Saturday, March 12, 2011

Most Excellent

What a tremendous premise! Axel Leijonhufvud interviews Friedrich Hayek. The incomprehensible takes on the increasingly obscure. Who wins? Judge for yourself.

Best part was where FAH insisted that Axel call him "Slash." (Okay, that didn't really happen). (But it would have been cool.)

Grand Game: Bullet Train Edition

Amazing article in the NYTimes, on bullet trains. (Nod to Anonyman).

Worthy of the Grand Game. Pick your favorite part.

Anonyman went first: Best part is the last sentence in the article...

Now, with the collapse of the Florida route, it looks as if the nation’s first segment of true high-speed rail will be in an even unlikelier place — linking Fresno and Bakersfield, in California’s Central Valley, and scheduled to end construction in 2017.

I can see wanting to take a fast train OUT of either of those places, but not if your only option is to go to the OTHER of those places.

My favorite part: The "Mad Men" commercial they paraphrase, which I had not heard about.

My favorite line: "“I read a piece that said that in 40 years, gas is going to cost almost a dollar a gallon,” one says." That was 1965, when gas was $0.31 per gallon. Now, this is not a commercial about inflation, folks. This is about GASOLINE. So, what is the current price of gasoline (I figured $3.60 per gallon nominal) in terms of 1965 prices? The answer is... $0.58! Still nowhere close to a dollar. I can never tell if US PIRG is a bunch of idiots, or liars. But those are the only possibilities, for them to make an ad like this.

Anyway, your turn! What's the coolest part of the article? Don't hold back, there's plenty of fun for everybody!

Friday, March 11, 2011

Music update

Two things, people.

First Air Waves' album is out (or more accurately, I finally realized it was out) and it's terrific! Available from Underwater Peoples.

Here's the video for their song "Knockout".




Second, Kurt Vile's new album is out and it's amazing. It's called "Smoke Rings for my Halo".

Here's a video of Kurt playing "Jeus Fever" out in the freezing cold:

My Blackberry is Frozen

I have to admit, this made me think of frequent reader Shirley...


UPDATE: Just got an email from Shirley saying power was out and she had no internet connection. Made me spit tea all over my keyboard. Either it was a miraculous email, or perhaps the power and internet are working after all. (No, she does not have an internet enabled phone).

Thursday, March 10, 2011

You can't make this stuff up

Over at Mother Jones, Kevin Drum reacts to Tyler's list of mistakes left wing economists often make, by making almost all of the mistakes!!!

Really:

1. Suggesting that money matters in politics far more than the peer-reviewed evidence indicates.

I think the peer-reviewed evidence is wrong. It simply isn't able to capture all the dynamics of money in politics.

The comments are equally excellent until they start scrumming over social security. Here's an example:

His list of 10 mistakes made by conservative economists is much better.

Ahh, life is so sweet sometimes!

Jalen Rose: "Uncle Toms" at Duke

Jalen Rose said he felt like all the black players at Duke were "Uncle Toms." (His words, folks).

The interview.

My response, on the radio yesterday.

By the way, some facts:

Duke tuition + room/board: $52,000 6,400 Undergrads
African-American 10.3%
Basketball team graduation rate: 90%

Michigan tuition + room/board: out of state $49,000 (in state: $21,000)
51,000 Undergrads
African American 5.8%
Basketball team graduation rate: 44%

SNAP! Duke has far more African-American students, as a proportion of the student body. Tuition/costs are roughly the same. And Duke recruits students who have some chance of graduating. Michigan recruits some guys like Jalen Rose, who left early and had a fine NBA career. But they also recruit a lot of guys who take fake classes and are simply exploited as basketball cannon fodder. So, yes, it may be true that Duke recruits a different sort of player, the sort who has a chance of graduating with a degree. But I think it's more likely that Duke players are told they MUST focus on graduating, and that they have to work. Michigan players can just hope to have a career shooting off their mouths...like Jalen Rose.

I think Duke wins... AGAIN. Gosh it sucks to be you, Jalen!

(To be fair, the fab Five were equal opportunity losers. UNC kicked their ass for the 1993 championship, after Chris Webber did some sort of "travelling / call time out we don't have" dance move at mid-court. So it wasn't like the Fab Five only lost to Duke. Some video, to help you remember.)

Public Choice Memorial for Mel Hinich

The Public Choice Society meetings are this weekend, in San Antonio, TX.

I can't travel, because of my eye. But I got Neanderbill to read a statement in my stead. Here is that statement. (Also there is the Public Choice memoriam, written by four of us.)

For the Session on Mel Hinich for Public Choice
San Antonio, Texas
March 12, 2011

I first met Melvin at the Public Choice meetings at the Hilton in Pheonix, Arizona, in 1984, in a hallway at the hotel. He was talking to Peter Ordeshook (who was smoking), and the two of them acted as they always did: artlessly impatient. Did you have something interesting to say? If so, take your shot. But the weather or baseball scores didn’t get you far. Mel always wanted to talk about the work, what he had been working on or what he would be working on. Mel talked more than anyone else I ever met in academics.
But he could also listen. After I moved to UT in the fall of 1986, I realized that I had the chance to start a second “graduate school.” My background in public choice and spatial theory was shallow, and Mel set out to improve me. We went for long walks, often at noon or 1 pm, in the Austin heat, and would come back drenched in sweat. Then Mel would scribble on his blackboard for half an hour, with me taking notes, and then I would go try type things up.
I often got back to my office, and realized that Mel had made a mistake. The model didn’t work the way he said it did. So the next morning I would go to show him the mistake.
But often it wasn’t a mistake at all. Mel had simply skipped three or four steps that seemed obvious to him. Once he filled in the argument so I could see what he was doing, I went back to writing.
Sometimes in the last few years people come up to me at conferences and ask, “Has Mel ever written anything, or did you write it all?” Then they snicker, “In fact, has Mel ever READ any of your joint work?!!”
The truth is that Mel did not much like to write. And even less did he like to edit. Sometimes, it was frustrating, because I would give him a finished chapter for comments, and his entire response the next day was, “That was good! Now, let’s talk about submarines…” (Or Russia. Or Shakespeare. Or…)
But what is “writing,” exactly? In many ways, I was Mel’s typist, his Boswell. True, Mel said things and I wrote them down, and later typed them. But the order of our names, Hinich and Munger, on our three books and many articles, accurately reflects the contributions we made. Mel was, and is, first.
If I had not met Mel, I would have missed out on the excitement of discovery, and the sense of eager mental searching. Without his tutelage, I would never have become President of the Public Choice Society or editor of the journal. I wouldn’t be at Duke, and I might never have gotten tenure.
And without his friendship I would have missed out on the grandest times, biggest laughs, and deepest talks in my life. Mel had two great loves, particularly in his 50s before he had a number of illnesses. These loves were talking and eating. If you ever had a meal with him, you know that there was a sense of excitement, since you can’t really eat and talk at the same time. Would the winner be the unstoppable force, or the immovable object?
Well, the premise of the question turned out to be false. Mel could in fact eat and talk at the same time. And he could eat a lot, for hours in fact. He preferred eating at someone’s house, rather than going to a restaurant. This was partly because he didn’t like to waste money. But it was also because he would likely have kept the restaurant open past closing time. His appetites, capacities, and abilities were simply larger than life. I’m not sure we will see his like again.
The Sunday before he died, Mel called me at home to discuss the introductory chapter we were working on for the second edition of Analytical Politics, our Cambridge book. The first edition has been translated into Spanish, Japanese, Korean, Chinese, and Russian. I have now made very substantial progress on that book, and hope to finish it by May.
On that new edition Mel’s name will still be first, where it belongs, even though once again he didn’t write that much of it. I will always miss him.

College Applications

The Jacket (wearing a black t-shirt and a black shirt, but no jacket) interviews Andrew Ferguson about college applications.

(Nod to Biz of Life)

Funny guys, the dad and son.

"You know that scene at the end of 'Titanic'? All the motionless bodies lying face down? That was my son."

Obama's cabinet has not lost the capacity to surprise me

It's quite a group.

First there's Timmy G., Secretary of the Treasury AND tax cheater!

Second, we got to know Janet Napolitano, who excelled at closing her eyes and sticking her fingers in her ears while screaming "the system worked" when everyone could see that it didn't.

Third comes in aptly named Ray LaHood, who crucified Toyota in the press and didn't have the onions or the decency to even pretend to apologize when the rocket scientists basically cleared the company.

Finally and most recently, we now can celebrate the stupidity of Tom Vilsack! Yes, farm subsidies are inefficient but they're essential for the self esteem of "rural folk"?

Que bola de pendejos, no? And I haven't even mentioned Eric Holder!

None of them anticipated the dramatic price hike

So, there was this system that worked pretty well. Women got the drug Makena quite cheaply, and it was available from a number of different sources. $20 per dose, tops.

Then the government decided to "help."
Who knew about conditions, safety? There needs to be a process, here. Let's regulate.

And now the price is $1,500 per dose. Many women won't be able to afford it. Here's the cool part: people are surprised.

More on the story:
KV Pharmaceutical of suburban St.Louis won government approval to exclusively sell the drug, known as Makena (Mah-KEE'-Nah). The March of Dimes and many obstetricians supported that because it means quality will be more consistent and it will be easier to get.

None of them anticipated the dramatic price hike, though — especially since most of the cost for development and research was shouldered by others in the past.

"That's a huge increase for something that can't be costing them that much to make. For crying out loud, this is about making money," said Dr. Roger Snow, deputy medical director for Massachusetts' Medicaid program.

"I've never seen anything as outrageous as this," said Dr. Arnold Cohen, an obstetrician at Albert Einstein Medical Center in Philadelphia.

"I'm breathless," said Dr. Joanne Armstrong, the head of women's health for Aetna, the Hartford-based national health insurer.

Doctors say the price hike may deter low-income women from getting the drug, leading to more premature births. And it will certainly be a huge financial burden for health insurance companies and government programs that have been paying for it.

The cost is justified to avoid the mental and physical disabilities that can come with very premature births, said KV Pharmaceutical chief executive Gregory J. Divis Jr. The cost of care for a preemie is estimated at $51,000 in the first year alone.


That's wonderful. Here's another example of that kind of reasoning: Dying of thirst is painful, and it involves...well... dying. So it's worth $250 per cup of water to avoid that. So give me a monopoly and let me charge $250 per cup of water. I'll have a slogan: "Water: It's Worth It!"

Folks: it's simple. Regulation is by and large designed, implemented, and continued because it benefits a few large corporations. The idea that regulation is supposed to help citizens is laughable. I'm surprised anyone is still surprised.

Why would anyone think that THIS TIME, this time it will be different?

Sounds like a description of Obamacare: "None of them anticipated the dramatic price hike"

(Nod to BJH)

Wednesday, March 09, 2011

Maurtius: Paradise Not

Every time I wonder to myself, "Could Joe Stiglitz sell out his considerable talents as an economist any more than he has?", Joe goes and shows that, YES HE CAN.

Mauritius--Paradise. What can the US learn from this tiny island nations?

We can learn that capital is berry, berry good ting to hov, mon. (No, Mauritius is not in the Carribean, sue me). But, when the Mauritianians want a big night out, they go to...Madagascar.

Also, the reason the Mauritius doesn't have American problems is that they don't have the American government. I say we give them Joe Biden, and throw in Fanny and Freddie for a player to be named never.

Anonyman writes: "Having been there, I can say that it's nice, for a 3rd world country. But it's still basic, and basic infrastructure is - well - basic. When you arrive and go through customs you wait in line and a guy behind a tiny desk looks at your passport, and then stamps it. That's all, no computer, no questions, nothing. When I remarked how primitive it was they guy next to me said, in all seriousness, that it's much more modern since they got A/C in the airport.

The best part was that there is a highway across the island, but no overpasses. So every time there is an intersection you go through a traffic circle at 60 mph. It was terrifying, but not in a good way. I was about to vomit after the first one, sort of like when you at the amusement park.

So nirvana? Not really. But a great excuse to visit there as an "economist talking guy." "

Happiness is a Warm...Republican?

Two maps. You draw your own conclusion.

First, happy. Darker orange is happier, lighter is sad.

Then, Congressional districts that elected a Republican in 2010 (red is Repub, of course):


The happiest man in the US, in terms of statistical prediction. The scoop:

The New York Times asked Gallup to come up with a statistical composite for the happiest person in America, based on the characteristics that most closely correlated with happiness in 2010. Men, for example, tend to be happier than women, older people are happier than middle-aged people, and so on.

Gallup’s answer: he’s a tall, Asian-American, observant Jew who is at least 65 and married, has children, lives in Hawaii, runs his own business and has a household income of more than $120,000 a year. A few phone calls later and ...

Meet Alvin Wong. He is a 5-foot-10, 69-year-old, Chinese-American, Kosher-observing Jew, who’s married with children and lives in Honolulu. He runs his own health care management business and earns more than $120,000 a year.


That man is clearly a Republican.

(Nod to Anonyman, who once thought he was a Republican, but decided he hated being happy...)

Whole Foods!

The new North Raleigh Whole Foods opens March 16!

4.96 miles
from the Rancho d'Munger.

Poor Angus.

But, help is on the way! It's the "Wrath of Grapes," or the Grapes of Wrath backwards, sort of.

Tuesday, March 08, 2011

Silly

Three silly things. Before you click: which one is the Onion?

1. Burglar showers, homeowner returns, burglar calls cops. Says he was afraid homeowner had gun! "I'm in the shower! There's a man with a gun in the hallway...what? No, it's his house, I'm robbing it. What? R-o-b-b-i-n-g, yes...Well, I needed a shower!"

2. Naked therapist. Says the therapist: "There's something about a naked woman that helps a man to really focus."

3. Tomato shaped like a duck. I like how they put a yellow duckie in the picture, just in case you don't know a "shaped like a duck" actually means.

Answer: I lied. They are all three real, if you can call them real.

Not What Metal, But What Factors

US Mint is soliciting public comment...sort of.

What new metals should we use in minting coins?

Except that they don't really want to know about metals. They want to know what factors we should use in deciding what metals.

The United States Mint is not soliciting suggestions or recommendations on specific metallic coinage materials, and any such suggestions or recommendations will not be considered at this time. The United States Mint seeks public comment only on the factors to be considered in the research and evaluation of potential new metallic coinage materials.

Welfare or Insurance?

Bob Samuelson and Mark Thoma are at it again. Samuelson claims that Social Security is welfare, while Thoma says that it's just plain old insurance. He repeatedly compares it to fire insurance.

Let's start with a list of "Why Social Security is NOT like fire insurance":

1. It pays off the same amount whether you need it or not.

2. The "premia" are not risk based in any meaningful way.

3. If you don't "buy" it, you go to jail.

4. There is only one company that "sells" it.

5. The "insurer" can unilaterally change the terms of both the premia and the payouts with no recourse for the "insured".

Ok, so it's not really insurance. Then what is it?

Well it's two distinct components. The first is the payroll tax, the second is the retirement benefits. The payroll tax falls on the relatively young, and the benefits are paid to the relatively old.

The confounding problem is that many people believe the payroll taxes they pay go to fund the benefits they will receive, which is completely untrue. The payroll taxes go to pay current expenses of the US government. They are just a tax on labor. The government is spending every penny of those payroll taxes to pay for current expenditures. There is no meaningful economic sense in which the current payroll taxes can even be said to be exclusively funding the current retirement benefit payouts!

Going back to the (bad) insurance analogy, the insurer is free to use your premia to buy fighter jets and space shuttles!!

So, is Social Security welfare then? Well the payroll tax component certainly isn't. The retirement benefits part certainly is.

But I will say this; it's a type of welfare that I think we should have! Not in it's current form, but as a means-tested safety net, and without the strange fiction that it's financed by the payroll tax.

Keep a modified (for the poor only) safety net, drop the payroll tax.

Replace the revenue by cutting spending elsewhere (you're on your own President Karzai!!).

A 12.4% tax on labor is a dumb tax in an era where we are worried about employment and middle class incomes and sending social security checks to Warren Buffett and Bill Gates is, if anything, even dumber!


Monday, March 07, 2011

Sweet Home Mississippi?

All hail to the State, with Patriotism so great, that less than 20% of its residents even have passports!



I was very proud to see that roughly 1/3 of my fellow Okies have passports.

Represent!!

Hat tip to LeBron, who grew up in New Jersey, that cesspool of disloyalty!


Wow! The Stuff Matt Y Knows!

The "Knowledge Problem" is a famous one in economics. Even a famous blog to go with it.

But there is NO KNOWLEDGE PROBLEM for Matt Yglesias. He knows all. Ay, marry now, unmuzzle your wisdom, sirrah!

Two tweets from this morning:

"I want to call it the rentier's fallacy: "If you don't let me overcharge, GDP will fall!" "

and

"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).

Should movies be subsidized?

Michael Kinsley says no. Interfluidity says yes.

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.


Sunday, March 06, 2011

Some Visionaries Fail, But Not All Failures are Visionaries

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.

Game Theory: Nuts?

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)