several thousand dollars. To qualify, one must have an car that has low value. Lots of lower and middle class families have those, often as a second or third or fourth car. I do not know enough about the rich to know if they tend to have old clunkers. Then one must be willing and able to buy a new car. For some of the poor, that may not be an option--they will not be able to make the payments. As time goes one, someone will figure out if this program subsidized the rich, the poor, or the middle. My guess is that it was a subsidy that went largely to the middle--or to the dealers, who were able to charge higher prices because of the program.
A second criteria is efficiency, which asks the question of whether the program increases value. Here the program is clearly a disaster because it destroys things that have value. The cars traded in with the program must be destroyed, as must their parts. The program is taking a lot of cars that are worth a couple thousand dollars each and converting them into scrap worth a few hundred dollars each. This brings up a secondary equity point. For many of the poor, the purchase of used cars is their best option in getting vehicles. This program will tend to raise the price of older used cars because it reduces their supply. The poor will pay more, and most economists believe that programs that hurt the poor should be condemned on equity grounds.
However, are these bad effects worth enduring for the good of stimulating the economy? We can see that sales of autos have greatly increased as a result of the program--so much so that the program ran out of money after just a few days in operation. A key question here is to what extent were those sales new sales, sales that would not have taken place without the program, and to what extent were those sales simple shifted in time. If you wanted to buy a new car and had a car that qualified as a clunker, you would have had a strong incentive to wait until the program was in force. Or if you were planning to buy a new car sometime in the future, you would have had a strong incentive to move the purchase forward in time to take advantage of the several thousand dollar grant. It is not clear that the program did more than shift sales in time, and if that was its primary effect, it was meaningful stimulus.
Addendum: People find ways to game the system, another example of people responding to incentives.
Update: Econbrowser had a post on the program with many comments.
Tuesday, August 4, 2009
Monday, August 3, 2009
From David Kuhn at Real Clear Politics:
Fully 35 percent of Democrats believe George W. Bush had advance knowledge of the 9/11 terrorist attacks. Fully 28 percent of Republicans believe Barack Obama wasn't born in the United States.
Meet the fanatical third.....
A few years ago, an Emory psychologist scanned the brains of self-described partisans. Partisans were able to notice the hypocritical statements of the opposing candidate but not the inconsistencies of their preferred candidate.
Thursday, July 30, 2009
Even aside from this major factor, Dudley argued that the Fed's large and growing balance sheet is nothing that prevents the Fed from controlling inflation once the economy corrects. 'It is not the case that our expanded balance sheet will inevitably prove inflationary,' he said.He complete speech is here. I need to revise my material on the Fed as the result of what it has done in the last year, and writing that the Fed now has four tools to control monetary policy--open market operations, the discount rate, reserve requirements, and the interest on excess reserves--is a first step. I wonder, though, if this does not make their job harder rather than easier.
Specifically, Dudley said the Fed's new ability to pay interest on excess reserves is a critical tool it uses to keep banks from lending these reserves and thereby creating new credit and boosting inflation. 'Thus, through the IOER rate (interest on excess reserves), the Federal Reserve can effectively retain control of monetary policy,' he said, noting that the Fed can increase the IOER rate if banks begin to find it more profitable to lend these reserves.
Here is more from the Fed on what new Fed powers, found on Donald Marron.