"I want to call it the rentier's fallacy: "If you don't let me overcharge, GDP will fall!" "
"Pharma frowns as consumers get access to useful medicine at close to market price: LINK"
In both instances, there is a correct price (Matt modestly calls it the "market price," but in fact it is the Yglesias Price, the price of God). Greedy, terrible people want to charge something other than the Yglesias Price.
But we must smite them! Price controls on rents, and force pharma companies to sell at marginal cost!
What, a shortage? Smite them again, for being greedy!
That's a lot of smiting, when it is the conceit that regulators (or bloggers!) think they know the correct prices that's causing the problem.
(I recognize that Michael G cringes, but my point is that I don't know the correct price, and neither does Matt Y. If you want to make an argument for rent control, it can't be about "overcharging." It just can't).
Interfluidity is quite right that subsidies will increase the supply of movies, and seems to consider that a good thing.
I have to differ. The motion picture industry is a huge rent seeking contest that is socially inefficient, just like professional sports. A large number of people dedicate themselves to trying to get a desirable position and the vast majority of them will (a) fail, and (b) be quite unprepared to do something else.
Increasing the number of movies, just like expanding a professional sports league will most likely draw many more people into the rent seeking contest than it will provide positions for, thus making matters worse.
Los Angeles and New York are already teeming with waitress / cab-driver / hobo "actors" and "screenwriters" who are smart, talented individuals, well prepared for jobs they'll never get and generating large social losses by not having gotten a more general preparation and more productive jobs. Do we really want to encourage these kinds of wasteful outcomes in New Mexico and Michigan as well?
Occupations that generate rent seeking contests should be taxed, not subsidized!
We should be nudging people OUT not in to the motion picture industry.
Had a conversation in Germany once, with a quite sensible man. We discussed the large number of solar panels on nearby homes. Germany, as I have written, has a climate where the sun is visible for about 90 minutes, some time in late July. That's it for the year.
I said it was not rational to force people to invest in solar panels.
He crowed, triumphantly, that it WAS rational, because of the enormous subsidies from the EU and the German government.
I stared at him, and tried (gently) to point out that he was ASSUMING it was rational. The fact that an activity is subsidized just means that the state takes your money at gunpoint, and agrees to give part of it back if you agree to do something you otherwise would not do.
In this case, only an idiot would put solar panels on houses in dark, snowy, cold Germany. Unless "the government" pays you to do it. But the government is bribing you with your own money, to do something that no sensible person would do. Yes, subsidies change the incentives. So does slavery.
My friend actually laughed, and said, "You economists. You never want to take anything on faith!" As if faith and religion were a big part of the lives of the German people. Or as if faith meant that installing solar panels at a cost per kw/hr that is triple the generation costs of other available technologies actually made sense, instead of being a boondoggle for the "Green Industry" pirates who run the EU like a whipped dog.
Anyway, a great story (shared by the Blonde) about faith-based energy policy in California. Just so many excellent little nuggets in this story. Glad to see that Californians can be just as ridiculously faithful as Germans can.
John Nash, Game Theory, and the Schizophrenic Brain
Donald Capps, Journal of Religion and Health, March 2011, Pages 145-162
Abstract: This article focuses on John Nash, recipient of the Nobel Prize in Economics in 1994, and subject of the Award winning 2001 film A Beautiful Mind, who was diagnosed with paranoid schizophrenia in 1958 at the age of 29. After presenting an account of the emergence, course, and eventual remission of his illness, the article argues for the relevance of his contribution to game theory, known as the Nash equilibrium, for which he received the Nobel Prize, to research studies of the schizophrenic brain and how it deviates from the normal brain. The case is made that the Nash equilibrium is descriptive of the normal brain, whereas the game theory formulated by John van Neumann, which Nash’s theory challenges, is descriptive of the schizophrenic brain. The fact that Nash and his colleagues in mathematics did not make the association between his contributions to mathematics and his mental breakdown and that his later recovery exemplified the validity of this contribution are noted and discussed. Religious themes in his delusional system, including his view of himself as a secret messianic figure and the biblical Esau, are interpreted in light of these competing game theories and the dysfunctions of the schizophrenic brain. His recognition that his return to normalcy came at the price of his sense of being in relation to the cosmos is also noted.
(Nod to Kevin Lewis)
Dr. Laing and Game Theory
(From which I conclude: (1) it is possible to misuse game theory for fun and profit; (2) British psychiatrists have appallingly bad hair; and (3) American psychiatrists have no hair at all)
State Department officials charged with evacuating nearly 200 Americans from Tripoli last week shepherded the U.S. citizens aboard a ferry, assessed their need for medical attention, and then asked them what the hell they were doing in Libya in the first place.
"We are pleased these Americans are now out of harm's way, but, really, why would anyone want to go to Libya?" a U.S. official told reporters, offering a list of more than 20 countries that are safer, more fun, and "just seem like more logical places to take a vacation" than the repressive North African country.
"It made sense when the organizers of a North Carolina festival suggested that the state zoo here adopt a mascot to promote clean rivers.
Except that the creature in question is the snot otter. Formally known as hellbenders, which is not much better from a public-relations standpoint, snot otters are giant, slimy salamanders that lurk under big rocks...
Already up and wriggling is the mascot, Snotty, a big-tailed lizard look-alike with brown skin, beady eyes and stubby teeth.
He made his debut—with mixed results—at the New River Celebration in Laurel Springs, N.C., this past summer.
"There was really just one kid that was kind of scared of me," says Ben Stanley, 20, a student at Randolph Community College here who helped create the Snotty costume and wore it at the festival. "Most of the kids were just running all around me; one actually tried to pull my finger off." (Ed's Note: at the Munger house, the whole "pull my finger" thing is a bad idea)
(nod to Angry Alex)
(UPDATE: Pablo is right, of course, in comments. A hoax. Not even the Onion, just an everyday garden variety urban legend. I should have known. But since a newspaper carried it...anyway, ONE of the above is real, and TWO are hoaxes)
But there are other critical factors integral to an understanding of my bollocks theory on the Middle East. Here they are:
MY MOUSTACHE – Americans have never really appreciated what a radical thing I did in growing a moustache, long the symbol of Arab male virility. I’m convinced that when Arab men catch a glimpse of my moustache as they bring me my breakfast in my hotel they are inspired and say to themselves: “Hmmm. Let’s see. He’s middle-aged. I’m middle-aged. He’s slightly tanned. I’m roughly the same colour. His name is Thomas. My name is Hussein. He is a prick. I sometimes act like a prick. He is not president of the United States. I am not president of the United States.
Very interesting issue: are parties private organizations, able to decide how they select candidates, subject only to nondiscrimination restrictions? Or can the state decide?
This advocate for "independents" thinks its a bad idea. Ma'am, parties are private organizations. If you want to vote in a primary, register as a member of that party. And of course you still get to vote however you want in the general election.
In North Carolina, we allow independents to vote in party primaries. But Dems can't cross over and vote for Repubs. Why would Coke execs get to sit on the board of Pepsi and make marketing decisions?
“Hmmm, let’s see. He’s young. I’m young. He’s dark-skinned. I’m dark-skinned. His middle name is Hussein. My name is Hussein. His grandfather is a Muslim. My grandfather is a Muslim. He is president of the United States. And I’m an unemployed young Arab with no vote and no voice in my future.”
In an otherwise enlightening interview with Barry Eichengreen, I had to stop a couple times to compose myself after cracking up at the way the Speigel interviewer posed questions.
Here's my favorite:
Is there any desire in US political circles to do something about this problem? Just last December, President Barack Obama extended the Bush administration's tax cuts to 2012, even though tax cuts for the super-rich do nothing to stimulate the economy.
and another good one:
Are people in the US willing to save at all?
One more for the road:
Despite the current crisis, the economic fundamentals in the euro zone are still stronger than those on the other side of the Atlantic. Why are bond traders scrutinizing Europe but not the US?
Great story about the precariousness of coaching in the NBA:
According to the Boston Herald, Celtics coach Doc Rivers was quite impressed with the debut of former Thunder starting center Nenad Krstic.
When Krstic pulled down two offensive rebounds on the team's first possession, Rivers reportedly turned to assistant coach Lawrence Frank and asked, “Does he do that all the time?”
Frank, who coached Krstic during his early days, replied: “If he did, I'd still be in New Jersey.”
I enjoyed the Nenad Krstic era in the OKC, even though he always seemed slightly bemused/confused on the court.
Paradoxically, getting Perkins and losing Nenad might make Scott Brooks' job LESS secure. Now with a real center (assuming he gets and stays healthy), the Thunder have one less excuse and lack of results now will cause the fickle finger to more likely be pointed at Scotty.
And, make no mistake about it, the Thunder coaching staff are either weak on the Xs and Os or else weak on getting the players to execute the Xs and Os.
While walking Mr. Tooty this morning Mrs. Angus and I were discussing why Americans visiting in Africa so often conclude that Africans are intrinsically more "joyful" and don't care about material things.
She suggested an analogy to the literature showing that people have a very hard time predicting the emotional consequences of being in unfamiliar, unfavorable situations.
For example, healthy people overwhelmingly say they'd be unhappy with their life if they lost a limb or were in a wheelchair, but people actually in those situations often report that they are happy. Here is a recent example regarding people with "locked in" syndrome. There is a term for this phenomenon; the disability paradox.
So maybe, when rich Westerners visit in Africa, they project their expectations of how happy they would be if they lived in the situations they see onto the local people. When these local people demonstrate that they are actually happy, it causes cognitive dissonance and the westerners attribute the paradox to some intrinsic otherness or lack of materialism, rather than recognizing that external circumstances do not determine happiness.
I am NOT saying poverty is a disability, I AM saying that the phenomenon of inaccurately predicting happiness in unfamiliar, adverse situations may apply more broadly than just to cases of physical disabilities.
The Jackie (and Jill) Robinson Effect: Why Do Congresswomen Outperform Congressmen?
Sarah Anzia & Christopher Berry American Journal of Political Science, forthcoming
Abstract: If voters are biased against female candidates, only the most talented, hardest working female candidates will succeed in the electoral process. Furthermore, if women perceive there to be sex discrimination in the electoral process, or if they underestimate their qualifications for office, then only the most qualified, politically ambitious females will emerge as candidates. We argue that when either or both forms of sex-based selection are present, the women who are elected to office will perform better, on average, than their male counterparts. We test this central implication of our theory by studying the relative success of men and women in delivering federal spending to their districts and in sponsoring legislation. Analyzing changes within districts over time, we find that congresswomen secure roughly 9 percent more spending from federal discretionary programs than congressmen. Women also sponsor and cosponsor significantly more bills than their male colleagues.
Who Does More Housework: Rich or Poor? A Comparison of 33 Countries
Jan Paul Heisig American Sociological Review, February 2011, Pages 74-99
Abstract: This article studies the relationship between household income and housework time across 33 countries. In most countries, low-income individuals do more housework than their high-income counterparts; the differences are even greater for women’s domestic work time. The analysis shows that the difference between rich and poor women’s housework time falls with economic development and rises with overall economic inequality. I use a cross-national reinterpretation of arguments from the historical time-use literature to show that this is attributable to the association between economic development and the diffusion of household technologies and to the association between economic inequality and the prevalence of service consumption among high-income households. Results for a direct measure of technology diffusion provide striking evidence for the first interpretation. The findings question the widespread notion that domestic technologies have had little or no impact on women’s housework time. On a general level, I find that gender inequalities are fundamentally conditioned by economic inequalities. A full understanding of the division of housework requires social scientists to go beyond couple-level dynamics and situate households and individuals within the broader social and economic structure.
Red Plenty by Francis Spuford. At its core, it's a narrative of the rise and fall of linear programming as the salvation of the Soviet system! It is funny, sarcastic, insightful and highly recommended, though I have to say it is a very weird book.
The Impenetrable Forest by Thor Hanson. A peace corp volunteer gets assigned to gorilla habituation in Uganda in the early 1990s. I started it because we are going to Uganda this summer, I finished it because it is a fantastic book!
Werewolves of Montpellier, by Jason. On Will W's recommendation I tried this graphic novella, something I'd never had read on my own. I have since bought 3 more of Jason's "books".
The Big Short, by Michael Lewis. If you only read one book on the crisis, or even if you only read one book all year, this should be the one!
"Strange as it may sound, to get a grip on costs, we should in many cases be hiring many more bureaucrats—and paying more to get better ones—not cutting their numbers and freezing their pay. Because in many parts of government, the bureaucracy has already crossed that dangerous threshold beyond which further cuts can only mean greater risk of a breakdown. Indeed, much of the runaway spending we’ve seen over the past decade is the result of our having crossed that line years ago—the last time there was a Democrat in the White House, a divided government, and calls for slashing the federal workforce in the air."
Yes, people, they really said that "much of the runaway spending" is a result of having too few Federal bureaucrats! Talk about pandering to your audience.
This is just so far out there that no one can really take it seriously right?
If you've read Michael Lewis' book "The Big Short" (and if you haven't you are really missing something good), you know that he comes down hard on a particular trader named Wing Chau.
Well hot on the heels of Brat Pitt buying the movie rights to the book, Mr. Chau has decided to sue Lewis for defamation.
His complaint contains some interesting parts, for example:
"Wing Chau and his immediate family are Chinese immigrants. His father, Muk Loong Chau, fled Chairman Mao’s China in 1953 to make a better life for his family in America—to pursue the American dream. Mr. Chau was born in Hong Kong, where the family was waylaid for many year while awaiting a visa. Eventually, the family immigrated to Rhode Island, where his father took various jobs at Chinese restaurants, usually working six days per week."
Michael Lewis! You should be ashamed of yourself!!!