I Told You So, I Did

Now even the NYT admits that the idea of subsidizing "green jobs" isn't working, and can't work.

I did say this, myself.

(To be fair, that's not the NYT, really. That's Ed Glaeser. He's really really smart. Not sure how the NYT made the mistake of letting him write for them.)

(Nod to Anonyman, who has a green thumb)

Spain is so screwed!

Great chart from the Angry Bear Blog on the evolution of labor costs in the EU (clic the pic for a more glorious image):

The orange line that inexorably rises? Spain.

The green line on the bottom that ends up almost 30% below Spain? Germany.

Chances of Spain reversing this without years of economic and social pain given their membership in the Euro? Zero.

Facts Don't Matter

To the food nannies, actual facts are irrelevant.

Jacob Grier cites some of these facts.

I myself was so discombobulated I went all Boudreaux on the New and Observer, for this story.

Food Trucks Create Jobs

Interesting new business.

(Nod to Anonyman, who is going to stick with his LocoPops, thankyouverymuch)

So Close, and Yet....

Matt Yglesias comes tantalizingly close to making sense for some of these, and then flitters away like a butterfly.

His list of "Things I Support for Policy"

— More redistribution of money from the top to the bottom.
— A less paternalistic welfare state that puts more money directly in the hands of the recipients of social services.

If these were taken as a couplet, I could sort of go along. The first by itself is nonsense; it's not wrong, it's impossible. But if we were to take all the money now spent on welfare and social services for the poor, and split it 80% to the poor, 20% tax rebates for the rest of us, AND PUT ALL THE 80% INTO A NEGATIVE INCOME TAX...then W. Pareto would smile. This is pretty much the argument I make in a paper forthcoming in Basic Income Studies. The point being we don't need more redistribution from top to bottom. What we need to do is make sure some of it actually makes it to the bottom, by preventing Robin Hood's Merry Men in Washington from drinking it all up and spending it on hookers.

— Macroeconomic stabilization policy that seriously aims for full employment.
— Curb the regulatory privileges of incumbent landowners.

I literally have no idea what the first one means. And the second one is clear, but terrifying. Good God, man, have you no shame? Have you no shame, sir? "Curb regulatory privileges" is just a straightforward taking, only without all that expensive (but Constitutionally-mandated) compensation.

— Roll back subsidies implicit in our current automobile/housing-oriented industrial policy.
— Break the licensing cartels that deny opportunity to the unskilled.

Jeez. Wot hoppint? These not only make sense, they are essential pieces of the libertarian economic program. And they are both well and precisely stated. I find it surprising that Matt Y actually believes the second. *I* certainly think the second is a huge problem, but....wow. Matt: much proper respect and love. This is good work, here.

— Much greater equalization of opportunities in K-12 education.

Put "public" and I'm with you. I don't see a reason to cap how good private schools can be (necessary to "equalize"), but I don't see why there should be such enormous disparities in public education, even in the same state. Of course, the way to do this is vouchers and charter schools. It would be fast and effective. Not sure Matt would go that far, though, 'cause he believes in government PROVISION of education, where I would go no further than government FUNDING of education, and even there I have some worries.

— Reduction of the rents assembled by privileged intellectual property owners.

Sure, yes. Don't feed the trolls. Patents and copyrights need reformed.

— Throughout the public sector, concerted reform aimed at ensuring public services are public services and not jobs programs.

Holy smokes! Not sure how this squares with the "full employment" thing, but if this be reform, give me more of it! In fact, the more I read this one the happier it makes me. Focusing on public service means you might be able to judge if it is a public good, and if it is worth something. Focusing on "jobs" means that evaluations go like this: (1) Do you have a budget? Yes. GOOD! (2) Did you spend it? Yes. VERY GOOD! Evaluation: Excellent program.

— Taxation of polluters (and resource-extractors more generally) rather than current de facto subsidization of resource extraction

Absolutely. AB. SO. LUTE. LY. Stop feeding the oil pigs, the coal pigs who rip the tops off mountains, stop subsidizing extraction with foreign wars that waste our young people and our taxes. If oil and coal were charged out at anything like their true prices, we would not need to subsidize "green" alternatives. Gas would (and should be) $5 a gallon, and coal would be expensive enough that we would find other ways to generate power. Instead, just as Matt Y says, we subsidize the pigs, and then we subsidize the "alternative" fuels. Since all we have to do is STOP spending tax money on coal, oil, ethanol, and so on, this should be doable. Sure, energy prices would go up, but they should go up. And if we had an effective basic income scheme, poor people could still afford the energy.

Overall: well done. Very solid on the list; counting 1/2 's I would say I am with him on 6 of these. I'm pretty confident that there are zero Republicans politicians that would get a 6/10 from me. So, Matt Yglesias for President!

Riding the Sex Doll

A river mishap in Oz.

Insert your own joke here. (well, write in your own joke, then)

(Nod to the Blonde)

Green Jobs: They Don't Exist

Delicious. Rich. I told you so. (etc)

We gave Evergreen Solar millions and millions of dollars, nearly $50 million, to subsidize production of solar energy panels.

But they closed shop and moved to China.

Now the U.S. is mad at China...FOR SUBSIDIZING PRODUCTION OF SOLAR ENERGY PANELS! ("The cops finally busted Madame Marie, for telling fortunes better than they do...")

Look, if the only way you can make money is to pay more than 100% of the purchase price in subsidies, you don't want to be in that business.

(Nod to Anonyman)

MLK day 2.0

Great tweet this morning from novelist Rafael Yglesias:

"The assassination of MLK Jr. was the most devastating of the 60s. We lost a leader who was that rare man of grace: a merciful revolutionary."

I can surely add this too; MLK Jr. was one hell of a preacher!

MLK Day

Gosh, when did the observance of MLK day become a religious obligation? Gov of Maine suggests NAACP can give him a nice nether kiss. A petty, silly squabble. No doubt the Gov. will next say, "You know, I have a lot of black friends!" Still, the NAACP folks in Maine (a large group? probably not...there are only 16k black folks in the state of Maine, total) are pretty insistent: Gov MUST observe MLK day. Strange.

For my own part, that would be easy, because I am a fan of MLK day. I am not a fan of the parasites such as Jesse Jackson who have come to make a lavish living trading on their associations with Dr. King. The whole "Rent a Riot" business, and "Give me money or I'll call you a racist" extortion racket is actually an affront to the memory of the man. If the NAACP wants to go after someone who is shaming Dr. King, they should try to distinguish between Dr. King and Kingists (something like admiring Marx, but laughing at Marxists).

So, on this MLK day, let me suggest "The Letter From A Birmingham Jail." An excerpt:

We know through painful experience that freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed. Frankly, I have yet to engage in a direct-action campaign that was "well timed" in the view of those who have not suffered unduly from the disease of segregation. For years now I have heard the word "Wait!" It rings in the ear of every Negro with piercing familiarity. This "Wait" has almost always meant 'Never." We must come to see, with one of our distinguished jurists, that "justice too long delayed is justice denied."

We have waited for more than 340 years for our constitutional and God-given rights. The nations of Asia and Africa are moving with jet-like speed toward gaining political independence, but we still creep at horse-and-buggy pace toward gaining a cup of coffee at a lunch counter. Perhaps it is easy for those who have never felt the stinging darts of segregation to say, "Wait." But when you have seen vicious mobs lynch your mothers and fathers at will and drown your sisters and brothers at whim; when you have seen hate-filled policemen curse, kick and even kill your black brothers and sisters; when you see the vast majority of your twenty million Negro brothers smothering in an airtight cage of poverty in the midst of an affluent society; when you suddenly find your tongue twisted and your speech stammering as you seek to explain to your six-year-old daughter why she can't go to the public amusement park that has just been advertised on television, and see tears welling up in her eyes when she is told that Funtown is closed to colored children, and see ominous clouds of inferiority beginning to form in her little mental sky, and see her beginning to distort her personality by developing an unconscious bitterness toward white people; when you have to concoct an answer for a five-year-old son who is asking: "Daddy, why do white people treat colored people so mean?"; when you take a cross-county drive and find it necessary to sleep night after night in the uncomfortable corners of your automobile because no motel will accept you; when you are humiliated day in and day out by nagging signs reading "white" and "colored"; when your first name becomes "nigger," your middle name becomes "boy" (however old you are) and your last name becomes "John," and your wife and mother are never given the respected title "Mrs."; when you are harried by day and haunted by night by the fact that you are a Negro, living constantly at tiptoe stance, never quite knowing what to expect next, and are plagued with inner fears and outer resentments; when you no forever fighting a degenerating sense of "nobodiness" then you will understand why we find it difficult to wait. There comes a time when the cup of endurance runs over, and men are no longer willing to be plunged into the abyss of despair. I hope, sirs, you can understand our legitimate and unavoidable impatience.

ATSRTWT, it's worth it. It's hard to read without getting tears in your eyes, in fact. The simple dignity of the claim, and of the man...wow.

This is the statement Dr. King was responding to..."Statement by Alabama Clergymen." The money quote:

Just as we formerly pointed out that "hatred and violence have no sanction in our religious and political traditions," we also point out that such actions as incite to hatred and violence, however technically peaceful those actions may be, have not contributed to the resolution of our local problems. We do not believe that these days of new hope are days when extreme measures are justified in Birmingham.

An interesting echo, down through the years. The clergymen thought non-violent actions and speech that might incite bad people to violence are immoral. Dr. King didn't think so.* To a reflective MLK holiday...

(*No, I won't try to connect this to the criticism after the Arizona shooting; you can do that yourself).

Ain't gonna bump no more....

Delta taking bump bids.

(Nod to Angry Alex)

I, Toaster

Interesting. A modern and video-ed update of "I, Pencil," though that is not what the author was thinking, I expect.

(Nod to JakeRuss)

He's Baa-ack

As amazing as this sounds, apparently Baby Doc is back in Haiti!

No word on what he was wearing.

I guess this guy was raised by Amy Chua

"I literally cannot imagine a more market-based, private-sector system for universal health insurance than the one that the Democrats implemented last fall."

--M.S., Democracy in America Blog, The Economist

(W.W. at the same blog, tries to help this individual out)

Augustine lives!

In today's NY Times, Christy Romer opines on "What Obama Should Say about the Deficit". Her idea is along the lines of "Lord, grant me chastity, but not yet".

Here's the exact quote:

"He should make clear that the issue is spending and taxes over the coming decades, not spending in 2011"

Wow, "the coming decades". So spending will become an issue in 2021? Good to know.

I actually hope Obama does NOT follow her advice, as the current pool of Republican candidates is so mutant that I am hoping President O can get hisself re-elected.

Telling America that spending won't be an issue for the rest of his first term and all of his second term is not a path to electoral success.

Rising Real Wages and the Spread of Opulence

Prof. G. Kennedy gives, as always, a learned and nuanced description of the problem.

I always come back to these two pictures shown in this post. Which one has higher wages, do you expect? And which one produces cheaper products? Since opulence, by definition, is higher wages and cheaper products, we're done here.

Civic Literacy Quiz

The ISI "Civic Literacy Quiz": Since many of our elected officials apparently think the Constitution is not really something they need to know.

I got a 97%, and the one question I missed, I missed on purpose.

Go ahead and take it if you want. Spoilers below...




Are you done?


Okay, here's the question I "missed"

33) If taxes equal government spending, then:
A. government debt is zero
B. printing money no longer causes inflation
C. government is not helping anybody
D. tax per person equals government spending per person
E. tax loopholes and special-interest spending are absent

Clearly, they want you to say "D". But A is a better answer. If there is no deficit, there is no borrowing. If over N years there is no borrowing, then there is no debt. So, "A" is the better answer.

"D" is correct only the following silly sense: Since Tax Rev = Gov Spending,
it must be true that (Tax Rev / Population) = (Gov Spending / Population). But there is no reason to believe that taxes paid match up with benefits received FOR EACH PERSON. Only in the aggregate would this be true. In fact, there is no reason to believe that taxes paid = gov spending for ANY individual citizen. It's just not a very good question.

UPDATE: From comments...listen, folks, it does NOT say this year. Not this month, not this century. It says FOREVER. The budget has always been balanced, and it always will be. Sure, if it said, "in a given year," fair enough. It does NOT say that. There is no debt in the world of that question. I agree that if it said, "in the past year" or "in a given fiscal year" it would be okay. But it doesn't.

Furthermore, it is NOT TRUE that the taxes a person pays are the same as spending on that person. So answer "D" is actually wrong. Those of you defending this question wallow in lameness.

Texas, California, and P-Kroog

Angry Alex sends the link for this joke, and commentary from P-Kroog, falsely comparing TX with CA.

Reminds me of this joke, which I heard in Idaho. You should know, if you don't already, that thousands of Californians have moved to Idaho, largely to avoid the stupid government in CA. Of course, those Californians bring "stupid" with them; unfortunately, it's contagious.

Four women in a car. Front seat, woman from Kentucky, woman from North Carolina. Back seat, woman from Idaho, woman from California.

Woman from Kentucky looks down at her drink. "I'm from Kentucky. I'm really tired of bourbon; we have SO much bourbon. It's just obnoxious and useless. Enough is enough!" And she throws the bourbon out the window.

Woman from NC is driving, looks down at cigarettes. "I'm from North Carolina. Tobacco everywhere, people smoking. Tobacco is just obnoxious and useless; enough is enough!" And she throws the pack of cigarettes out the window.

Woman from Idaho looks around, reaches across and opens the other door....and kicks out the woman from California.

There are a lot of locational preferences that I understand. But California.... I just don't get it. You people who claim to like it: STAY. HOME.

(Nod to Angry Alex)

mean-variance domination

Kevin Durant has repealed the laws of finance and CBS sports can prove it!

There's supposed to be a trade off between average return and variance where you get a higher return by bearing more risk. Yet, of all the leading scorers in the NBA (and he is THE leading scorer) Durant has the lowest variance of points per game.

Here's the picture (click the pic for a more glorious image):




Michael Beasley, call your office!

Game of the year so far

Amazing NBA game in the OKC last night. Thunder led wire to wire and beat Orlando 125-124. Durant won it at the end by absolutely abusing Turkoglu, who he outscored 36-7. Howard had 39 points and 18 boards and the Magic shot 14-28 on threes, but all in vain.

Besides the game itself, two things stood out. First Stan Van Gundy is an absolute jerk. He is down on everyone and everything all the time. I think he will lose that team.

Second, Dwight Howard absolutely does not give a F**K about his chosen profession. He's talking to the crowd, clowning around with the ball, yakking to his opponents, and just acting like a goofball while his team is losing. He has to be so incredibly frustrating to coach.

I guess he and Stanvan deserve each other.

They should have stuck with import substitution

From Argentina (one of my very favorite countries) comes a great story on how tax collectors are innovating to find unreported income.

Briefly, they are counting the number of imported breast implants to get an idea of the income of plastic surgeons. They claim that given the number of these imports, there is at least $10 million of unpaid taxes floating around the industry.

People, these poor surgeons are just the latest victims of globalization!

My favorite short poems about prison

Prison Ball

They don't negotiate if you are held
Hostage. Don't attempt to take a charge.
If you find a point guard who'll pass the rock,
Help him escape. Let him fastbreak at large.

-Sherman Alexie



Christmas in Prison

It was Christmas in prison
and the food was real good.
We had turkey and pistols
carved out of wood.

-John Prine

If I wasn't already married......

This one would be a keeper!

Men Are Evil

I took my younger son skating a few years ago. Went to the men's room. As I was coming out, a woman with a very angry face and holding a young boy's hand shouted at me, "What were you doing in there?"

Stunned, I mumbled that I was using the bathroom. She kept yelling, "You aren't supposed to. It's against the rules!"

Turns out the skating rink wouldn't allow men to go to the men's room alone. You were supposed to go with your son. (What if you had a daughter, you ask? You were supposed to tell a clerk, who would stand guard. What if you were there by yourself? Not allowed; you could only go to the rink if you were accompanying a child).

WTF? What is this? WSJ article gives some perspective.

In this forum, notice that no one worries about men who have daughters, only strange men who are pedophiles. Yet nearly ALL actual sexual abuse of children is the fault of family members. (And don't get me wrong, it's not like most men abuse their daughters, either. Extremely rare)

Women are very strange. They have plenty of good reasons to dislike men. Why are they making up absurd new reasons?

Consider the following comment, from this forum:

Well, I am a mom of two boys 8 and 5. I won't let them go to the mens bathroom alone any where unless their dad is with them. I think people just don't trust older men alone. I don't. Those are the one's that you always hear taking a little boy or something and leaving with them. And they are in the bathroom alone...and then I send my kids in there. I'm afraid they may be checking my kid out lol. idk, it's always been an issue for me. I was touched when I was little by my own grandfather. My grandfather was a well respected man in the community, he was asked to play pro golf after winning state championship in Texas, he was the manager over half of the Exxon plant in Texas. So this is why I wouldn't even trust a well respected man with a child. Maybe I am a bit over protective but if I can save my kids that kind of stress I have done my job. Until they are old enough to say no and fight a grown up, I will be that way. You really have to think about what could go on if you send a kid in a bathroom alone. You don't know who is in there. You don't know who they are or where they have been or if they have done something or are looking for someone. My kids do play outside and do kid stuff but when we are in public it's very different. Hope this helps some and may help you understand more what some people may feel about their kids. Boys and girls both. It's a crazy world so be careful. Now, yes she could have put her grandson in the stall that wasn't a changing stall in the bathroom but I'm sure that this may be why she had him with her.

I'm amazed. "You always hear"? In fact, you almost NEVER hear of this. It never happens, statistically, not compared to the frequency of abuse by familty members. She documents that in her own case the abuse was her grandfather, a family member. And concludes that ALL men want to abuse children. Ma'am, I'm sorry you were abused. But you are a dangerous lunatic.

(Nod to Angry Alex)

Heavy Legal Ordnance Used For Oppressive Ordinance: Street Vendors Must DIE!

KPC friend Sara Burrows has a nice piece on the increasing official harrassment of street vendors in Raleigh.

Brick and mortar restaurants are thinking about this wrong, because they can. They are like the idiot record companies, who assume that all music downloaded at a zero price would have been purchased at full price (price elasticity = 0, in other words).

I'm sure street vendor food is SOME kind of substitute for restaurant food, but not dollar for dollar, and not meal for meal. When my friend Jay Hamilton sneaks a Pauly Dog, he is not doing it INSTEAD of a restaurant meal. He is having a hot dog on the run.*

More on street vendor harrassment below. Remember, the state is simply acting here as the enforcement arm of anti-competitive business interests. The interests of consumers count bupkis, bagel, nada.

Raleigh is actually far behind Durham in this respect, which is remarkable. But then the New York Times did recently list Durham as one of the top unexpectedly cool places to eat and to visit (check #35...). Raleigh, listen up! Good restaurants and good food trucks are NOT substitutes, but rather are complements....If you want to be the sort of place where people go to eat, you need more stuff to eat. Stop protecting all those suckwad Applebees and Bob Evans in Raleigh from Tony's Tacos!

(*Jay is running, not the hot dog).

If at first you don't succeed....

People, I'm still unhappy about the colonialist fabulism of Bret Stephens in yesterday's WSJ.

Besides the points I already discussed, Stephens claims that unless "the west" is willing to recolonize, it should be obliged to stop pretending that it cares about problematic countries.

I would make a different case: Unless "the west" is willing to undertake a significant increase in legal immigration and/or reduction in barriers to imported goods, it should be obliged to stop pretending that it cares about the people living in problematic countries.

At least allowing greater immigration and lowering trade barriers are things a western country could actually do, and we know they would provide incredible help.

Suppose that Canada announced it was going to make Ivory Coast a colony. What would happen? How would that work out for our northern neighbor?

Sadly it probably wouldn't be much less controversial (at least inside Canada) than an announcement that Canada was going to materially increase it's allowed immigration from sub-Saharan Africa.

Duke v. MD--YYM is there!

Cliff Tucker tries to inbound the ball. But C-Crazies put that bad hoodoo on him.

The YYM is circled. Exciting. Duke uses non-price rationing to allocate game tickets. They are all "free" to students, but you have to wait in line. Maryland game usually a tough ticket to get, since U of Maryland is basically an urban pentitentiary with chalkboards and we HATES them. But this game was on January 9th before classes started and the YYM only had to wait about six hours in line to get into a position where he could fling that hoodoo.

Grow up and mow up

Here's a great video for a song off Danielson's upcoming album. The song is "Grow up". He is wearing some totally badass shoes in the video. Do you think they are John Fluevogs?

Heartbreaking Grace and Tremendous Courage

This totally made me tear up. What a great guy.

(Nod to Angry Alex)

Dancing on the Ceiling

The Jacket appears on Parker-Spitzer, does a good job.

Then presumably he put on the hard hat and tool belt, and went to his night job in a Village People tribute band.

(Nod to Angry Alex, who is clearly just jealous. But then, so am I)

D-Zet's Review

D-Zet reviews vol 5 in the Seldon Series.

.

neo-neo-colonialism?

In a stunningly ignorant article in today's WSJ, Bret Stephens calls for the re-colonization of selected countries:

"some new version of colonialism may be the best thing that could happen to at least some countries in the post-colonial world"

He's not totally specific; he names Haiti, Ivory Coast & Sudan, but also says "Post-colonial Africa has seen the future. As often as not it looks like Zimbabwe".

Wow.

Then there's this:

"The colonialists of yore may often have been bigots, but they were also, just as often, doers. Their colonies were better places than the shipwrecked countries that we have today".

Holy Crap.

First, sub-Saharan Africa is actually improving on governance on the whole, not digressing. Second, colonialism helped create the conditions that plague the region like artificial borders, ginned up ethnic rivalries, diminished local capacities and so on. Third, "sure they were bigots, but they got things done"? Really? We are going to use "the trains ran on time" as a serious argument?

Finally, as to the colonies being "better places" than their current independent counterparts, I have to ask, better for who? Has Bret ever read about the colonial experience of the Congo? Has he ever heard of apartheid?

This guy should be fired, ASAP.

Monopoly My Foot

The other shoe drops...

...on the Brannock Device.

(Nod to the EYM)

Ice Storm

We are getting a fo-sho, straight from Oklahomo, oh-no ice storm here in Raleigh.

To paraphrase Joe Schultz: s*&t-f%$k.

Feeling Old

Not even 30 years old...and antiques?

Jefferson v. Adams Attack Ads

Deerhoof!

Deerhoof vs. Evil is coming out soon. Here's a video of a song from it:

From this small sample, it seems like they've been drinking the Spencer Krug koolaid; the song reminds me of "Paper Lace" by Swan Lake. Very melodic for Deerhoof.

Grandpa Toots

Mr. Tooty was being extra weird last night. Had to take a photo:




I didn't even know the iPhone 4 had a flash until last night!!

Bring Back the Toasters

KPC friend Amar Bhide has an interesting piece in the F-Times

True Grit: Bold Talk From a One-Eyed Fat Man

So, the LMM and I tried leaving the house. She drove to the movie theater near our house, and we saw "True Grit."

From now on, I want everyone to call me "Brewster Rugburn." I have the eye patch and everything.

(BTW: If I took off the eye patch, you could see my eye. But my eye, alas, could not see you. Unless you were a large very bright light.)

Wrath of Khan

Bob Frank takes the death of Al Kahn as an occasion to launch into bizarre attacks on macro theory and airline deregulation.

KAAAAAAHHHHHNNNNNNNNNN!!!!!

Apparently Al once said "if you can't explain what you are doing in plain English, you're probably doing something wrong", which I guess means the general theory of relativity is pure bullcrap.

Bob riffs off this to "If you can’t describe what your model says in plain English without provoking derisive laughter, it probably doesn’t say anything of value”, and says Macroeconomists should take heed.

KAAAAAHHHHHHNNNNNNNN!!!!

I must say though, that I've never thought it was hard to say what DSGE models were saying in plain English without getting laughs. I did find it so hard to say what textbook Keynesian models were doing with a straight face that I had to quit teaching intermediate macro.

Bob then returns to his main theme, an appreciation of all things Kahn:

"Many disgruntled air travelers remember him unfavorably as the chief architect of commercial airline industry deregulation. But as he was quick to remind critics, planes now fly with many fewer empty seats than they used to, resulting in much lower average fares, after adjusting for the sharp increases in operating costs that have occurred in the interim."

KAAAAAHHHHHNNNN!!!!!

Um, I'm pretty sure there was a lot more to airline deregulation than decreasing the number of empty seats on flights. There was entry, there were new routes, there was the opening of air travel to the middle class. In short the industry was transformed in a way that massively benefitted consumers.

I'm not sure why Bob is so conflicted that here in his homage to Al, he feels the need to take shots at Al's crowning achievement.

Bob then ends with a heartwarming story about how kind and beloved Al was:

"A story circulating at the time described an English professor’s complaint to him about the high salaries of economics professors. “Perhaps you should consider starting an English consulting firm,” he is said to have responded."

If I didn't know better, I'd think Bob didn't actually like Al very much.

Mother Superior jumped the gun

Wow. Huge article in today's WSJ by Yale Law professor Amy Chua (of World on Fire "fame") called, "Why Chinese Mothers are Superior". Should have been titled "I am a raging, abusive, racist, a-hole".

It's terrific to read the whole thing. You think it can't get any worse and then it does.

Here's a lovely vignette involving her masochistic husband, Jed and daughter Lulu, that followed Lulu's inability to play a certain piece of music on the piano:

Jed took me aside. He told me to stop insulting Lulu—which I wasn't even doing, I was just motivating her—and that he didn't think threatening Lulu was helpful. Also, he said, maybe Lulu really just couldn't do the technique—perhaps she didn't have the coordination yet—had I considered that possibility?

"You just don't believe in her," I accused.

"That's ridiculous," Jed said scornfully. "Of course I do."

"Sophia could play the piece when she was this age."

"But Lulu and Sophia are different people," Jed pointed out.

"Oh no, not this," I said, rolling my eyes. "Everyone is special in their special own way," I mimicked sarcastically. "Even losers are special in their own special way. Well don't worry, you don't have to lift a finger. I'm willing to put in as long as it takes, and I'm happy to be the one hated. And you can be the one they adore because you make them pancakes and take them to Yankees games."

I rolled up my sleeves and went back to Lulu. I used every weapon and tactic I could think of. We worked right through dinner into the night, and I wouldn't let Lulu get up, not for water, not even to go to the bathroom.

Holy Crap!

The Matthew Effect

"To those that have, more will be given"

Quantitative and empirical demonstration of the Matthew effect in a study of career longevity

Alexander Petersen, Woo-Sung Jung, Jae-Suk Yang & Eugene Stanley, Proceedings of the National Academy of Sciences, 4 January 2011, Pages 18-23

Abstract: The Matthew effect refers to the adage written some two-thousand years ago in the Gospel of St. Matthew: “For to all those who have, more will be given.” Even two millennia later, this idiom is used by sociologists to qualitatively describe the dynamics of individual progress and the interplay between status and reward. Quantitative studies of professional careers are traditionally limited by the difficulty in measuring progress and the lack of data on individual careers. However, in some professions, there are well-defined metrics that quantify career longevity, success, and prowess, which together contribute to the overall success rating for an individual employee. Here we demonstrate testable evidence of the age-old Matthew “rich get richer” effect, wherein the longevity and past success of an individual lead to a cumulative advantage in further developing his or her career. We develop an exactly solvable stochastic career progress model that quantitatively incorporates the Matthew effect and validate our model predictions for several competitive professions. We test our model on the careers of 400,000 scientists using data from six high-impact journals and further confirm our findings by testing the model on the careers of more than 20,000 athletes in four sports leagues. Our model highlights the importance of early career development, showing that many careers are stunted by the relative disadvantage associated with inexperience.

I think of this as a kind of path-dependence. Along the lines Adam Smith (WoN, Bk I, chapter 2) suggested:

The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they werea, perhaps,a very much alike, and neither their parents nor play–fellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance.

(nod to Kevin Lewis)

Almost Too Easy

It's almost too easy (and depressing).

But as Nick "The Jacket" Gillespie points out (and as KPC has pointed out)...it's NOT A HARD QUESTION!

(Nod to Angry Alex)

Odd Sentences, of the Criminal Kind

Some unusual sentences. Some funny, some just.... odd.

(Nod to the LMM)

If This Be Critique, Give Us More of It!

S.T. Karnick assesses Christopher Beam's recent article on libertarianism.

Both articles worth reading. If this be critique, give us more of it. Beam at least drills down a couple of levels, and correctly concludes (a) the Founders had real libertarian motives, in SOME ways, and (b) the modern Republicans couldn't see a real libertarian principle if someone wrapped it around their big porky necks.

(Nod to the Blonde)

Afghan Troop Surge

On the Afghan troop surge:

(Nod to Angry Alex)

Video Beatdowns

I am a fan of a good video interview beatdown.

Here are two exceptionally delightful ones.

The folks at CNN put the hammer down on Dr. Wakefield, the Bernie Madoff of vaccine science.

And Jon Stewart's man Aasiaf Mandvi goes after San Francisco. I giggled and jiggled uncontrollably. The sheer Orwellian arrogance of the SF guy, saying "we don't have that power." Really? REALLY?

(Nod to @BrendanNyhan and Angry Alex)

Congratulations, Venezuela!

According to the Economist, exactly 5 countries are forecasted to have a shrinking economy in 2011. Only two of them are PIIGS (Portugal & Greece). Two others are small islands (Barbados & Puerto Rico).

The other is Venezuela, who is forecasted to do worse than Spain, Iceland, Ireland, and Italy (among many many others).

Nice work Hugo!

Reading The Constitution: Charade

I have been getting some angry emails from people who object to what I said in the David Lightman / McClatchy story about the new Congress. Here is what I said: "This is to make the tea party people happy. It's like a religious ceremony."

Anyone who reads this blog even occasionally knows I am a fan of the Constitution. The reason I think that the "reading ceremony" in Congress is idiotic is that I know for a fact the Republicans know they are LYING when they say they admire the Constitution. They have no intention of cutting spending, none.

Or maybe they don't know, and they are just idiots. Daniel Henninger explains the "perhaps they are idiots" position in today's WSJ quite nicely.

The Republicans are reading their little pocket Constitutions, and as soon as they get a chance they are going to increase the deficit dramatically. Because that is what Republicans do. You can't blame dogs for eating out of the garbage.

Trade is Good

More trade is more good. Restricting trade is bad. It's not complicated. And even unilateral movements toward free trade are good. Reminds me of the way I introduce my talks on free trade: a matching exercise.

China ... USA

1. Which country has the largest amount of manufacturing, by value, in the world?
2. Which country lost the most manufacturing jobs, gross, between 1990 and 2005?

The answers surprise people who know nothing about economics. The answer to 1 is "USA," by a lot.

The answer to 2 is China, again by a lot. Think of it this way: Here is a Chinese manufacturing facility, in 1990...
Here is a Chinese manufacturing facility in 2005...
China lost tens of millions of manufacturing jobs. Just compare the two pictures above, and you know it is true. The automated facility can produce 100 times, or 1000 times, as much output, and do it with fewer workers. But only if trade is possible. Because as Adam Smith brilliantly noted, "The Division of Labor is Limited by the Extent of the Market."

The point is that all factories, all over the world, are "losing" jobs to productivity. Adam Smith called it "division of labor." So while China has increased manufacturing OUTPUT (though not as much as the US!), China is rapidly losing manurfacturing JOBS.

So, to be clear, total US manufacturing is NOT falling. It's going up. Yes, up. We are losing jobs, sure, because we are becoming more productive. Check Mark Perry's graph:

UPDATE: Yes, I recognize that the idea of "gross jobs" is nonsense. I don't disagree with the comments. But when US protectionists talk about "shipping jobs to China" that is exactly what they are referring to. I'll stop when that idiot Lou Dobbs stops talking that way.

Further, remember this: In the Stone Age, unemployment was zero. Our goal is to be wealthy, not employed. Employment is often a means to wealth, but it is not the same thing. As my man Alan A says, "jobs are a COST." Cool.

Sustainable Marriage

Interesting article in the NYTimes, about marriage.

Quotes our longtime friend Caryl Rusbult, who was at UNC Chapel Hill for years (she was married to David Lowery, ex-editor of JOP and well-known political scientist).

The article actually does not do Caryl's theory justice. Caryl saw marriage as an institution that helped capture gains from exchange, and rewarded "investment." The NYTimes reporter is just genetically incapable of using a market metaphor in a positive way, and so ignored that part.

Caryl Rusbult died almost exactly a year ago. She is missed.

End of Year Column From KPC Friend "Thomas"

An end of year column from KPC friend "Thomas." A wide-ranging and fun column, I'd say.

I became a devout follower of Austrian economics starting in the late 90s, which, at the time, was on a par with joining NAMBLA. I must ensure that being a wingnut is not undermining my financial stability. As to why you might wish to keep reading I have several arguments. Whatever it is I am doing has worked remarkably well. In 31 years I had only one year in which my total wealth decreased in nominal dollars. (Peek ahead to Figure 3 if you wish.) In addition, any economist will tell you that when the free market fails a black market emerges. The blogs are the black market of information. Noted economist Russ Roberts once asserted that reading five blogs is probably better than going to an economics lecture. The blogs, in conjunction with a serious filter, protect you from those who traffic in financial products and misinformation. I ride the blogs pretty hard and am pretty good at distilling complexity down to the extracts of beets and carrots.

ATSRTWT

The Voice

Nice. Just a nice story. I hope it works out for him.

(Nod to Jackie Blue)

The "Ignore the Constitution" Meme Grows

Donnie B picks up on the growing lefty-bedwetter meme about the inconvenient Constitution. A nice letter. (Nod to Angry Alex for pointing to this)

But the argument actually intrigues me, even on its own merits. Suppose you go with the EJ Dionne / Ezra Klein "Stop bringin' up old stuff!" view of the Constitution. That means it holds no essential truths, and has no moral force. I disagree, but suppose, for the sake of argument.

It is still a contract. A contract that would never have been signed unless the signatories thought that the contract represented a commitment. You don't have to believe that a contract is perfect to argue that it is binding. Here is what Mr. Dionne says:

"...as Gordon Wood, the widely admired historian of the Revolutionary era has noted, we "can recognize the extraordinary character of the Founding Fathers while also knowing that those 18th-century political leaders were not outside history. . . . They were as enmeshed in historical circumstances as we are, they had no special divine insight into politics, and their thinking was certainly not free of passion, ignorance, and foolishness."

An examination of the Constitution that views it as something other than the books of Genesis or Leviticus would be good for the country."

Mr. Dionne appears to use the following argument as if it made sense:

A. The Constitution is not scripture, but rather is a set of "shrewd political compromises."
B. Therefore, people on the left can simply ignore or distort provisions that they don't like.

I am willing to concede A, at least for the sake of argument. (Yes, my Burkean / Hayekian intuition warns me against changing things we don't understand, but let's go with this). But why oh why would B follow from A? The Constitution is a contract; you are bound by a signed and established contract unless you can elicit consent to change or ignore its provisions.

The Dionne / Klein argument is a non sequitur, revealing the appalling depth of the arrogance of the LBW ruling class. We have to pass the bill so we can all find out what is in it.

A Lagniappe: One can certainly argue that there IS no social contract, and the Constitution is NOT binding, because no one now living signed it. So those in the "Sovereign" or "Voluntaryist" movements can say they are NOT parties to the social contract. But that is not acceptable to Mr. Dionne, either. He wants a binding social contract, one that constrains all citizens to obey, but places no constraints on government. They are just making this up as they go along.

ch-ch-changes

A flim-flam man turns philosophy professor only to be shocked by the company he now must keep. Well worth reading it all, here's a juicy excerpt:


"Bob, the professor business is even sleazier than the jewelry business. At least in the jewelry business we were honest about being fake. Plus, when I go to conferences, I've never seen such pretentiousness. These are the most precious people I've ever met."

"Come on, Clancy. Did you really think people were going to be any better in a university?"

"Um, kind of." Of course I did. "And it's not that they're not better. They're worse."

Welcome to my world!

Feminism Explained

I have the feeling that this caricature is unfair. But I have a hard time pointing to specific lines that are unfair. All too accurate.


You do have to laugh at the part about college majors. Tremendous. "What did you learn in women's studies?"

(Nod to the Blonde, who is clearly just a handmaiden to "The Patriarchy")

View of New Congress, From Santiago

A view of the new US Congress, from my friend Carolina Alvarez at El Mercurio. She was kind enough to ask my opinion on some things.

As the headline puts it, "Nuevo Congreso de Estados Unidos se instala hoy"

I guess we'll see if hoy es una dia nueva, o no. I'm not sure the Repubs are capable of being different. But viva la gridlock! I feel safer already.

EU Busts Man's Heat Balls

UPDATE: EU will capture and destroy the "Heat Balls," discussed earlier today here at KPC.

Can it really be better to make new bulbs, and destroy these without using them? How does that save energy? Can they be serious?

Answer: YES, if you understand that environmentalism has nothing to do with saving energy, and everything to do with religious ceremonies where cost is actually a signal of devotion. As soon as you start to think of environuts as religious zealots, it makes perfect sense.

(Nod to the Blonde, again. She just can't let these Heat Balls alone!)

THIS TIME We'll Cut Spending

No, really, this time will be different. The Republicans promise. Gag me.


Nod to Angry Alex, who gets it.

As I said for a McClatchy story, written by my man David Lightman, this is just a religious ceremony, something Repubs do before they start eating. It has nothing to do with the actual meal of piggies at the trough. HuffPo liked it.

Art vs. Commerce

"Well, it’s the absurdity of expressing it, the absurdity of commerce… making records is commerce and it’s about fooling yourself as a writer and a performer and fooling the audience into not thinking about it and accepting it. It’s like when you walk down the street, and you say, “look at that girl’s ass, it’s so great.” You’re ignoring also the fact that she farts and shits out of that ass."

--Will Oldham

Full interview is here.

Grabbing EU Law by the Heat Balls!

What, these incandescent light bulbs? The ones outlawed by the EU ubernannies? Those aren't light bulbs at all! Those are small heating units that plug into an otherwise unused light bulb. Sure, they produce a small amount of light, but that's a bonus.

These are "Heat Balls!" Sure, that's what they are. Really.

(Nod to the Blonde)

All We Are Saying Is: Give Bankruptcy a Chance!

"University of Pennsylvania law professor David Skeel, writing in the Weekly Standard, suggests that Congress pass a law allowing states to go bankrupt. Skeel, a bankruptcy expert, notes that a Depression-era statute allows local governments to go into bankruptcy...A state bankruptcy law would not let creditors thrust a state into bankruptcy -- that would violate state sovereignty. But it would allow a state government going into bankruptcy to force a 'cramdown,' imposing a haircut on bondholders, and to rewrite its union contracts. The threat of bankruptcy would put a powerful weapon in the hands of governors and legislatures: They can tell their unions that they have to accept cuts now or face a much more dire fate in bankruptcy court."
[Michael Barone, NRO Online]

(Kenneth A from Volokh has comments and links, back on the original Skeel article)

(Nod to Kevin Lewis)

From Pelsmin: Beer Cannon

The story.

Pelsmin's reason for sending it: "This is just the thing for the semi-immobile guy who needs to chase down his oxycodone with a frosty Bud Light." Yes, yes it is.

A milestone

Last Thursday, Mrs. A & I celebrated our 16th wedding anniversary. It was a lovely evening:

Angus tries to be a one armed economist

People, I'm trying!

I want to go on record as being bullish on 2011 for the US economy. I want to predict average growth for the year of 4.2%.

Yes, de-leveraging is not over. Yes, housing probably has not hit bottom. But, my view is we are poised for a semi-robust expansion.

But I'm afraid to come out and say it.

Why?

Well I'm not proud to admit this but I'm afraid of the House Republicans and the crazy sh*t they will no doubt try and pull. Yes I know, checks and balances and all that, but they worry me.

If they go after the Fed, throw a lot of heat and light on rolling back HCR and the financial oversight bill, and try to shut down the government over the debt ceiling, we could be right back into economic doldrums.

Look, I am not a big fan of the Fed or of HCR as currently constituted, but my advice to the Republicans would be to wait until after 2012 when the economy should be much sounder and maybe you also have the Senate to try and make your move.

The biggest thing Washington could do right now to help the economy would be to take a 14 month vacation.

Patrick on Suspending the BoR

Patrick at Popehat is right about our blind spot about DUI "investigation." I hadn't thought about the sixth amendment point.

And, since my eye hurts too much to sleep, I have been up catching up on good blog posts. Like the ones at Popehat. So now my eye hurts AND I'm outraged. DUI is really tough, because it is like the war in Iraq: the right wants to do stupid shit, and the left is too big a bunch of pussweilers to stand up for the Constitution. Because half-wits like Ezra Klein have decided that talking about the Const is just bringin' up ol' stuff. And why you wanna bring up old stuff?

Separated at Birth

Separated at birth? Mungowitz and Nick Nolte...

Lagniappe: The reason *I* look that way (Not sure what Nick's excuse was) is that I had this operation. With local anesthesia. Which means I got to watch (it's a 2 hour operation, by the way). If you want to see what it looks like from outside, check out this video.

It's amazing they can do that to an eye. It's even more amazing they did that to mine, and that I had to watch the whole thing. On the plus side: they prescribed oxycodone, the oxycontin plus other stuff pain medication. I was a little upset to learn that that was what they were going to prescribe, because they try to avoid it. It has to be clear that you are going to hurtin' before you get it. It does help, though. Gosh, have you ever looked at how your fingers bend? I mean really looked at your fingers. Whooooaaaaa.....

How much is that can of whoop-ass??

My oh my people, First, here's Will Wilkinson taking Arnold to the woodshed.

Will is both eloquent and spot-on here.

Second, here's Mark Thoma and Brad Delong, tag-teaming a brutal beatdown of N. Gregory Mankiw.

I am far more sympathetic to Mankiw's ideas than Mark and Brad, but it's fun to read them raging.

I guess we can all be glad that the Bush tax cuts were extended for everyone so that Greg didn't get dis-incentivized out of writing his Times column!

Markets in everything

Hat tip to Mrs. A!

Evo got Evo'ed!

or, the gasolinazo that wasn't.

First big news story of the year (if you are a weirdo like me) is that Evo Morales has abruptly cancelled his cancellation of gasoline subsidies in Bolivia in the face of growing street protests.

Of course, changing policy (or even governments) via street protests was Evo's calling card before he himself became president.

Boz has good background/context.

PS. One thing I really like about Latin American Spanish is the -azo. Take a soccer goal (gol). If it's spectacular, add the azo and call it a golazo! If Serge Ibaka busts open Josh Smith's pumpkin with a vicious elbow (codo)? That, people, is a codazo!

Let's start the new year out right

Thanks to Yahoo for collecting an absolutely amazing compendium of diet and health tips to help us roar into 2011.

Here's a sample:

"A tablespoon of semen has your equivalent of steak, eggs, lemons and oranges."

PS. I really dislike how the media always use this "he said, she said" approach to health news.

Dr. Newmark

End of year Newmarkian link dump.

Some fine entertainment there.

Don' mess wit dem Eagles, Gov!

Selective snow removal for Eagles game... Is the Gov a wuss?

Stupid is as Stupid Does

"The Fair Trade Challenge to Embedded Liberalism"

Sean Ehrlich, International Studies Quarterly, December 2010, Pages 1013-1033

Abstract: The embedded liberalism thesis, a major component of the trade policy literature in political science, argues that governments can build support for free trade by compensating economically those hurt by trade, usually with welfare or education policies. This strategy depends, though, on opposition to trade being driven by employment factors, such as job or income loss because of increased competition. The current fair trade movement raises many non-employment criticisms of trade such as concerns about the environment and labor standards but the literature tends to treat these concerns as traditional protectionism in disguise. This article argues, instead, that for many, these concerns are sincere and that this presents a growing challenge to the compromise of embedded liberalism. The article demonstrates this by examining survey data in the United States and showing that those who support fair trade tend to have characteristics that are opposite those who support economic protection.

A clear problem with democracy. Idiots who are racist or homophobic get to decide employment and marriage policy. And idiots who have no idea how an economy works get to regulate the economy. Democracy is overrated.

(Nod to Kevin Lewis)

Old and retarded

I actually thought that Angus must be making up the thing about "old people should be ignored because they were retarded." After all, Arnold Kling is hardly a left-wing goober.

But the left-wing goobers are saying the same thing! Check this bon mot from the aggressively useless Ezra "History Begins With Me!" Klein:


He actually says that the reason no one should read the Constitution is that it is old, and no one can tell what it says.

To be fair, I'm sure he means that one has to read the "midrash" of Supreme Court decisions before you can know what the "torah" of the Constitution actually means. (At least, I hope he means that.)

But, consider the 2nd Amendment. Ten years ago I had lunch with a friend who teaches Con Law. I mentioned that the 2nd Amendment clearly creates a personal, individual right to have and bear arms. The only question is how much the state can regulate and limit the size and use of such weapons.

My "friend," with amazing condescension, suggested I should read some undergraduate books to learn what the Constitution really means. Clearly, given what the Court had said in Miller (for example) there is NO right to individual ownership. It doesn't really matter what I think the Constitution says, he told me in the patient tone of a parent lecturing a wayward and willfully ignorant child.

Well, my good friend Prof KM, given the recent decisions in Heller and in McDonald...HOW DO YOU LIKE ME NOW, SWEETIE! Maybe YOU should go read that old Constitution. It has some really cool parts.

Of course, some of it is very hard to understand, I admit. Take the first Amendment, where it says, "Congress shall make no law..." Opaque language, that, as Stephen Gutowski notes. Must mean that Congress can make pretty much any law it wants, right? As long as a majority approves, like in McCain-Feingold?

(Nod to Angry Alex)

Why I love the NBA

Exhibit A:

Exhibit B:

Exhibit C (pay close attention starting at the 0.40 second mark here):

Coase

100 years ago, Ronald Coase was born. 20 years ago, I was privileged to write a book review of Ronald's book, THE FIRM, THE MARKET, AND THE LAW. Here is part of that review:

"The reason the collection works as a book is that Coase frankly recognizes that though his work (particularly "The Nature of the Firm" and "The Problem of Social Cost," Chapter Five) is often cited it is apparently little read or accepted. In fact, Coase seems frustrated at the misuse of his work, particularly regarding the apocryphal "Coase Theorem":

The world of zero transaction costs has often been described as a Coasian world. Nothing could be further from the truth. It is the world of modern economic theory, one which I was hoping to persuade economists to leave . . . Economists [have] been engaged in an attempt to explain why there are divergences between private and social costs and what should be done about it, using a theory in which private and social costs were necessarily always equal. It is therefore hardly surprising that the conclusions reached were often incorrect.., their theoretical system did not take into account a factor which is essential of one wishes to analyze the effect of a change in the law on the allocation of resources. This missing factor is the existence of transactions costs. (pp. 174-175, red emphasis added.)

So Coase actually thought transactions costs could make social and private costs diverge. Does that mean Pigou was right? Well, yes, Pigou was certainly right, especially when he said:

It is not sufficient to contrast the imperfect adjustments of unfettered enterprise with the best adjustment that economists in their studies can imagine. For we cannot expect that any State authority will attain, or even wholeheartedly seek, that ideal. Such authorities are liable alike to ignorance, to sectional pressure, and to personal corruption by private interest. (1920; p. 296)

The point is that we should READ the classics, not just cite them. Especially when we cite them wrong. Both Coase and Pigou are much more subtle than the caricature they generally get in intermediate micro classes. Happy birthday, Dr. Coase.

(Lagniappe: I should note that a better review of Coase's contribution is Posner's. That is my favorite)

when people were shorter and lived by the water

I was browsing through Econlog this morning and found just the most amazing bit of analysis ever. I just had to share it with you all:


I focus a lot of my historical reading on the first World War and on the 1930s. I think that people were really stupid back then. I take the Flynn Effect seriously, which suggests that the average IQ several generations back was what today would be considered to be mentally retarded. In my view, this helps to explain how cheerfully the nations went to war in1914. Yes, the war turned out to be worse than what they expected. But how were their expectations not influenced by the Civil War or the Franco-Prussian war?

--Arnold Kling

OMFG, people. World War I happened because world leaders 100 years or so ago were "mentally retarded"? Really?

REALLY?????

So going back another 50 years or so, Abraham Lincoln must have been the intellectual equivalent of a spider monkey?

Go another 100 years back from that. The founding fathers were the mental equivalents of dung beatles?

Adam Smith had an IQ of 13?

Blogger, please.

Frogger: No Darwin Award, But Close

A guy in Clemson was playing Frogger. For real.

Guy survived. So not Darwin eligible.

(Nod to Tommy the Country Gent Brit)

Roubini vs. Roubini

Or, saying things are bad has been very very good.

Item 1: Nouriel gives an interview on December 28th with CNBC saying housing prices can "only move down".

Item 2: Earlier this month, Nouriel bought a $5.5 million apartment in Manhattan! He got a $2.99 million dollar ARM (so I guess he made a $2.51 million down payment??)!

Best. Letter. Ever.

This is a "What Would Angus Do?" moment, from the past.

An exchange of letters.

A most Angus-esque response.

(Nod to Angry Alex)

The EYM Speaks

The EYM Speaks on Hipness

The article begins on p. 110. Interesting, actually.

Great Thread on PSJR

A great thread about "should you take a dog to your office?" for academics.

The Coase theorem, manners, and a variety of madcap exchanges like this:

A: I never liked having to maneuver around strange large dogs in tight offices in my suit

B: what was a dog doing in your suit?

I liked the whole thing. It's ALL good. Yes, I cheated to spend so much time on the computer. But I couldn't help it. I often took "Louis, King of Dogs" to the office in grad school. And Angus would get in some pretty good basketball-doghead-dribbling. Louie had a pretty solid upward head bounce, and was not smart enough to walk away.

Thomas Friedman finds a friend in politics

I can only hope PA governor Ed Rendell was trying to be funny when he had the following reaction to the postponement of an Eagles game (but I fear that he was serious):

"We've become a nation of wusses. The Chinese are kicking our butt in everything. If this was in China do you think the Chinese would have called off the game? People would have been marching down to the stadium, they would have walked and they would have been doing calculus on the way down."

Holy Moly!

I will say this though. If the Communist party wanted the game to go on, it would go on and the people would walk there if ordered to and would do calculus, or even the hokey pokey on the way if ordered to.

KPC is officially "short" on Ed Rendell AND China for 2011.

New Regs Hurt the Poor

The Inefficiency of Refinancing: Why Prepayment Penalties Are Good for Risky Borrowers

Christopher Mayer, Tomasz Piskorski & Alexei Tchistyi
NBER Working Paper, December 2010

Abstract: This paper explores the practice of mortgage refinancing in a dynamic
competitive lending model with risky borrowers and costly default. We show that prepayment penalties improve welfare by ensuring longer-term lending contracts, which prevents the mortgage pools from becoming disproportionately composed of the riskiest borrowers over time. Mortgages with prepayment penalties allow lenders to lower mortgage rates and extend credit to the least creditworthy, with the largest benefits going to the riskiest borrowers, who have the most incentive to refinance in response to positive credit shocks. Empirical evidence from more than 21,000 non-agency securitized fixed rate mortgages is consistent with the key predictions of
our model. Our results suggest that regulations banning refinancing penalties might have the unintended consequence of restricting access to credit and raising rates for the least creditworthy borrowers.

It has been the maintained hypothesis here at KPC for some time that the PRIMARY burden of the new nanny regs on financial markets will be poor or risky borrowers. It's actually pretty obvious, when you think of it.

(Nod to Kevin Lewis)

I Heart FA Hayek

Gotta be tough for the young lady. Hayek is long dead, and she can't use ...well, let's call them battery-powered products. 'Cause no true Hayek-lover would accept artificial stimulus.

(Nod to Angry Alex)

Grade Inflation? Not here! Well, maybe....

NYTime article on grade inflation in Chapel Hill, and a remedy (?)

ARTICLE

(NOD to MAG)

Competitive Markets Are the Enemy of Profits, So Wall Street Opposes Market Competition

Reputation, the SEC, and the requirements of SARBOX are extremely effective entry barriers. SARBOX doesn't apply to privately held companies, but no small company could hope to compete with the big companies.

"If Hertz sees much of its rental fleet lying idle, it will cut its prices to better compete with Avis and Enterprise. Chances are that Avis and Enterprise will respond in kind, and the result will be lower profits all around. On Wall Street, the price of various services has been fixed for decades. If Morgan Stanley issues stock in a new company, it charges the company a commission of around seven per cent. If Evercore or JPMorgan advises a corporation on making an acquisition, the standard fee is about two per cent of the purchase price. I asked TED why there is so little price competition. He concluded it was something of a mystery. 'It’s a commodity
business,' he said. 'I can do what Goldman Sachs does. You can do what I can do. Nobody has a proprietary edge. And if you do have a proprietary edge you’ll only have it for a few weeks before somebody reverse engineers it.' After thinking it over, the best explanation TED could come up with was based on a theory of relativity: investment-banking fees are small compared with the size of the over-all transaction. 'You are a client, and you are going to do a five-billion-dollar deal,' he said. 'It’s the biggest deal you’ve ever done. It’s going to determine your future, and the future of your firm. Are you really going to fight about whether a certain fee is 2.5 per cent or 3.3 per cent? No. The old cliché we rely on is this: When you need surgery, do you go to the discount surgeon or to the one you trust and
know, who charges more?'" [John Cassidy, New Yorker]

Now, you could say it would be hard for new firms to enter this market anyway. But our government makes it impossible.

(Nod to Kevin Lewis)

Movin' on up

Congratulations to the Mexican drug cartels, who've had a very good 2010. They now allegedly control 75% of neighboring Guatemala (with the deployment of only 800 operatives), and have muscled out the Colombians for the European cocaine distribution routes.

KPC is officially "long" on Mexican drug lords for 2011.

Hat tip to Boz and Wikileaks.

Christmas is *awesome*!

Happy Holidays

and best wishes for 2011 from KPC

O Tannenbaum

Mrs. Angus and I wait til just before Christmas and buy a live tree which we plant afterwards. Today was the day and we got an awesome Blue Atlas Cedar. Here's the before and after:

It's beginning to look at lot like Christmas at Chez Angus.