Sunday, November 29, 2009

Killing trees with kindness

From the New York Times:
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

Private Property and Thanksgiving

Were the Pilgrim's saved by an abandonment of collectivism and an embrace of private property? This post, found via the a link in the Volokh Conspiracy, says yes.
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

Animal sacrifice

If you are an animal rights activist, you want it to stop, but if you value diversity, you should want it to continue. How does the modern progressive decide on the tradition of a centuries-old animal slaughter?
The world's biggest animal sacrifice began in Nepal today with the killing of the first of more than 250,000 animals as part of a Hindu festival in the village of Bariyapur, near the border with India.

Monday, November 23, 2009

An unemployment feedback loop

From an AP article:
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.
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.
 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.

Climategate

Blogs are abuzz with the story of Climategate. James Taranto gives us the bottom line:
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.

The Natural Survival of Work

From The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy:
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....

Trends in world GDPs

Mark Perry has a graph on Carpe Diem that shows that the US has produced about 25% of the world GDP from 1969 until the present. Europe's share has fallen, while the share due to Asia has rise, and both are also closing in to 25%.

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

Special Interest groups and education

The Chicago Tribune has the story of a state legislator who has run afoul the teachers union as he has tried to improve education. The Trib embeds a video from a retirement speech of the head of the NEA that gives the priorities of the NEA.
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.


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.
If the choice is between protecting the jobs of its members or educating students, which will they choose?

What exactly is the justification of public-sector unionism?

Thursday, November 19, 2009

Rent seeking and lawyers

From California:
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.

The center of the earth

Al Gore's new mantra seems to be "Drill, Baby, Drill." Do you see anything wrong with this clip?



People are learning science from a guy whose worst grade in college was in a natural science course.

Tuesday, November 17, 2009

Sweatshop

The book Portfolios of the Poor: How the World's Poor Live on $2 a Day examines the financial decisions of poor people in India, Bangladesh, and South Africa. Seeing the problems they face and how they deal with them offers a fascinating view of world poverty.

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?

Return of Layaway

More people are buying Christmas gifts using layaway, a method of making several small payments to accumulate a large sum. Layaway payments do not make sense in the world of rational economics, but they do make sense in the world of behavioral economics.

Thursday, November 12, 2009

fiscal policy or economic development

Found here:
http://www.zerohedge.com/article/other-side-chinas-8-gdp-growth-ghost-cities
http://www.youtube.com/watch?v=0h7V3Twb-Qk



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.)

Football helmets and unintended consequences

Economists have long recognized that when some activity is made safer by improved equipment, people compensate with more risky behavior. For example, making cars safer lets people take more risks behind the wheel. People respond to incentives. The phenomenon of moral hazard is another example of how a reduction in risk changes behavior.

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

Is China a bubble economy?

One of the hedge fund managers who has made money as a bear thinks China is a bubble economy ready to pop:
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

Germs

From a blog that is part of Technology Review:
Each of us contains roughly 10 times as many microbial cells as human ones.

Betting against recovery

On the Corner at National Review a reader writes:
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

Problem of commons in Yemen

Found on Marginal Revolution, an article in the New York Times that reports on the overuse of water in Yemen. Will they be able to curtail the use of water before catastrophe occurs?
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

Economists on Jeopardy

Found on Greg Mankiw's blog, who got it from another blog.