A Surgeons Joke

Five surgeons are talking.

The first says: " I like to see accountants on my operating table, because when you open them up, everything inside is
numbered. "

The second responds: " Yeah, but you should try electricians. Everything inside of them is color coded. "

The third says: " No, I really think librarians are the best, everything inside of them is in alphabetical order. "

The fourth chimes in: " You know, I like construction workers.... those guys always understand when you have a few parts left over. "

But, the fifth shut them all up when he observed: " You're all wrong. Politicians are the easiest to operate on. There's no guts, no heart, no balls, no brains, and no spine, -- and the head and the ass are interchangeable."

Separated at Birth: Tennis edition

Alexandr Dolgopolov & Martina Hingis:

'


(clic the pics for more eerily similarity)

'Nuff said

Headline of the Month

"Nearly 40% of Europeans Suffer Mental Illness"

Lets see, JC Trichet, check; DSK, check; Sarkozy, check; Silvio Berlusconi, check; Joseph Ratzinger, check......

Hmmm, maybe that number is a bit low?

Interestingly, the percentage was only 27% in 2005 (it's 38% now).

That is an excellent rate of return in these troubled financial times, so I feel fully justified in recommending that our readers go LONG IN EUROPEAN MENTAL ILLNESS.

Mea Culpa

FLG has a valid point here.

You can't have just any shirt-tail guy off the street thinking they can do a hit-and-run post on bizarre sex practices.

Sorry, FLG; respect should have been paid.

Infrastructure

The problem is not that we spend too little on infrastructure. The problem is that our very large spending on infrastructure gets diverted to pet projects of members of Congress.

Why anyone would think that government wants to do what is right for the average citizen utterly mystifies me.

Sure, a Senator is no more greedy than a financial services CEO. Folks, the problem is that a Senator is NO LESS greedy than a financial services CEO. And the Senator faces none of the checks on behavior. He gets to bribe voters in his state with money taken from people in other states. It's a foolproof system.

And you are the fool. Here's proof, from David Leonhardt.

Munger Road

This is odd.

First, it's odd that there is a movie called, "Munger Road." But there is. Here's the trailer (clearly for folks who live in a trailer park, I might add).

Second, given that I google myself 8-10 times per hour, it's remarkable that I didn't know. It fell to KPC pal (and G*d figure!) Dan Drezner to point out the existence of this offense to reason and cinema. Still, thanks to DD.

UPDATE: Apparently, an actual old fake legend, about a school bus in Illinois. There are even a bunch of YouTube videos, of such high quality as this one, with the car getting "pushed" off the railroad track, uphill.

What's Your PQ?

It turns out MY "pq" is 29, very similar to that of Ron Paul. Doesn't mean all our issue positions are the same, but I would guess that in a 2-dimensional space our issue positions ARE pretty much the same.

Our guy* Tim Groseclose has an interesting web site for his new book. And you can find out what YOUR pq is, though it's a 40 question survey.

*Angus actually owns him. He bought an option, back when it was cheap. At least, he wishes he had.

In Italy, Laziness is NOT a Problem

Does anybody really know what satire is?; does anybody really care?

Abstract: We investigate a phenomenon which we have experienced as common when dealing with an assortment of Italian public and private institutions: people promise to exchange high quality goods and services (H), but then something goes wrong and the quality delivered is lower than promised (L). While this is perceived as ‘cheating’ by outsiders, insiders seem not only to adapt but to rely on this outcome. They do not resent low quality exchanges, in fact they seem to resent high quality ones, and are inclined to ostracise and avoid dealing with agents who deliver high quality. This equilibrium violates the standard preference ranking associated to the prisoner’s dilemma and similar games, whereby self-interested rational agents prefer to dish out low quality in exchange for high quality. While equally ‘lazy’, agents in our L-worlds are nonetheless oddly ‘pro-social’: to the advantage of maximizing their raw self-interest, they prefer to receive low quality provided that they too can in exchange deliver low quality without embarrassment. They develop a set of oblique social norms to sustain their preferred equilibrium when threatened by intrusions of high quality. We argue that cooperation is not always for the better: high quality collective outcomes are not only endangered by self-interested individual defectors, but by ‘cartels’ of mutually satisfied mediocrities.

Either way, fabulous. Really a fine piece of social science. Not least because the phrase "cartels of mutually satisfied mediocrities" sounds a lot like a faculty meeting in the US. Not at Duke, of course. No, really.

(Nod to the Ward Boss, who is never lazy)

Grand Game: So Many Ways

I wish we had never played the Grand Game, and were never to play it again.

Just so we could take it out of its wrapping paper, still crinkly wrapping paper, and play it just one perfect time for this story.

My humble thanks to the lovely and talented @EmilySkarbek for the link.

There is a LOT to love in this story, people. Go!

Do Women Earn Less Than Men?

Well, women get paid less than men. The "earn" thing is considerably more complicated.

KPC uper-pal Steve Horwitz, with a fresh coat of Rain-X on his pate, explains.

They Knew This Was Going to Happen

This is just inexplicable.

“Is fortunetelling a crime? Of course, fortunetelling is not a crime,” prosecutor Laurence Bardfeld said in court recently. But promising to return large sums of money, and failing to do so, constitutes fraud, Bardfeld argued.

Yes, I think the prosecutor is right about that.

And, this: Bestselling romance novelist Jude Deveraux has been identified as one of the Marks’ clients, and she alone paid the family nearly $20 million, according to court documents. Deveraux declined to comment to The Miami Herald, citing the pending case, but in the acknowledgements section of her book Scarlet Nights, in which several characters were based on the Markses, she specifically praised retired Fort Lauderdale Police economics crimes detective Charles Stack, calling him a “true hero.”

Well, Mr. Stack may be a true hero. But Ms. Deveraux is a true moron. $20 million? I want to announce my own psychic services: Angus and I will make up a bunch of stupid sh** about the future (we are ECONOMISTS! IT'S EASY for us!), and we will do it for just $5 million. We'll call the service "Kids Prefer Cash."

Please leave a comment with your contact information. Clerks are on call.

(Nod to the Blonde; I think SHE knew this was going to happen. But then she's psychotic.)

Entrepreneurship, Change, and Extreme Events

A recent empirical study. Don't get me wrong, empirical studies are good. Here is the summary (courtesy of new papers superstar Kevin Lewis):

Entrepreneurship: The role of extreme events

Tilman Brück, Fernanda Llussá & José Tavares, European Journal of Political Economy, forthcoming

Abstract: We use aggregate country data as well as individual surveys to uncover, for
the first time, the effect of extreme events such as natural disasters and terrorist attacks on entrepreneurial activity. We find that natural disasters and terrorist attacks influence individual perceptions of the rewards to entrepreneurship and, more surprisingly, extreme events affect entrepreneurship rates positively in a robust and significant way.

"More surprisingly"? Really? Consider what Hayek said about information and change:

If it is fashionable today to minimize the importance of the knowledge of the particular circumstances of time and place, this is closely connected with the smaller importance which is now attached to change as such. Indeed, there are few points on which the assumptions made (usually only implicitly) by the "planners" differ from those of their opponents as much as with regard to the significance and frequency of changes which will make substantial alterations of production plans necessary. Of course, if detailed economic plans could be laid down for fairly long periods in advance and then closely adhered to, so that no further economic decisions of importance would be required, the task of drawing up a comprehensive plan governing all economic activity would be much less formidable.

It is, perhaps, worth stressing that economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan. The belief that changes, or at least day-to-day adjustments, have become less important in modern times implies the contention that economic problems also have become less important. This belief in the decreasing importance of change is, for that reason, usually held by the same people who argue that the importance of economic considerations has been driven into the background by the growing importance of technological knowledge.

"Extreme events," by definition (I think) are unexpected changes. Of COURSE entrepenership increases in the aftermath of extreme events. The "more surprising" bit can only be explained, as Hayek explained it, by the nonsensical insistence that technological knowledge and not entrepreneurship is the driving force of capitalist economies.

Of course, it would be possible to document that the relationship between large unexpected shocks and entrepreneurship is direct and predictable, from many works by Kirzner, or Mises, and others. But Hayek's paper was in the A.E.R. Don't you people read? I recognize that it is easier to claim your theory is novel if you constantly pretend that all previous work doesn't exist. But this is egregious.

scenes from a marriage

Time to re-think college football

College football is a mess, with Ohio State and The U providing the latest "scandals" and with the pattern of conference jumping we've seen lately.

I think it's time to split big time football from academics. Dissolve the NCAA. Pay the players. Don't even force them to be students if they don't want to be students. Treat college football like an age 21 and under pro league. The schools rent out their facilities, names, supporters, etc. and the football program is separate from the school itself, just like the food service program.

There's 120 schools in the FBS. Split them into 4 geographical regions, everyone plays a 16 game season and then have a 16 team playoff.

I love David Boren. He's done amazing things for OU and my own family, but university presidents shouldn't have to be involved like this in something as inconsequential to the mission of a university as football:

“I don’t think OU is going to be a wallflower when all is said and done. I don’t know how long it will be before clarity comes to us. My experience is that on these kinds of things, it might be a matter of 72 hours, it might be a matter of two weeks. I don’t really think this is something that is going to linger on beyond two or three weeks at the outside. It’s been consuming my life the last few days, but it’s a fascinating challenge and we’re just in the search for what’s best for the university.”

--David Boren,

And then there's this:

Boren confirmed that he flew to Missouri, whose chancellor is the chairman of the Big 12 board of directors, and then to College Station last week to try to prevent the Aggies from leaving.

Obama Wins in 2012?

I have said several times Obama will win in 2012. (After I said in March 2008 that he was "unelectable," so ignore whatever I say).

But now a man with an actual MODEL (sort of) has called it for BHO.

Meet Prof. Lichtman...

(Nod to Anonyman)

A Strategy for the Left?

Is this going to be the strategy for Team Obama for 2012?

I am no fan of the talking points of either side. And there is some merit to the charge that some Republicans depend on the religious right for support.

But, "the economy sucks so let's talk about scary religious zealots!" is pretty darned cynical.

(Nod to the Blonde)

Markets in everything: earthmover edition

In the shadow of the Vegas strip, you can pay $400, get 10 minutes of instruction, and then get turned loose to operate earth-moving equipment in a vacant lot.

Really.

The company is called Dig This. Their website is here. The AP story is here. Sharon Zukin could not be reached for comment.

Redneck Trifecta

NASCAR, a racoon, and runnin' round nekkid. The article (there's a video). Another story.
The mug shot:
See, the problem is that among the folks I grew up with, that mugshot and this story would be extremely effective for on-line dating sites. Ocoee women would LOVE this guy. The tat? The quizzical look? The (by Ocoee standards) well-groomed hair? Two words: Chick. Magnet. Plus, he has a racoon.

(Seriously, is that a great mug shot or what? Calling him "unrepentant" doesn't really capture it fully) (Nod to the Blonde)

Not the Onion? (Labor Day/ Sex with Stuff Edition)

Which of the following (if any) are from the Onion?

1. Man has sex with inflatable pool raft.

2. Beach bonking in Blackpool: Your government keeps statistics!

3. Guinness BOWR "world's largest penis" man: It's no picnic.

4. Labor Day party: American caught having sex with picnic table.

5. Man arrested for having sex with street signs; now has to "STOP"

6. I want to ride my bicycle, I want to ride my bike.

7. Man humps steel park bench (the kind with holes in it). And there's a video (so this is NOT the Onion!). You may not want to listen; the guy is not having much fun. "OOOOOOOH! OOOOOOOOOOOOOOH!"


Some details. And a source post.

(And a nod to Dutch Boy)

China Monopolizes the Sun!

Suppose you had a pretty big yard, 2 acres. And your neighbor comes over one day and says, "I have a big lawn mower, a huge expensive one. I just like having a big mower, too big for my own purposes. It really costs a lot, but my dad left me an inheritance and I like the prestige of having the biggest mower in the state. How about if I mow your lawn for my marginal cost, plus a little bit? Say, $35?"

You figure that you would have to buy a mower, plus spend time mowing, plus upkeep. It would cost you at least $100 a week to do the same thing. So, you say, "Sure!"

Can someone explain to me why we are poopin' in our panties about China doing essentially the same thing with solar power technology? And why U.S. government officials are claiming that the answer is that WE, the US, HAVE TO BUY A REALLY BIG MOWER, TOO? For some reason, gigantic world-wide over-capacity, subsidized by tax dollars, is the answer for Obamanoids like this guy:

“There is no question that renewable energy companies in the United States feel pressure from China,” said David B. Sandalow, the assistant secretary for policy and international affairs at the United States Energy Department. “Many of them say it is cheap capital, not cheap labor, that gives Chinese companies the main competitive advantage.”

Is China behaving badly? Yep. And if I were a Chinese taxpayer, I'd be pissed. But why is the US upset? There is no way that the resulting price of solar technology and equipment is going to be more expensive for us. UNLESS, of course, we try to enter the race and buy a really big lawn mower, too.

The "worry" is that China will achieve world dominance and then raise prices. Idiots used to make the same argument about Wal-Mart: once they drive out the competition, they will raise prices. Two problems with that argument. 1. It's not true, empirically. It just never happens. 2. The only possible truth to the argument is with respect to the "correct" price, which in the mind of the subsidizers is the price in the US if we spent billions in subsidies. Friends, subsidies are a COST, not a benefit.

Let the Chinese mow our solar lawn, if they want to. (Angus has tried to make this point before, as have I. Angus may have said it best here. And we'll probably get chances to say it again.)

(Nod to Anonyman, who drives a stinkin' hybrid)

(UPDATE: Meant to say... title of post comes from our guy Alex)

Solar Fail

A little story, in pictures. First, triumphalism of our gov't: thousands of jobs.


The "deal" came under scrutiny, because it appeared that our gubmint had given truly huge amounts of public money without going through the usual procedures.

Most recently, the company went bankruptski. Total collapse.

The delicious part is this: Solyndra is whining that the Chinese subsidize THEIR solar industry. Solyndra was a pure scam, only a front for taking tax dollars. All of their revenues and investment money were public subsidy. And then they have the gall to say that the reason this oinker of a company could not compete is that they needed to be subsidized even more. Some background.

Their "idea"? I promised pictures. Here it was. It didn't work, even with huge public subsidies.

(Nod to J-Don, who knows things)

Ho Tax

Tax meter for street walkers, or street standers, in Germany.

As Anonyman said, "the Germans are so organized."

Plus: consummation areas. Nice.

Madeline the prostitute explains how it all works.

NSFW: Prison Camp Economics

I am teaching Radford's famous "Economics of a POW Camp" article tomorrow. Wondered if there were any good videos about cigarette currencies.

Found this: very very very NSFW. Or class. But PERFECT for KPC!


Also: did find this video about candy as currency, because cigs are contraband.

Which reminds me: that most excellent Skarbek, with whom I am well pleased, just placed this paper in the APSR. yes, forthcoming, beeyotches! Way to go, Skarbek!

Bad-ass Bunnies

Story is here.

Tuesday's Child is Full of Links

Nick T. on why indie music is a conservative genre

Tennessee I: Rest in Peace

Tennessee II: Holy Smoking Bull Semen, Batman!

Wow. Will gives an incredibly useful assessment of Texas educational policy and results.

Lemonade Stand Freedom Day!

(Nod to Anonyman; I hope he doesn't get confused between the lemonade and what got spilled on that Tennessee highway...)

"I Do Not LIKE It, Sam I Am, I Do Not Like Las Vegas"-Ma'am

I thought I was going to agree with this. After all, I don't like Las Vegas. I really, really, really don't like Las Vegas.

But this lefto-fascist doesn't think it should be allowed to exist. Because she knows, given her privileged status as a sociologist, what fun really is.


Many people like Las Vegas. This prof and I do NOT like Las Vegas. Why am I unthreatened by this, when she wants to call in tanks? Also, one does have to like the final comparison, where our teacher compares LV to the worst thing in the world: Suburbia!

(Nod to Tommy the Brit)

Sentiments entirely appropriate for these troubled times

"My thing is, I'm never going to cheat, "I'm never going to be unsportsmanlike. I'm gonna beat you — straight, fair, in your face. I don't have to go around the block. I don't have to, like, go underhand. I'm gonna beat you, I'm gonna beat you. That's it, and there's no way around it."

--Serena Williams

Congress CAN Do One Thing

It can suck, scare people, prevent investment, and reduce the value of existing investments. Of course, IF that were true, you could trade on that information.

And perhaps you can. Why do stocks do better when Congress is OUT of session? It could be that the risk is lower, so lower variance (though in that case options should do better when Congress is in session). A more likely explanation is that Congress sees its job as ordering people around and claiming credit for steering the economy. Iceberg! Dead ahead!

A nod to Prof. Newmark, for pointing this out. I like his "exercise for the reader."

Fear Without Function

Sex Offender Registries: Fear without Function?

Amanda Agan, Journal of Law and Economics, February 2011, Pages 207-239

Abstract: I use three separate data sets and designs to determine whether sex offender registries are effective. First, I use state-level panel data to determine whether sex offender registries and public access to them decrease the rate of rape and other sexual abuse. Second, I use a data set that contains information on the subsequent arrests of sex offenders released from prison in 1994 in 15 states to determine whether registries reduce the recidivism rate of offenders required to register compared with the recidivism of those who are not. Finally, I combine data on locations of crimes in Washington, D.C., with data on locations of registered sex offenders to determine whether knowing the locations of sex offenders in a region helps predict the locations of sexual abuse. The results from all three data sets do not support the hypothesis that sex offender registries are effective tools for increasing public safety.

(A-Tab has some details over at MR)

(nod to Kevin Lewis)

You Play, We Pay

An article about how hard the folks out on the sandbar...er ... barrier islands of NC have it.

Best quote: "this is the price you pay for living in paradise." Well, no. This is the price *WE* pay so you can live on a freakin' sandbar.

Look, you loonies are welcome to live out there. But the state subsidized insurance for decades, and pays for new roads, and rebuilds broken roads. That money comes from people who have to pay to visit paradise.

So you can live there at public expense.

I have no problem with people living out there. If they like it, good for them. And emergency services, in cases where the emergency is unpredictable? Okay by me.

But living on a sandbar that never gets higher than 8 feet, in an area where storm surge from a hurricane hits 12 feet or more at least once a decade? Why do I have to pay for that?

(Nod to the Blonde)

The Weather: These Folks DID Something About It

Civil conflicts are associated with the global climate, Solomon Hsiang, Kyle Meng & Mark Cane, Nature, 25 August 2011, Pages 438–441

Abstract: It has been proposed that changes in global climate have been responsible for episodes of widespread violence and even the collapse of civilizations. Yet previous studies have not shown that violence can be attributed to the global climate, only that random weather events might be correlated with conflict in some cases. Here we directly associate planetary- scale climate changes with global patterns of civil conflict by examining the dominant interannual mode of the modern climate, the El Niño/Southern Oscillation (ENSO). Historians have argued that ENSO may have driven global patterns of civil conflict in the distant past, a hypothesis that we extend to the modern era and test quantitatively. Using data from 1950 to 2004, we show that the probability of new civil conflicts arising throughout the tropics doubles during El Niño years relative to La Niña years. This result, which indicates that ENSO may have had a role in 21% of all civil conflicts since 1950, is the first demonstration that the stability of modern societies relates strongly to the global climate.

(Nod to Kevin Lewis)

All Hail Norm McDonald

I have only watched one episode of the current season of High Stakes Poker, but new host Norm McDonald was brilliant.

Here was my favorite bit, as verbatim as I can make it:

Let me translate that into poker talk. Barry is saying that Doyle sucked out on cancer. I wasn't there at the time but I believe it went runner-runner.

Just thinking about cancer having a bad beat story to tell made me laugh pretty hard!

Tying one's self to the mast with silly string

Richard Thaler, in today's NY Times has words of wisdom on governments' pervasive inability to commit to painful future courses of action with balanced budget amendments or fiscal rules.

Sadly, he fails to stick the landing:

The bottom line is that in matters of governmental self-control there is no real substitute for willpower. If we want to balance the budget over time we are going to have to elect adults to Congress who are prepared to invest now in our country’s future and then, when the economy picks up, take the necessary steps to get spending in line with revenue. The question is whether politicians who act like adults can win elections.

Yes, that is surely the solution to the inability to bind future politicians and the serious problem that optimal policies are often time inconsistent: just find the right people!

Could we not at least try to think of institutional changes that might help the situation instead of calling for politicians from another planet to come and save us?

How about longer terms of office but no re-election? say 6 years in the House, 8 years for President, 10 years for Senate?

Other ideas?

Krugman's reality problem

Paul writes that Rick Perry and inflation hawks on the FOMC are stopping Ben Bernanke from implementing a Fed policy that would be effective in increasing employment and growth.

He argues that for these reasons Bernanke is not acting on the advice he gave to Japan in 2000 about unorthodox policies to combat their situation which has parallels with ours.

Monetary economics superstar Michael Woodford makes a similar, though more nuanced, argument as well.

In both cases, the policy they want Bernanke to follow is to announce that the Fed will tolerate/encourage/create and sustain higher inflation than the Fed actually likes for some number of years in the future.

Here's Krugman:

the only way for monetary policy to be effective in a liquidity trap was via expectations: the central bank had to convince the public that it would sustain monetary expansion even after the trap was over.

Yes, and if Grandma had wheels, she'd be a Harley.

People, the Fed has no commitment mechanism. For their policies to be credible, they must be time-consistent, meaning that they must be in the Fed's best interest AT THE TIME THEY HAPPEN (in each period).

The Fed simply cannot announce a time-inconsistent policy path and get the public to base their expectations on this non-credible announcement.

I am not a big Fed fan, but let's not excoriate them for failing to do the impossible.

No HCR, No Jobs

I win drinks in bars sometimes by betting on the answers to two questions. First, what nation in the world "lost" the most jobs between 1990 and 2005? Second, what nation in the world leads in the value of manufacturing products? (Yes, I have fussed about this before, it's true)

The answers are the U.S. and China, but not in that order. China lost by far the most manufacturing jobs between 1990 and 2005, and the U.S. still leads the next largest manufacturing economy by a full 25%.

Think about it: in 1990, a "factory" in China was a large shed with 1,200 workers with sewing macihines, sitting beside a pile of patterns, cloth, and scraps. Today that factory is 100 times as productive, but it only has 30 employees tending modern and lightning fast machines.

The same thing has happened in the U.S., in industry after industry. As we increased our output, we "lost" jobs to increased productivity. We didn't ship those jobs to China; China lost even more jobs than we did.

The difference is that China more than replaced its lost jobs with new jobs, in new industries. Until recently, the U.S. has always been able to do that, too. What has changed?

The problem is both obvious and hard to see: it's health care costs. The U.S. has produced quite a few new service sector jobs, jobs at the lower end of the pay scale, jobs that don't usually come with health benefits.

But those "good" jobs, the ones that President is looking for? Health care costs have driven a wedge between what employers pay and what they get in terms of productivity. Wages for workers in many industries has been flat, or nearly flat, in real terms since 1990. But total compensation, especially health care costs on the best jobs, has increased at a rate of more than 3% per year on average. (Census Report in 2008)

Employers paying more, workers seeing no increase in take-home pay: a constantly increasing wedge being driven into job growth. More than all of our productivity growth has been sucked into the voracious maw of health care costs. Until we break the connection between jobs and health care, there is no way for the U.S. to begin to recover job growth.

Unfortunately, the fiasco of HCR in 2009 made this problem worse, not better. Our HCR law created a complex, expensive system with no cost controls. And since insurance cannot cost less than the care it covers, this implicit but very real tax on job creation is hamstringing the recovery.

IPaidABrive

If you paid a bribe.... did you pay too much?

I hate it when that happens.

Pretty interesting "corruption quotient" quiz. Fascinating, in fact. It turns out I am a...

Buffalo! Your corruption quotient is down in the dump. Corruption is such an important part of your daily life that you see no difference between corruption and honesty. In our opinion you need to take a step back and review your take on corruption. In a corrupt instance, your philosophy will definitely have you rolling in the muck. You are a BUFFALO

Thanks to Chateau, for the link.

Balancing Budget Should Be Progressive Priority

Not all progs are goofy.

My man Don Taylor makes considerable sense, in fact, in his new book.

.

Oh noes, I'm obsolete!

Apparently Peter Theil & Moore's law are going to kill the species professorus tenuris!

At least according to James Miller of Smith.

Theil famously paid 20 kids $100,000 to not go to college. Not sure how big of a dent that will put in demand, even if he spend $100,000,000 every year to keep 1,000 kids out of our clutches, but Miller is worried.

On the supply side, Moore's law means that "20 years from now computers will likely be around a million times more powerful than they are today".

Apparently online education is "Halo" and I am "Pong".

Interestingly, Miller's article doesn't even mention what I think are the biggest real threats to my species; the proliferation of adjunt/non-tenure track/low paying positions and the explosion of high paying administrative positions.

KPC pal and uber-blogger Mark Perry is excellent on these points.

Headline of the day

"Greek police smash violent doughnut ring"

Well done, lads, I'm pretty sure that in Britain the doughnuts would have smashed the police.

Corporate [ TAXES ] are [ PAID BY ] People

Not sure why the goofy lefties are so gleeful about Romney's "corporations are people" statement (gaffe, they would say).

Here is a NOT goofy lefty, my PhD student Tom Schaller, going ballistic, even planetary orbital, over Romney. Tom is a smart guy. But like most people on the left, almost entirely innocent of economic knowledge. I submit that is the only reason they COULD be on the left, since an understanding of basic economics moves one over to the center right position, almost by definition.

Good lord. Let's do this. Corporations are owned by stockholders. Corporations don't pay taxes, stockholders pay taxes. They pay taxes on income, and they also pay an implicit tax in the form of reduced stock prices when gov't taxes corporate income separately. (Consumers may also pay corporate taxes, if the taxes are on inputs, raise prices of production, etc. I submit, without further discussion, that consumers are people).

Every intro econ book, even Samuelson, noted that the corporate income tax is "double taxation," and therefore inefficient. It restricts investment and reduces employment. Better to have a lower corporate income tax, and much more progressive income tax system.

The US has corporate income tax rates that are 5-10% higher than almost any other country we compete with. If you add fed and state CIT, our rates are 50% or higher; Germany is 30%; France is 33%.

Corporations can move around; stockholders won't move around, at least not as much.

So, Romney meant, "Corporate taxes are paid by people, my friend." And it was absolutely clear that that is what he meant. People misspeak in the heat of the moment. IT. WAS. CLEAR.

Look, I am not a Romney fan. He's an unprincipled gas bag. But this whole "corporations are people" kerfuffle really shows why our center left folks cannot understand even basic economics. The Obama admin, and as far as I can tell the entire Washington press, thinks corporations are just cows to be milked. Instead, they are geese, laying golden eggs. BUT GEESE CAN FLY. Why are "jobs" leaving the U.S.? Because our corporate tax rates are too high, and our regulatory policies too stupid.

And, in any case, corporate taxes are paid by people.

Stupid Economist tricks

Was reading the Economist, the Aug. 13-19 issue and found two very jarring and wrong statements.

On page 71 in the article "Poor dollar standard":

"The 66 members of the dollar block have a collective GDP of over 9 trillion...the list includes...rebels such as Venezuela, which expresses disdain for American imperialism even as it surrenders its monetary sovereignty to America's central bank".

Wow. That is amazingly incorrect.

According to page 89 of the same issue, Venezuela's inflation rate is around 27% while the America's is under 3%. It's pretty clear that Hugo, for all his faults, hasn't "surrendered" his inalienable right to have an irresponsible national monetary policy.

On page 70 in the "Buttonwood" column:

"The Bretton Woods system had strict capital controls, designed to protect the exchange-rate peg. But these became unnecessary in an era of floating rates."

This is somewhere between naive and wrong. First, the written articles of the IMF from Bretton Woods, mandated full currency convertiblity for trade purposes (which wasn't actually achieved until the early 1960s), but allowed individual countries to decide whether or not to have capital controls. Controls were not part of the system requirements. Further, rather than the end of the Bretton Woods era causing the decline of capital controls, as the article claims, the decline of the effectiveness of controls DURING the Bretton Woods era helped to bring about the demise of the system.

Buttonwood should seriously consider reading Barry Eichengreen's classic "Globalizing Capital".

Economist FAIL.

Two Party System

The Daily Show Correspondents explain the two party system.

The Daily Show - The Correspondents Explain - Political Parties - The Two-Party System
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(Nod to Neanderbill)

My Dinner with Tyler

Sure, I'm riffing on the movie title.

But this was very, very interesting: dinner at Chutny, breaking the Ramadan fast, along with Chug R.

And, while I can't speak for Tyler formally, I can quote from MR: "There are plenty of good arguments that taxes have to go up." We agree on that, completely. At dinner, we came to the conclusion that the actual solutions we expect, which do NOT involve taxes going up in a sensible way, are probably worse than other solutions we can imagine.

If you are not going to cut spending, you have to raise taxes, because DAFT. And nobody wants to cut spending.

The point is this: the BEST case for something that is actually feasible looks like this:

1. Cut military spending
2. Solve Soc Sec with combination of means testing and delayed retirement age
3. Health care reform, with most preferable outcome being a Singapore-light system. Even a German style system, which preserves considerable competition, and controls cost.
4. Medicare reform. But #3 solves #4, automatically. We can't solve Medicare, we have to finesse it.
5. Mild inflation, 5%, for 5 years
6. Tax increases and cutting deductions

Do I favor the above policies? I do not, in an unconstrained world where I was dictator.* Do I think that the actual package of stupid s**t we are going to pick is substantially WORSE than the above package? I do.

*Non-doughy samosas for everyone!

Tuesday's Child is ALSO Full of Links

Back from DC. Some links, with no theme or coherent order.

1. Philosophy as psychotherapy

2. R. Branson running nekkid from Necker

3. Amusing earthquake tweets (the tweets are funny, not the earthquake). (I particularly like the premature looteration)

4. Explaining charter school effectiveness (Gated, but I have a PDF. Send me an email at munger at duke dot edu)

5. Pronouns: The secret code of power and weakness

6. Jeff Miron: Capitalism--It doesn't suck

(Nod to Chateau, the Blonde, and Kevin Lewis)

This video presented by Tucks Medicated Pads

People, Ken Tremendous directs a music video for a cool new song by Colin Meloy that is based on a section of "Infinite Jest".

Life is good.

Time to make the donuts

Aaargh.

Another semester starts today.

Don't get me wrong, I probably have the best job in the world, but the sudden influx of 23,000+ students and the imposition of a fixed schedule always takes me by surprise somehow, even after 26 years of being a professor.

Last night I dreamed that Mr. 2T got lost on campus and I couldn't find him. I couldn't recognize buildings (the dream campus was a mix of OU, George Mason, Duke and my old K-12 building), and someone had put a snow capped mountain between the front and back halves of the campus.

Tomorrow, I'll be sweaty and nervous when my classes meet for the first time.

I know, there are tons of people in the world with actual, real problems.

Thanks for listening anyway.

Twisted steel & Sachs appeal

In an otherwise well thought out and well written piece, Jeff Sachs joins the list of economists who throw unreasoned, knee-jerk, shout outs to "greenness" into their economic analysis.

Here's the quote:

The path to recovery now lies not in a new housing bubble, but in upgraded skills, increased exports and public investments in infrastructure and low-carbon energy.

This sentence appears in the third graph. There are eight paragraphs afterward that flesh out what Sachs considers to be the path to recovery. Carbon, or green, or alternative energy is not ever mentioned in any of his analysis.

Is it some kind of secret lefty code way to say "hey, you can trust me and my views, I love windmills just like you"?

I really wish economists would either (A) cut it out, or (B) explain why public investment in greenness can help lead to recovery (in a way that would be better than a simple carbon tax).

But I'm not holding my breath.

Wow, it's Hitler week at KPC

This time the venerable Harold Bloom plays the Hitler card wrt the Tea Party:

We have this horrible contemporary phenomenon in the Tea Party – a real menace not only to America but to the world. Because if it goes on like this, they will destroy our economy and they will destroy America. They have no democratic vision, and I don't mean with a capital “D”, I mean with a small “d”. They frighten me. They're like the early followers of Adolf Hitler, and I'm willing to be quoted on that. They are a sickening phenomenon. That is because they have not read deeply and widely enough. But then maybe they’re not to blame, because American education – even in elite universities – has become a scandal in my opinion. It has committed suicide.

Yikes!

I agree that American education has become a scandal, but not because the rise of the Tea Party.

Hat tip to LeBron who really buried the lede on this one.

Hayek Caused Hitler

Wow. Robert Sidelsky is clearly a zealot, someone who puts worship ahead of logical argument. But that's okay. There are plenty of folks I admire who do that also.

Sidelsky has perhaps overstepped, however. It turns out that Hayek's economic policies brought Hitler to powerin Germany. If only the D-Bank had been Keynesian, and had inflated the money supply, and wasted a bunch of money on make-work projects, the Nazis would never have had a chance.

Who knew?

The surprising thing for me is that I would have said that inflating the hell out of the money supply and spending a bunch of money on crony projects was EXACTLY what Weimar did. Thank goodness B-Sid is here to set me straight.

Note that I am not making the Godwin's Law objection. Sidelsky is not making a gratuitous comparison to Hitler. He literally means that Hayekian economic policies are directly responsible for the rise of the Nazis.

(Nod to Herr F, who is helpful)

How The US Crushes Resistance in its Young People (?)

This piece is interesting, but pretty inconsistent. Check it out.

The problem with Soc Sec and Medicare is that the rich are not fairly taxed? It was supposed to be self-financing. To the extent that it takes more from the rich and gives it to the poor, it is a welfare program, not a pension program for workers. Perhaps that is okay, but that is NOT how the program was sold or how it is talked about still. This person is deeply confused.

And...our young people should take to the streets, like those in Egypt did, because our kids have to pay back student loans? Really? Mubarak repression of all free speech and job choice = student loans?

Still, interesting. ATSRTWT.

(Nod to Katie, btw)

Angus at the Opera

Last night, Mrs. Angus and I went to the Santa Fe Opera and saw "The Last Savage" by Gian Carlo Menotti.

It was amazing.

It started out with a gaggle of tattooed Osama Bin Ladens in diapers dancing around, and also insulted women, gays, and pretty much any other group you could think of.

Basically it was like an episode of South Park set to incredible music, where every so often an excellent real musical interlude would hit you between the eyes.

The parts of the greedy servant girl and the loutish prince were sung especially well overall and their two solos were the musical highlights.

Them dancing Bin Ladens were really something though!

Slogans entirely relevant to these troubled times

Stopped Clock-onomics

"[J]ust to be clear, there's nothing wrong with a low cost of living. In particular, there's a good case to be made that zoning policies in many states unnecessarily restrict the supply of housing, and that this is one area where Texas does in fact do something right."

What? WHAT? What alien spaceship stole P-Kroog, and who is this guy?

I think the problem is P-Kroog is actually a first-rate economist, and so sometimes he forgets his self-appointed role as slinger of shinola and actually makes sense briefly.

That article, linked above, does pretty quickly revert to P-Kroogery of the worst sort. But, for just a minute there....

How Much Did an iPad Cost in 1911?

Our guy, that smokin' hot Steve Horowitz, shares some truth about cost of "living."


On a personal front, my very own EYM has struck a blow for informing the squishes of the world. Tired of seeing all the "no farms, no food!" stickers on the MacBook Pros of all his fellow Carrborovians, he got a bumper sticker of his own made.

It's on his computer (it's a used Dell, by the way, at about half the cost of the MacBook Pros that all the sensitive lefties insist on having as a show of their independence from everything but dad's trust fund). (And before you crack wise, EYM has a job, thank you very much).

It's Different if SPACE ALIENS Break the Window

The broken window fallacy is pernicious. John Stossel explains, for those of you who have lived under a rock, or studied economics at Harvard, MIT, or Princeton.

(heh; heh heh; heh: he said, "Fallacious")

Most recently, of course, it was KPC's favorite deep space Keynesian, P-Kroog.

Mary Theroux has some thoughts.


...

extra skin pups

This photo is amazing:




Many more great pics here.

Rent-Seeking is the New Profit Center, and DC is its Festering Capital

In the U.S. there have always been centers for frenzied entrepreneurial activity, creating value, wealth, and employment. It's what we do.

New York and Boston were both important trade, financial, and industrial centers. Then Pittsburgh and the Ohio Valley became engines of growth and industrial might. Detroit made iron machines that covered the world with transportation. Silicon Valley, quite recently, produced enormous amounts of hardware and software, and revolutionized the way we think about information.

In all those cases, American entrepreneurs sought out opportunities to create value and collect profits. That's what profits are, the inducement to redirect resources toward higher valued uses.

What does the U.S. produce now? Government contracts, where money is taken from tax-payers at gunpoint and wasted on "information systems," useless consultants and brutal elective wars on faraway and largely innocent populations. A festering hive of rent-seekers has clustered around Washington, D.C.

Rent-seeking and profit-seeking look the same from the perspective of the seeker. Both produce super-normal returns to investment, and create wealth for the winners. The difference is that profits are a sign of value being created. Rent-seeking is a sign of value being destroyed.

(nod to Anonyman, who eats his rents with fava beans and a nice Chianti)

SCORE!

From Renton: It just gets better. You could NOT make this stuff up.

I did post yesterday about the "cyberstalking" harrassment.

Here is one of the "offensive" videos put up about the Renton PD, and the jail facility.



Turns out the folks who put this video up were....Renton cops!

(Nod to B.E. I'd give names, but this is probably cyberstalking, and I don't want to implicate the innocent!)

Jon Stewart on Ron Paul

I don't always like Jon Stewart. But I have to like this, a lot.

The Daily Show - Indecision 2012 - Corn Polled Edition - Ron Paul & the Top Tier
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

It's a legit question: Why ignore Ron Paul? I don't think they are doing it because they are afraid of him.

I also enjoyed JS's line that Huntsman was the only Mormon actively running, and he still came in second among Mormons in the straw poll.

(Nod to John Jay L.)

Gender and Genetics as Sources of Attitudes Toward Science and Politics

Who is in charge of Science: Men view "Time" as more fixed, "Reality" as
less real, and "Order" as less ordered

Ira Trofimova, Cognitive Systems Research, forthcoming

Abstract: There is a controversy about the factors underlying male predominance in mathematics, natural and engineering sciences. Our study of meaning attribution, conducted in Canada, China and Russia showed that men had a consistent tendency to estimate natural phenomena (even time-related) as more fixed and limited, less real (even "Reality") and less complex (even "Complexity") than women. Concepts related to classical mechanics received significantly more positive estimations by men than by women, but phenomena related to development and reality were assessed more positively by women than by men. We argue that the methods and language of science, which historically were developed by men, were affected by a tendency of men to reduce natural phenomena to structures with Lego-like components, and to mechanical aspects of their interaction.

****************

Linking Genetics and Political Attitudes: Reconceptualizing Political Ideology

Kevin Smith et al., Political Psychology, June 2011, Pages 369-397

Abstract: In this paper, we trace the route by which genetics could ultimately connect to issue attitudes and suggest that central to this connection are chronic dispositional preferences for mass-scale social rules, order, and conduct-what we label political ideology. The need to resolve bedrock social dilemmas concerning such matters as leadership style, protection from outgroups, and the degree to which norms of conduct are malleable, is present in any large-scale social unit at any time. This universality is important in that it leaves open the possibility that genetics could influence stances on issues of the day. Here, we measure orientation to these bedrock principles in two ways-a survey of conscious, self-reported positions and an implicit association test (IAT) of latent orientations toward fixed or flexible rules of social conduct. In an initial test, both measures were predictive of stances on issues of the day as well as of ideological self-labeling, thereby suggesting that the heritability of specific issue attitudes could be the result of the heritability of general orientations toward bedrock principles of mass-scale group life.

(Nod to Kevin Lewis)

Railroaded?

JS sends an email, as he sometimes does:

The California High Speed Rail Authority (CHSRA), hired some highly qualified transportation experts to analyze their ridership and revenue projections. From what I can tell the experts determined that the original ridership and revenue model used many state of the art techniques, but did not use all the methods the reviewing experts have heard of so they need to do more projecting. In going through the projections they came up with some interesting points about bias due to using stated preference versus revealed preference and a lot of advice on how to improve the accuracy of the projections. (The Report)

Even though all of the recommendation seem reasonable in making the model more accurate, it seems to me to be much about scientism. The the model projects all modes; however, the most import for determining revenue and ridership is the High Speed Rail (HSR) component. This mode has no possibility of revealed preference data in the US much less California. So the question is for both the CHSRA modelers and model reviewers: "Where is the uncertainty?" I see a presumption that there is an answer, instead of range of possible outcomes.

Many travel models that populate the Metropolitan Planning Organizations across the US show traffic doubling from Today's levels by 2035, but from May 2001 to May 2011 the trend has only shown a 0.8% annual rate of increase. (Travel Trends Report FHWA) A rate approximately one quarter of what was projected. These car and truck models have virtually all the historical data that economtrican could want but still has huge uncertainties. In fact the auto share of the market is an integral part of the HSR model. Shouldn't the uncertainty be as or more paramount than the accuracy. With the higher uncertainty should come the naturally higher return on the $40 to $120 Billion investment. I predict little if any of the uncertainty will be addressed in the next CHSRA business plan.

Renton, WA

This is an excellent little story, told in an excellent way by Ken over at Popehat.

You will enjoy it.

The whole probable cause thing really does come down to two elements:

1. A specific crime has been committed.
2. A specific identifiable person and location to be searched can be named.

You can't search a specific person / location in hopes of finding evidence of SOME crime. And you can't just search any old person you want just because a specific crime has been committed. You need both elements.

The whole things makes me think of the part near the end of LOTR:

...as they came to the east end of the village they met a barrier with a large board saying NO ROAD; and behind it stood a large band of Shirriffs with staves in their hands and feathers in their caps, looking both important and rather scared.
"What's all this?" said Frodo, feeling inclined to laugh.
"This is what it is, Mr. Baggins," said the leader of the Shirriffs, a two-feather hobbit: "You're arrested for Gate-breaking, and Tearing up of Rules, and Assaulting Gate-keepers, and Trespassing, and Sleeping in Shire-buildings without Leave, and Bribing Guards with Food."
And what else?" said Frodo.
"That'll do to go on with," said the Shirriff-leader.
"I can add some more, if you'd like it," said Sam. "Calling your Chief Names, Wishing to punch his Pimply Face, and Thinking you Shirriffs look a lot of Tom-fools".

In this case, as Ken at Popehat puts it:

When the police arrest someone, or search something, the relevant question isn’t whether they can, post hoc, gather evidence to show that there was probable cause. The question is whether the search or arrest was supported by probable cause at the time. Saying “well, we asked for a search warrant and got it, but we haven’t found new evidence since, so we’re not going to try to defend the warrant” is a non-sequitur. In addition, it’s an about-face. Renton’s minions previously claimed that the internet cartoons were self-evidently illegal cyberstalking. So what more evidence did they need to gather to support that proposition — unless the proposition was nonsense from the onset?

Owie. That's going to leave a mark. Of course, Ken may be a cyberstalker himself. With laws that vague, all you need to do is annoy the prosecutor and....Wait, there's someone at the door. You have a warrant for what? For cyberstalking? AAAIEEEE!

"It's not the end of Western civilization"

Me and Mrs. Angus yap with Captain Zach and you can hear it here.

The whole KGOU "World Views" series can be accessed here.

Mungo has always told me that I have a face for radio!

Dutch Resistance

Dutch Boy sends this article from the NYT.

Interesting, but grim, reading.

Dutch Boy, deep down inside, is very nearly a bed-wetting leftie. He believes in extreme stuff like actual rights for everyone, regardless of sexual orientation. He believes in reproductive rights, and thinks capital punishment is barbaric. He would likely treat immigrants more like humans than cattle.

But living in Holland also made him a realist about Muslim immigration in Europe. To be fair, the problem is not so much the immigrants themselves as the bizarre Dutch reaction to it. Also the Danish/Swedish/Norse/French/German/etc. reaction.

From the NYT article: Dutch politicians were promoting economic integration — language training, job training. “They didn’t understand the importance of religious identity among the immigrants,” he said. They dismissed it as backward even as they failed to understand the anger a growing immigrant population was creating.

The problem has two parts:
1. A deep shame the Dutch feel about Western institutions. They are not remotely willing to defend markets, political liberties, or anything. Perversely, since by their birthright as Dutchmen they are entitled to these things, they feel no need whatsoever to protect them. Let someone else do it. I'm tired.
2. A weakness of the spirit, a disease of the soul, so pervasive that they cannot imagine that anyone could really be serious about believing in that primitive religious crap. To be fair, they doubt across the board, from Christian to Jew to Muslim. They just wallow in weltschmerz, and justify their national spiritual laziness as a sign of sophistication.

So, it comes down to this: Christopher Caldwell, REFLECTIONS ON THE REVOLUTION IN EUROPE. I had not read this book until two years ago, when Dutch Boy sent it to me. But if you have not read it, you should. This is not a partisan issue, it's just the facts.

Monday's Child is Full of Links: What Blogs Do

A roundup of some interesting links on what blogs do, may do, and probably don't do.

From the Incidental Economist: Another set of links

TC's post on reputation

A science perspective (and credit for the poster above)

The impact of blogs on literature. (Really? A book? I had not seen this.)

The impact of blogging on the practice of law (pretty old, but thoughtful and quite interesting)

Blogging and public relations

An academic-ish article from the good people at Monkey Cage

Blogging as a way of increasing "assignment engagement" for students

Property Rights and Cooperation Among Greedy People

Young children's understanding of violations of property rights
Federico Rossano, Hannes Rakoczy & Michael Tomasello, Cognition, forthcoming

Abstract: The present work investigated young children's normative understanding of property rights using a novel methodology. Two- and 3-year-old children participated in situations in which an actor (1) took possession of an object for himself, and (2) attempted to throw it away. What varied was who owned the objectt: the actor himself, the child subject, or a third party. We found that while both 2- and 3-year-old children protested frequently when their own object was involved, only 3-year-old children protested more when a third party's object was involved than when the actor was acting on his own object. This suggests that at the latest around 3 years of age young children begin to understand the normative dimensions of property rights.
**********************

Emergence of social cohesion in a model society of greedy, mobile individuals
Carlos Roca & Dirk Helbing, Proceedings of the National Academy of Sciences, 12 July 2011, Pages 11370-11374

Abstract: Human wellbeing in modern societies relies on social cohesion, which can be characterized by high levels of cooperation and a large number of social ties. Both features, however, are frequently challenged by individual self-interest. In fact, the stability of social and economic systems can suddenly break down as the recent financial crisis and outbreaks of civil wars illustrate. To understand the conditions for the emergence and robustness of social cohesion, we simulate the creation of public goods among mobile agents, assuming that behavioral changes are determined by individual satisfaction. Specifically, we study a generalized win-stay-lose-shift learning model, which is only based on previous experience and rules out greenbeard effects that would allow individuals to guess future gains. The most noteworthy aspect of this model is that it promotes cooperation in social dilemma situations despite very low information requirements and without assuming imitation, a shadow of the future, reputation effects, signaling, or punishment. We find that moderate greediness favors social cohesion by a coevolution between cooperation and spatial organization, additionally showing that those cooperation-enforcing levels of greediness can be evolutionarily selected. However, a maladaptive trend of increasing greediness, although enhancing individuals' returns in the beginning, eventually causes cooperation and social relationships to fall apart. Our model is, therefore, expected to shed light on the long-standing problem of the emergence and stability of cooperative behavior.

(nod to Kevin Lewis)

Grand Game: Inflation Edition

Angus points out that advocating good policies that are impossible is bad.

As a balance, I submit that it is also unfortunate when we are told we need to pursue bad policies that are unfortunately all too feasible.

In this article...well, check it out.

My own favorite 'graf:

Had the central bankers of the world understood that inflation in asset prices could be just as bad as, if not worse than, inflation in the prices of consumer goods, this would not be necessary. But they did not. So they did nothing to resist soaring home prices, just as they had seen no reason to worry about the Internet stock bubble.

Golly sakes alive, Jasper; where to start?

1. "Understand"? The asset bubble was largely an intentional consequence of monetary, regulatory, and tax policies of the federal government. It was not a thunderstorm, something that just happened randomly. It was a POLICY.
2. The fact that incorrect asset prices resulting from government policies on money, interest, and taxes cause asset bubbles is one of the central tenets of the Austrian Business Cycle theory. I myself have always been skeptical of that theory, but it accounts for the events of 2001 - 2010 beautifully and quite accurately.

It's not the bust. The problem is the freakin' boom. And the idea that inflation solves the bust is just askin' for another boom.

Why do economists keep advocating impossible policies?

Policy activists on both the fiscal and monetary side are united by one common thread. The policies they propose are impossible to credibly implement.

Start with the fiscal side. Christina Romer in the NY Times again calls for an increase in our debt now for "stimulus" combined with a long term reduction in our debt. Mark Thoma and many others have made similar calls.

Dr. Romer is an excellent economist with a fantastic research record, but her policy proposal is impossible! In our political system, we cannot make any type of future long term commitment to do anything.

We cannot bind future politicians. Long run plans will only come to pass if they are in the interest of the politicians who are in office at each point in time over the course of the plan. In econo-speak, the policy must be time-consistent if it is ever going to be followed.

Amazingly we find the exact same problem on the monetary side. We are told by the Sumnerians that targeting a path for nominal GDP or the price level would help avoid situations like our current one.

But for these policies to work, when shocks hit the economy people have to believe that the Fed will do things in the future that they know the Fed doesn't like to do!

The Fed cannot bind either (A) future Feds, or (B) future politicians, who after all actually created and run the Fed.

The popular economics discussion of policy alternatives seemingly takes place in a world where Finn Kydland never won the Nobel Prize.

I will allow that there are papers that take commitment issues seriously in monetary policy. Many of them are well discussed in this excellent post. But, reading the post will show just how thorny those issues are and just how hard it actually is to implement an "optimal" policy over time.

The Sacrifices We Make For Research

I am sorry; I find this quite funny.

That does not MAKE me a bad person, but it IMPLIES that I am a bad person.

The guy was doing what he knew, so that he knew who he was doing. Here is his dissertation. So when he did the Pres's wife, he had solid research to back him up.

(Nod to Anonyman, who also found it funny. But there is no question Anonyman is going to hell, none)

What a nice pup....

This dog is not really cute, but he is obedient.

And if you are really obedient, people will think you are cute anyway. That approach certainly works for me in MY marriage.

Miller Center Summer Institute

Back home now. Was in NY, at Columbia Law School, for Tikva-Hertog.

And then in Pasadena, for Miller Center. Amazing students, in both cases. Scary smart people, really interesting and accomplished.

There is a tradition (blame the Admiral, I expect) of "toasting" at the Miller Center.

These can get a bit rococo. But, in this case, even more. It was... It was.... well, I have pictures.

I did my usual shy, balanced, fair-minded discussion, in two lectures. Okay, actually, I was pretty tired, and I went full-out teller of ungentle truths, "you maggots need to get to work, nobody likes you anyway, you all suck!" on them.

At the dinner on Thursday night, the toast took the form of a male maenad (if you can be a male maenad; is that a "gonad," perhaps?), a frenzied follower of Bacchus.

He mounted the stage, which was a table. Now, this particular gonad was not a small gonad. So there was some question whether the table would be able to do its job here, adding dramatic tension.

Then, the gonad held forth, in quite an impressive Shakespearean form, about my outrages and errors of the previous day. The list was long (and, I should add, quite accurate).
We, as the British say, fell about. Well played, young gonad.

.
(Thanks for DS for the pix)

Happy Vladirday!

Root-toot-tootin' Vladimir Putin is at it again, this time diving for ancient urns in the black sea.

Here's the video:

Here's a slightly cynical account of his exploits:

"Diving in the Taman gulf, the Russian prime minister immediately found two amphorae that had been waiting for him since the 6th century AD at a depth of two metres," wrote the Novaya Gazeta newspaper in an editorial dripping with sarcasm. "He was lucky: in the same place, over the last two years archaeologists and divers of the Russian Academy of Sciences managed to find only a few pottery shards."

carts, horses, and asses

Why do media outlets publish op-eds by politicians? This piece by Ed Rendell and Scott Smith is perfect for a Mungowitzian "grand game".

Apparently the US used to be "the world leader in infrastructure"! But sadly now we suck in infrastructure. It seems that the Chinese are eating our lunch in infrastructure.

The authors claim that, because we haven't spend enough on infrastructure, "China is now home to six of the world's 10 busiest ports—while the U.S. isn't home to one."

This is where the first two words of my title come in. I hate to break it to you Ed and Scott, but the US could spend trillions on ports and China would still have 6 of the world's 10 busiest ports and we'd probably still have none.

But that's because China has at least 3 times as many people as we do, China is growing at 8 to 10 percent annually, and China is the export king of the world. They don't have busy ports because just because they spent a lot of money on infrastructure!

If the authors really wanted US ports to be busier (as opposed to just wanting the government to spend more money), they should lobby their colleagues to pass the trade deals with Colombia, South Korea, and Panama.

And of course this masterpiece would not be complete without Ed and Scott making the sacred call for a national infrastructure bank. What politician wouldn't want a $500 billion slush fund to dig into come election time?

What the last word of my post's title refers to is left as an exercise to the reader!

Does Blogging "Help"?

LeBron takes up a question: Does blogging improve the professional rep of an economist?

And does blogging change policy?

I can answer the second question: YES. In quite a few instances, people who have read THIS blog have adopted a policy of not reading this blog. Or so I would infer from their comments.

Falling with style

Remarkable. Jet Man.


(Nod to DB, who of course wanted to know (1) if he could have one, and (2) if he could mount .30 cal Brownings on the wings.

So near but yet so far

LeBron points us to Daron Acemoglu writing at the HBR blog, saying that he makes "many good points". Indeed, I'd say of the 7 he makes, 6 are good to very good.

However, that last one is a real doozy:

Focus on green technology, the next area that has the best promise of creating a platform for more innovation. Innovations in information and communication technology starting in the 1960s have had a transformative impact on the world economy by creating a platform upon which myriad other technologies and products could be developed. Green technology has the potential to cut carbon emissions, sure, but we also need to transform the way in which energy is delivered, utilized, and monitored. This necessitates innovation and significant investment not only in power generation but also in the electricity grid, in the transport system, and in homes and factories. The United States is lagging behind other countries in these activities. To regain leadership, we need both more and smarter subsidies to research in green technologies and a carbon tax that naturally encourages the use of cleaner technologies and triggers more research to seek such technologies.

First, what standard are we to judge the statement that green technology "has the best promise"? At least give us some reasons why. To me this is more of an article of faith to people than the product of any kind of cost-benefit analysis.

Second, Why does it matter where an innovation takes place? Ideas are public goods. If the Chinese figure out how to somehow make solar power cost effective, why shouldn't we just be happy and use the invention?

It's not about nationalism and competition between nations; innovation anywhere is good for every place that is able to absorb and implement it. It is the global amount of R&D and innovation that we should care about, not whether the US can "reclaim leadership", especially in an area where no one can make money without continual large subsidies.

About the only part of DA's quoted paragraph I agree with is that we should introduce a Pigouvian carbon tax. I'd like to do so in a way that's revenue neutral, but even if it isn't, a carbon tax is probably the simplest and one of the best things we can do for the environment.

nothing stops the honey badger when it's hungry!

It's not the bombs, but where they're hidden

Apparently Hamid Karzai doesn't have any problems with suicide bombers, he just wants them to not hide the bombs in their turbans:

"Afghan President Hamid Karzai met recently with members of the country’s clerical councils to get their assistance in persuading insurgents not to hide explosives in suicide bombers' turbans or in other religious or cultural symbols.

In the last five weeks, suicide bombers have killed the mayor of Kandahar and a senior cleric in the city with small amounts of explosives hidden in their turbans. In both cases, the bombers grabbed their victims before triggering the explosives.

It is believed to be the first time turbans have been used in suicide attacks.

A man’s turban has important religious and cultural significance and it is considered dishonourable to touch it.

Karzai met with clerics this week and pleaded with them to use their influence on the Taliban and other insurgents to dissuade them from using cultural or religious garments to hide explosives."

I certainly hope the president succeeds in this noble quest to get the bombers to go back to strapping explosives to their chests or putting them on women or in camel humps or whatever, and to convince them that they must always, always honor the turban!

who's punk?

Great Jawbreaker cover by John Darnielle & the Mountain Goats!

Will politicians ever stop lying to the public?

People, maybe we should extend unemployment benefits yet again. The job outlook is bleak, unemployment is high, and lots of people are hurting bad. Maybe it's the civilized thing to do.

But could we please just stop yapping out the bald faced lie that unemployment benefits create jobs?

Please?

Obama and Pelosi were again claiming that yesterday. The closest thing to any analysis of why was Nancy's "it injects demand".

Today, Mark Thoma has found an economist to parrot the company line as well. He offers absolutely no analysis or evidence for the proposition.

You know why there's no analysis or evidence given? Because, even on the crudest of Keynesian grounds, its horse-hockey!

The proposed bill would affect around 1,000,000 workers and we'd be giving them a few hundred bucks a month for what, another year? so thats, say $300 x 12 x 1,000,000 or $3.6 billion passed out in 12 "doses" of $300 million each in a geographically diffuse pattern.

Yeah, I can see entrepreneurs all over the country rushing to hire new workers to handle the massive increase in demand created by this program.

It never seems to enter their heads that at the margin, subsidizing unemployment tends to create more unemployment. There are a lot of studies in economics showing that employment spikes at the time when unemployment benefits run out.

Yes, I know the benefits are small compared to a job. No I am not calling unemployed people lazy. I am perfectly willing to concede that the humanitarian case for extending benefits may trump the marginal incentives they create to postpone taking a job.

What I won't concede, what I'm very very tired of hearing asserted as if it was obvious, is that extending unemployment benefits will create jobs.

Obama and Pelosi remind me of that movie about the bus. It's like if they stop spending money at a certain high rate, they will explode.