Brand names as signaling

Mazda destroys 4703 new cars, worth about $100 million, to protect its brand name.

Mazda saw no easy way to guard against these outcomes. So it decided to destroy approximately $100 million worth of factory-new automobiles. "We couldn't run the risk of damaging the brand name that Mazda worked so hard over the years to develop," says Jeremy Barnes, the company's corporate-affairs director for North America.

(It is a bit old, but still a good example for why brand names matter.)

Long-term treasuries

Long-term Treasury bonds have been falling in value as their interest rates have risen, from less than 3% at the beginning of the year to more than 4.5% on Friday. Much of that rise has occurred in the last two months, and has resulted in large losses in some bond funds:

What's stunning about the portfolio declines is the swift plunge in Treasury prices within a short period of time despite the Federal Reserve's buyback purchases intended to hold down interest rates. Benchmark 10-year Treasury yields have surged to levels not seen in more than six months, resulting in meaningful losses for many portfolios.

The 10-year T-note and 30-year Treasury bond are down 8.58 percent and 24 percent, respectively, in terms of price for the year to date.

As a result, the yield curve is very steep. People are still getting almost nothing at the short end, but are demanding much larger returns at the high end. The most interesting question in all of this is, are people expecting an outbreak of inflation as a result of a U.S. government budget that is out of control?

Source of most data is here.

The press and the president

From Vanity Fair:

These people in this White House are in greater control of the media than any administration before them.

The only thing is, they mustn’t let on that they know it.

In praise of Jimmy Carter

Holman Jenkins has words of praise for President Jimmy Carter in his Wall Street Journal column:

In Mr. Carter's day, bankruptcies were scything through the railroad sector, hurtling toward a rendezvous with nationalization. Conrail, an amalgam of failed Northeastern lines, had already been taken over and analysts foresaw a $300 billion bill (in today's dollars) in the likely prospect that Washington would soon have to operate the rest of the nation's freight railroads.
...
Rail executives and economists had been arguing since the 1920s, when competition from trucks and planes began to emerge, that comprehensive federal regulation had only distorted the industry's pricing, driven away investment, and made competitive adaptation impossible.
...
It still took some doing on Mr. Carter's part. When the bill stalled, a hundred phone calls went from the White House to congressmen, including 10 by Mr. Carter in a single evening. The bill essentially no longer required railroads to provide services at a loss to please certain constituencies. It meant going up against farmers, labor, utilities, mining interests, and even some railroads....

Barbados vs Jamaica

From Newmark's Door.

It's not just Nevada

It's not just Nevada that has legalized prostitution. So does Rhode Island. Found via marginalrevolution.com

Over the line

Playboy recently had a web piece about ten conservative women that they would like to hatef**k. It lasted a few hours before it was taken down after generating a considerable reaction. Some sites, including Politico, showed a cluelessness that was quite remarkable.

Not my alma mater

Found on the SCSU Scholars blog, a note that a team from a town I lived in for several years, Little Falls, MN, won a national economics competition, an impressive achievement. However, I never went to the high school there--I left home to go elsewhere.

Falsifiability

This afternoon I stumbled on a set of speakers on CSPAN discussing the future of progressivism (though under the title of the future of conservatism). What struck me was the their position was non-falsifiable. They had great faith in the ability of government to serve the people provided that the right people control government. The right people are the progressives and the wrong people are the conservatives. The present triumph of progressives opens up the possibility of a long reign of progressive rule that can only be stopped by mistakes of the progressives. Hence, if the policies of the Obama administration are disastrous resulting in electoral reversal, it will not be that the progressive policies were flawed. It will be that the people who implemented them were not good enough. True progressives will continue to advocate these policies, arguing that they will work next time provided that better people are carrying them out.

Everyone holds beliefs that are non-falsifiable. However, we should be able to recognize that that these beliefs are not scientific, but rather non-scientific and religious. It does strike me as a bit strange that the progressives seek to discredit conservative policies on empirical grounds (i.e., the present recession shows the failure of laissez-faire policies), but are unwilling to submit, a priori, their policies to similar empirical tests.

Inequality

Last week the President took his wife on to a Broadway play, flying three planes from Washington to New York, taking a helicopter to Manhattan, and then shutting down traffic as he traveled by car to the theater. It was the kind of outing that even a very rich person would find it difficult to match.

Many of the Left are deeply concerned by the inequality that a market society generates. They seem to be unconcerned by the inequality that democracy, or any other form of government, generates. However, the inequality generated by the political system is greater than the inequality generated by the market. Bill Gates can do a lot of things that I cannot do. But what can he do that the President cannot do? Or senators and congressmen? A rich person can live luxuriously with a huge house, a private jet plane, and a big yacht. Those with political power can live luxuriously not because they personally own things but because they control publicly-owned resources, as the Obamas' trip to New York demonstrates. The rich can give away vast sums of money, but the amounts of money that those with political power can dispense is far greater. Those with political power can do most of the things that those with great wealth can do, and they can also do a variety of things that no amount of wealth allows. No rich person can tax others, or sentence them to jail or to death, or decree what behavior is permissible and what behavior is impermissible. Wealth requires the voluntary cooperation of others to be effective, whereas political power can rely on force and coercion.

Proposals to limit the inequality of the market almost always increase the role of political power, and thus increase the inequality due to the political structure. I do not understand why those who are so concerned with income or wealth inequality are not equally concerned about the inequality of power that is inherent in the political structure. (I also do not understand why they are not concerned about the inequality due to health, family, and natural ability, which also can dwarf income or wealth inequality.) Maybe it is because the political-caused inequality is not easily measured, whereas measuring and comparing different levels of income and wealth is easy.