Saturday, August 04, 2007

Overheard at a Liberty Fund Conference....(II)

A. At a dinner, nice restaurant. Talking about dessert down at our end of table. Young woman, looking over at two older men (who have not heard our conversation about dessert) at other end of table: "So: You two getting any?" Loudly.

Stunned silence, at neighboring table also. Then laughter begins to leak out through every pore. Young woman covers face with hands. It takes several minutes to restore decorum.

B. In hotel bar, midnight, Latino native speaker, reading from Crackberry: "Hugo Chavez praises champagne!"

Rest of us: "What?"

"Champagne! Hugo praises champagne, for service."

"WHAT?"

"CHAM PAIN! THE ACTOR!"

Order is never restored. We had to leave the bar, to stop laughing. (story)

C. Walking in crowded Santa Fe street, during large festival. Young woman walking five enormous standard poodles. She gets tangled in leashes, drops one. Dog stands, patiently. Woman is nearly completely immobilized, with four leashes wrapped around her legs, reaches for handle of fifth leash. Dogs lick her hand, keep her from reaching it.

Man on sidewalk: "Hey, lady! One of 'em's loose!"

Young woman: (sigh)

D. Walking in same crowded Santa Fe street festival. Tall young woman wearing t-shirt with lots of writing on it, in what appears to be Spanish, written with a Sharpie. She is talking animatedly on her cell phone: "So, we did some mushrooms, and acid, and then watched a Teletubbies tape. I was so scared I didn't sleep for two days. It was horrible."

Stuck inside of Norman with the Mahale blues again!

One of the coolest places to visit on earth has got to be Mahale Mountains National Park on the shores of Lake Tanganyika in Tanzania. Access is by boat only (no roads at all).








It's very isolated, we stayed in funky cabanas on the edge of the forest by the beach





It's one of the few places left in the world where you can see Chimpanzees in the wild!!!




Very Idyllic!!


Consider the Kiwi

As the Doha trade talks continue to flounder on the impossibility of the US and EU significantly reducing farm subsidies, and as our Congress passes another whoppingly grotesque farm bill, it is perhaps instructive to consider the Kiwis.

In 1984, more or less cold turkey, New Zealand cut its farmers loose. No more subsidies.

According to the NY Times:

The farming community was devastated — but not for long. Today, agriculture remains the lifeblood of New Zealand’s economy. There are still more sheep and cows here than people, their meat, milk and wool providing the country with its biggest source of export earnings. Most farms are still owned by families, but their incomes have recovered and output has soared.

“Farming in New Zealand is now a cold, hard business,” said Mr. Lumsden, who at the time of the farming revolution was president of Federated Farmers in the Waikato region, the heart of New Zealand’s dairy country. “I think we have benefited hugely.”

one particularly perspicacious Kiwi put it this way:

“When you’re not going to get paid for what the market doesn’t want, you have to get off your backside and find out what they want,” said Charlie Pedersen, who, when he is not raising sheep and beef cattle on his farm north of the capital, Wellington, is president of Federated Farmers of New Zealand.

Amen, brother Charlie, Amen!

Friday, August 03, 2007

Overheard at a Liberty Fund Conference....

I'm in Santa Fe, NM, at an LF conference.

At the bar, a young woman asks for a dirty martini.

Bartender: "How dirty?"

YW: "Britney Spears."

Bartender: "You want it shaved, then?"

Chinese: We LOVE American Free Trade

I was one of the thousand who signed the "Don't be protectionist!" letter sponsored by Club for Growth.

It has been interesting to see the reaction in China. There's this, which is a little icky:

This week in Washington, short-term politics won over long-term economics and basic humanity when the Senate Banking Committee voted in favor of a protectionist bill, joining a long list of bills aimed at China.

There is a race to the bottom among American politicians to determine who will get the honor of leading the lynch mob that blames China for every real or imagined economic ill. These political leaders are competing for short-term political gain at the risk of the global growth that is lifting billions of people out of poverty around the world. Worse still, they know exactly what they are doing.

On Wednesday of this week, 1,028 economists signed a petition to members of Congress, advising them of the immense benefits of free and open trade in goods, services, and capital, and warning them of the grave risk to growth and stability, both in and outside the US, from escalating protectionist measures that could lead to a global trade war.


I actually don't mind that Chinese workers and taxpayers are being asked to subsidize cheap stuff for me to buy. (Can one you guys come over and mow my lawn?) But for China to complain about U.S. protectionism.....wow. Balls, John Rutledge, balls.

There was also this, for example.

Protectionism is a tax on domestic consumers. "Encouraging" exports is subsidy for consumers of trading partners. Neither makes any economic sense. And both hurt growth, over the course of decades.

Thursday, August 02, 2007

Bobby Mugabe has got it goin' on!

Zimbabwe currently has an annualized inflation rate of between 4,000 and 10,000 percent. The IMF is forecasting 100,000% inflation for next year. Now, I am not meaning to insult anyone's intelligence but this of course means that all prices in the economy will be going up very very fast and everyone will complain that prices are going up faster than their incomes.

Bobby M, who has singlehandedly created this situation has also proposed its cure: cutting many retail prices in half and freezing them at that level by law. Beautiful, no?

Except of course, now stores are pretty much 100% empty, and it seems when government inspectors do find merchandise and enforce the bargain pricing, it is government employees and military personnel who somehow find themselves in the front of the line. The Economist reports this week that roughly one third of the population has fled the country!

Mugabe, now 83 years young, has been the head of state in Zimbabwe for over 27 years; the exact same length of time that Zimbabwe has been an independent country. My sincere hope for Africa is that he is the last "president for life" an august group that included Daniel Arap Moi in Kenya (1978-2002) , Julius Nyerere in Tanzania (1964-1985), Mobutu in Zaire/Congo, (1965-1997), and Félix Houphouët-Boigny in Ivory Coast (1960-1993).

Idiot Wind (don't cover up the truth with lies)

AAARGH!!! Foreign Policy, the People magazine of international affairs has produced a column entitled "5 Lies my Economist Told me". The problem is, they are either not really lies or else not really what a professional economist would say!!


1. High productivity and low unemployment make us all better off.

This is clearly false in the sense that not every single person in the USA is better off than they used to be, but it is bizarre. Would FP advocate lower productivity and higher unemployment as the key to personal improvement? They offer stagnant wage growth in the face of solid productivity growth as their evidence, but this ignores non-wage payments (health care!!) and the massive improvements in everyday life for even the poor in the US.

2.
It’s hard to grow without good banks and private property

I really don't get this one. It is clearly, obviously true!! FP gives China as the damning counterexample, but (a) China didn't grow before introducing a form of private property and (b) one country doing it doesn't mean it is easy, does it??


3.
Capital must always be let free to flow

If anyone flat out says or said this with no qualifications, then I guess it would be a lie, but economists pretty much never recommend corner solutions, most papers now are about under what conditions increased capital flows improve growth. FP gives the Asian financial crisis as the damning counterexample, but really, are those countries worse off than if they had never enjoyed capital inflows at all? Would you rather be S. Korea or say the Congo? I think there are a lot of countries in the world who'd be thrilled to have a financial crisis because it would mean they had experienced some foreign investment.

So, how about "its better to always have free capital flows than to always have total capital restrictions".


4.
The Euro will never work.

This is just confused. It depends how you define work. Compared to an optimal monetary policy for each country, the Euro clearly is not "working". If working = surviving as an institution, the Euro is working. FP quotes Friedman as saying that fixed exchange rates are a bad idea, not as saying that the Euro will become extinct. There are a lot of bad ideas with a long long shelf life (payroll taxes, the AMA....).

5.
Japan—no wait, China—is going to take over the world economy

This one is stupid and insulting. I don't know of a single serious economics paper arguing the truth of either of these positions. It is clearly true that a lot of people think (thought) like this and fear (feared) China (Japan) but the impetus is NOT coming from the economics profession. No way.

Hat tip to Dani Rodrik for the pointer.

Wednesday, August 01, 2007

I'll bet its the transfat!


From Der Spiegel online edition comes the shocking news:


Fatty Knut Put on Strict Diet

Knut, the world's most famous polar bear, is off the scales after eating too many snacks and has been put on a diet. The Berlin Zoo said Knut's handlers have been told to stop feeding him extra rations of croissant, fish and meat.

Is this a great country or what??

I has a butt  purhaps ud like 2 pet it?

Caplanian deep thoughts, part deux

Wow, from reading just one sentence from Bryan's book, I haven't been able to think of hardly anything else the last couple days (good thing I didn't read more or I probably wouldn't be able to sleep!!). To recap the sentence in question:

“I see neither well-functioning democracies nor democracies hijacked by special interests,” Mr. Caplan writes. “Instead, I see democracies that fall short because voters get the foolish policies they ask for.”

so, here I go again:

First, what has been the policy trend since world war II? To my reading of history it has been increasing trade, freer and freer flows of capital, tons of private sector innovation. I don't think this just happened in a vacuum, we lowered tariffs and capital account restrictions, we subsidized R&D, allowed (after a fashion) large changes in the composition of the economy. America has almost completely remade itself in the last 50 years, hasn't it? So maybe, just maybe, (a) people in general don't ask for foolish policies or (b) our political elites have done a fantastic job giving the people what they need while pretending to give them what they want. I'd also say that from my point of view, organized interests have done more to block this liberalizing, modernizing process than have the irrational average joes of the world.

Second and more subtly, how do we know the "foolish policies" asked for by the public are really foolish? Here I refer to the economic theory of the second best, the oft ignored bete noir of reformists. Simply put, if the polity contains multiple economic distortions, there is no way to guarantee that removing or reducing one or even a subset of them will raise welfare.

We now return you to your regularly scheduled programming.

Tuesday, July 31, 2007

Sasha for next American Idol?

The VC (actually, Eugene) post a bit of YouTube with Sasha doing an a cappella version of this song:

We're doing battle with statists
Across the USA,
'Cause everybody's reading Hayek,
The man from Austri-ay --
In spontaneous order
We let the market play,
With the writer Fred Hayek,
H-A-Y-E-K.

We use the signals of prices
And then we'll be O.K.,
'Cause no one knows what's efficient
Unless they have to pay;
If we replace that with planning
Like once in Russ-i-ay, [pronounced "Rush-Eye-Ay"]
We'll take the road to serfdom --
Serfdom USA.

[Backup singers should at this point start singing, "Serfdom, serfdom USA, Friedrich H-A-Y-E-K."]

We still have government bureaus,
Just like the FDA, [replace with three-letter agency of your choice ending in A]
But the welfare state mindset
Will soon become passe.
Ayn Rand said he was evil,
Which makes him A-O.K. --
Friedrich August von Hayek, H-A-Y-E-K.

(Nice singing, Sasha. Nice dig on Rand, there toward the end. And thanks to Eugene for finding that, and outing Sasha.)

Caplanian testability?

Let me start with two confessions: (1) I like Bryan Caplan very much, (2) I have not read his book. However, I take the following as his central thesis:

“I see neither well-functioning democracies nor democracies hijacked by special interests,” Mr. Caplan writes. “Instead, I see democracies that fall short because voters get the foolish policies they ask for.”

and wish to speculate on how these three points of view might be discriminated between empirically.

My own work, mostly joint with Mungowitz, shows that interest groups systematically give money to legislators best positioned to support their causes, and that the amount an interest group can raise and spend depends on both the potential gains they may receive and the costs of overcoming free riding in their particular interest class. We also predict and find that the economic interests of voters serves to influence the price that specific legislators would have to charge to provide services to an interest group. So I guess we would say that interest groups get what they want subject to (a) their ability to organize, (b) the constraints that having to face voters in periodic elections puts on legislators, and (c) the institutional structure of the government (committee system, term limits, etc.).

I guess the biggest problem for me in the Caplan quote (sorry for going all Rand-ian on you guys) is defining terms. How do we know a well-functioning democracy when we see one? To me, if power changes hands peacefully and fraud is not rampant, then we pretty much have a well-functioning democracy. That is to say, I'd judge democracy on the process and not on the outcomes. I don't know of any proofs of propositions like "well functioning democracies produce efficient economic outcomes". In fact proofs of the opposite are somewhat prevalent, aren't they?

I also find it interesting that a lot of left leaning political scientists (and yes there ARE other kinds as well!!!) bemoan exactly the same alleged phenomenon claiming that poor and middle class people foolishly and repeatedly and mistakenly vote Republican against their own personal economic interests (right, Mungowitz?? Bartells and them guys).

Note that I personally am a very small government kind of guy. I'd like to cap spending at say 10% of GDP, virtually do away with our military, privatize social security, increase competition and ease entry into medicine, law, etc. I am just not sure how effective Bryan's argument is in reaching this kind of conclusion (which I freely acknowledge has probability zero of ever happening).

I guess I should actually say something about what this post is supposed to be about, the testability of Bryan's thesis, so here goes. I don't see any way to actually test between the three positions outlined in the original quote. Anyone?? Anyone?? Ferris??

Monday, July 30, 2007

4th Amendment Rights: Illegal Seizure?

Chief Justice John Roberts has suffered a seizure and is hospitalized in Maine, the Supreme Court says.

The funniest thing I've read in a long time

Originally written June 10 by Lydia Polgreen in the NY Times and repeated today in the Gray Lady by Mike Nizza:

A journey between Abidjan, the government seat, and Bouaké, the rebel capital, reveals a nation eager for reconciliation but caught between war and peace, its once-mighty economy hobbled, its cosmopolitan image sullied, its place as a symbol of stability and progress long gone.

Lets start with "once-mighty economy". According to the Penn World Tables, per-capita gdp in the Cote d'Ivoire was around 11% of the US in 1960. It peaked at 13% of the US in 1977, and in the last year available, 2003, stood at around 6.5% of the US level. hmmmmm......

Anybody want to take a crack at the "cosmopolitan image" part? They do speak French so I guess that counts for something.......

"Symbol of progress"?? Sure, there's the Asian Tigers, China, India and Cote d'Ivoire, right??

Does everyone who writes about economics at the NY times smoke crack??


Pride of the Celtics!

So Kevin Garnett is now a Boston Celtic. The Celtics will have Paul Pierce, Ray Allen and KG on the floor with pretty much no one else. Even in the east, I don't think its enough but they should at least make the playoffs now. Reportedly, KG had refused going to Boston as recently as last month, so I also wonder exactly what is up now. On the other side of the deal, the T-Wolves are heading directly to the lottery for the forseeable future. Ex Celtic greats Larry Bird, Kevin McHale and Danny Ainge have not exactly covered themselves with glory as NBA executives, have they?

Lott v Levitt settles

John Lott appears to have gotten no money, but considerable satisfaction, from the settlement terms, if in fact these terms are correct (and I got them from John's own forward of the article quoted below, so they must be!)

In documents filed on Friday in federal court, the two parties outlined a settlement that requires Mr. Levitt, who is a professor of economics at the University of Chicago and a co-author of the best-selling book Freakonomics: A Rogue Economist Explains the Hidden Side of Everything, to send a letter of clarification to John B. McCall, a retired economist in Texas.

Mr. Lott's lawsuit alleges that Mr. Levitt defamed him in a 2005 e-mail message to Mr. McCall. In that message, Mr. Levitt criticized Mr. Lott's work on a special 2001 issue of The Journal of Law & Economics that stemmed from a conference on gun issues held in 1999.

By some measures, Mr. Lott appears to have won little from his 15 months of litigation. No money will change hands, and the settlement does not require a formal apology from Mr. Levitt.

But on certain points of reputation and pride, Mr. Lott might take some satisfaction. Mr. Levitt's letter of clarification, which was included in Friday's filing, offers a doozy of a concession. In his 2005 message, Mr. Levitt told Mr. McCall that "it was not a peer-refereed edition of the Journal." But in his letter of clarification, Mr. Levitt writes: "I acknowledge that the articles that were published in the conference issue were reviewed by referees engaged by the editors of the JLE. In fact, I was one of the peer referees."

Mr. Levitt's letter also concedes that he had been invited to present a paper at the 1999 conference. (He did not do so.) That admission undermines his e-mail message's statement that Mr. Lott had "put in only work that supported him."

In his letter of clarification to Mr. McCall, Mr. Levitt said, "At the time of my May 2005 e-mails to you, I knew that scholars with varying opinions had been invited to participate in the 1999 conference and had been informed that their papers would be considered for publication in what became the conference issue."


ATSRTWT (if you are a Chronicle subscriber)

Jury Duty: Legit, or a Taking?

There may be problems with the jury system that we all understand, such as the cottage industry that has grown up around selection and manipulation.

But KL writes with a straight-up objection that is interesting. He was prompted by a piece in the NYT:

"Ann Blakely, the clerk of the Superior Court in Lee County, said sending
deputy sheriffs to find jurors at random was done very rarely, and only when
a judge was about to begin a case without enough jurors...Courts across the
country have been going to extraordinary lengths to get people to report for
jury duty, which many people would do almost anything to avoid."
(July 29, 2007)

As KL goes on to say, in his email:

The Constitution states that private property cannot "be taken for
public use, without just compensation." Given that "time equals money", the
current (trivial) compensation policy for jury duty arguably constitutes an
improper taking. Meanwhile, it is entirely possible that the cost-benefit
ratio of the current jury system is worse than the cost-benefit ratio of
alternative mechanisms of due process.


Reference is the 5th Amendment, of course:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

It is interesting that there is a trend, at the federal level, to rule against "commandeering" of state government officials for use by Federal agencies, or statutes (New York v. U.S., 1992, and Printz v. U.S., 1996, for example).

So, can local governments "commandeer" the time of private citizens for jury duty? Is this like a military draft (which presumably has some emergency justification, so there is a sufficient state interest to justify the "taking" of the body of soldiers), or is it something else? Why isn't jury duty commandeering, and subject to a bar as a taking?

Good one, KL.

(Postscript: Yes, I know commandeering in NY and PRINTZ is a 10th Amendment issue. But commandeering is also a form of taking; why isn't jury duty a taking, for that reason? We can force people to serve as jurors, but we have to offer fair compensation.)

Why Doesn't Rwanda Have Better Growth? Because We Don't Give Them More Money!

UN reports make pretty amusing reading, if you can stomach the cant.

Why isn't Rwanda doing better economically? Is it because of a dysfunctional government, a nonexistent financial sector, and insecure property rights that prevent the poor from borrowing against their meager assets.

NO! It turns out the biggest problem that Rwanda has is: Rich people! Too darned many of them, going around buying stuff and investing. If we could get rid of those darned rich people, everything would be okay.

According to the report, Rwanda's recent growth has bypassed the rural poor leading to a concentration of wealth at the top of the income distribution bracket - a situation that could lead the country to exhaust its ability to reduce poverty rates through economic growth alone.

At the same time, Rwanda has been finalising the Economic Development and Poverty Reduction Strategy.

The strategy estimates that total investment of approximately US$140 per capita per year is needed for MDG-related interventions. With the extent of poverty and the small size of the private sector, the bulk of these investments would have to come from the public sector.

"Rwanda needs to increase investments in development sectors, mainly in agriculture," James Musoni, Rwanda's Minister of Finance and Economic, planning told reporters during the 26 July launch of the report. He also expressed concerns over high population growth.

According to official statistics, life expectancy in Rwanda now stands at 51 years, partly because of efforts to reduce HIV/AIDS related deaths; while the number of people relying on agriculture is projected to drop from 90 percent to 50 percent by 2020.

"In some sectors progress has been recorded but the target is still to be met," the minister added.


ATSRTWT

The "target"? Sounds like it was written by John Edwards, who hates all rich people except himself. And I even think he hates himself, sometimes.

Another Congolese Tragedy

As I may have mentioned a few hundred times by now, Robin & I just got back from our trip to Tanzania and Rwanda where we were lucky enough to see mountain gorillas in the wild. It was a wonderful experience, but it makes the shocking news of recent gorilla massacres in neighboring Congo even more disturbing. There are about 700 mountain gorillas and 6 billion homo sapiens in the world but some are not content with even that ratio as seven gorillas have been killed so far this year in the Congo.





One can find more details here, along with information about how one can help to protect these magnificent animals.

Sunday, July 29, 2007

Plunk Biggio

Fundman sends this suggestion, regarding the HBP thing I mentioned last week.

As the blog says, it is:

Dedicated to Craig Biggio and his (probably unintentional) Quest to break the all time major league career record for getting hit by pitches.

So, the current standings are:

Hughie Jennings 287
Craig Biggio 285
Tommy Tucker 272
Don Baylor 267

Projected HBP total for Biggio, at end of season total = 287
And, end of season matters, since Biggio is retiring.

C'mon, pitchers, you bunch of pussweilers! Plunk Biggio. He is in the Hall anyway, but all time HBP leader is quite a feather in your cap. Or, quite a bruise on your boom-boom.

(Gratitude to Fundman. An excellent tip.)

LOLATTYGNL!!


Ize in ur chamber............
...........stickin' to mah storie!!!!