Euvoluntary Exchange In NRO

Interesting NRO piece by Reihan Salam on Euvoluntary Exchange. Nice examples. And the question at the end is the right one. I just don't know the answer.

What are the sources of the disparities we care, or rather that we should care, about?

Occupy Wall Street--Carter Administration Edition

When you have an inept President who blames employers for not hiring people, you get this. From 1979, but quite fresh and timely. No jazz hands, though, which is a shame.



Nod to the Blonde...

G'accuse!

Where seldom is heard, a missing G word, and judges do strip searches all day!

At the World Scrabble Finals in Warsaw, one competitor accused another having hidden the "G" tile. He demanded that the miscreant be strip searched to find the missing tile.

In the US this would have been done, as long as the guy spoke Spanish and had committed a traffic offense. But not in Poland.

(Yes, the title is intentionally misspelled)

Nod to the Blonde

Jazz Hands

Wow, these OWS guys are even more self-congratulatory than this blog! And we are (mostly) kidding when we self-congratulate.

I do like the jazz hands.

Finally, Angus, in spite of his protests, would last about 90 seconds in this crowd before he got into a fight with one of them. Their diagnosis, I will admit, is in some important ways correct. Their prescription for cure? Not so much. Angus's claim that he could be in that crowd and not make fun of it.... that made ME laugh. Good one.

we going to Sizzler!

One of the few good things about going to Wash U was Cardinals baseball. Me and Mungo were there for some pretty good years (1980-84). We would sit in the LF bleachers (I want to say that tickets were $1.50 but that can't be right can it?), smoke cheap cigars, chant obscenities at the people in the RF bleachers and hate the Cubs. A couple times we even took the train to Chicago and caught a Cards-Cubs game at Wrigley. Jeez, no wonder we almost didn't make it through the program!

I'm down with OWS!

I, Angus, just want to tell you all that, contrary to my good friend and co-blogger Mungowitz, I am totally down with and supportive of the OWS movement.

The ever stronger link between big finance and big government is really hurting this country, and who knows, maybe OWS will start the ball rolling somehow to improve things.

Even if it doesn't, who are they really hurting?

I say let 'em protest in peace with a minimum of mockery.

Heck, if there was an Occupy Norman, I might check it out. Maybe find some elevators where we could push all the buttons at once....

Special Bagels or Something

Actual Egyptians near the park of OWS in New York are scornful of the "pain" of rich kids whining about hardship.  An interesting bit...

As Anonyman summarizes it:

But although she said the destitution in the square reminded her of the Third World, the occupation didn’t strike her as another Tahrir. “We were fighting for a big, big thing: for life, to eat, against a giant snake that would kill us.” Unsurprisingly, she employs a smart breakfast metaphor: “Here, they’re not fighting to eat, say, regular bread, but … special bagels or something.”

The Grand Game: Farmer Bob Edition

In the contest for worst analogy ever, "The economy is like a farm" has GOT to be a serious contender. In today's NY Times, Bob Shiller trots it out for a spin.

Let's start at the beginning. I grew up in a rural setting and have worked on farms. Farmers don't wait until winter to fix their fences. If there is a break in the fence and the cows are loose, you fix the damn fence then and there. Same with your barn. If there's a hole in the barn roof in June, you don't wait until January to patch it.

Then there's what I think is the weirdest part of the analogy:

The farm needn’t go into debt to do this. All able-bodied people on the farm are expected to contribute their labor, an imposition we can view as an informal tax.

In my experience, farmers laid off many of their seasonal workers after the harvest. Those that were kept on, to deal with animals or to do projects were paid hourly wages. They weren't "expected to contribute their labor".

The farmer had to save part of the farm's income to pay for what workers were needed in periods when the farm wasn't making a lot of income.

(A lot of the kids I knew that lived on farms were expected to make this "contribution" year round and they really really hated it. Winter was their favorite time of year because they didn't have to work nearly as hard)

I acknowledge that in some areas of the country and for some types of farms, business is seasonal. However, farmers mostly deal with that seasonality by laying off workers!

P.S.

The funniest thing of all about this is probably the title of the HTML link for the article which I reproduce here for your enjoyment (I am NOT making this up):

http://www.nytimes.com/2011/10/16/business/a-proven-principle-behind-obamas-jobs-plan.html

be careful what you wish for

T-Russ on "To Tell the Truth"

Just ... wow.  Excellent protective camouflage, wearing that suit. 

James Madison on Property: Your Dog Does Not Own Your House

(A piece I wrote for the Miller Center) "A Scholar’s View: James Madison’s View on Property"


     Americans believe that property is necessary for liberty. But how can my liberty be enhanced by an institution that excludes me from so many things? In his article for the National Gazette in 1792, James Madison addressed this paradox squarely. The quaint thing about his resolution of the paradox, almost pathetic in retrospect, is the completely assured way in which Madison describes how property, far from being a threat to liberty, is its very foundation. In our modern age, property seems to mean nothing more than that portion of the fruits of our labor that government deigns let us keep. How did things change so much?
      Madison, of course, was a primary architect of the Constitution. He defined property, in that 1792 article, as “that dominion which one man claims and exercises over the external things of the world, in exclusion of every other individual. In its larger and juster meaning, it embraces every thing to which a man may attach a value and have a right, and which leaves to every one else the like advantage.”
      Madison continues: “In the former sense, a man’s land, or merchandise, or money is called his property. In the latter sense, a man has a property in his opinions and the free communication of them.” His conclusion? “As a man is said to have a right to his property, he may equally be said to have a property in his rights.” This is no Buddhist koan, a semantic paradox like “What is the sound of one hand clapping?” What Madison meant, and what the U.S. Constitution should mean, is that rights of conscience and rights of property are of a piece, mutually reinforcing. Each American owns his or her rights, and our right to own property is what affords autonomy and independence from the collective will.
      Our freedoms are not guaranteed by majority rule, or by “rights” of political representation. Those things are threats to our true rights. Otherwise there would be no 1st Amendment protection for the press, for speech, or for rights of conscience. Likewise, and on the same level (because the same essential thing), there would be no 5th Amendment protection against the taking of property without due process and without just compensation.
     Madison drives home the point later in the piece, when he describes a “just” government, presumably the kind of government the Founders hoped the Constitution might create. His words ring true, but hollow, for us today, for many of Madison’s premonitions of injustice have come to pass if fact. “A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species; where arbitrary taxes invade the domestic sanctuaries of the rich, and excessive taxes grind the faces of the poor; where the keenness and competitions of want are deemed an insufficient spur to labor, and taxes are again applied, by an unfeeling policy, as another spur; in violation of that sacred property, which Heaven, in decreeing man to earn his bread by the sweat of his brow, kindly reserved to him, in the small repose that could be spared from the supply of his necessities.”
       The American Constitution creates a powerful institution, government, to protect our rights to property, and to defend our property in our rights. The core of those liberties are those properties, of both industry and of conscience, that we have fairly obtained for ourselves by work and reflection. Yet our industry is now yoked to a “partnership” with government for the rich, who are told that corporations and equal protection under the law are privileges, granted by the good graces of government and by no essential right. And the consciences of the poor are to be shaped by dependence on public viands to sustain the body, the mind, and the soul. Relieved of all responsibility, they are robbed of all rights.
        Our government, because it protects my rights and my property, has come to claim that my rights are a privilege, and my property is not my own. I would answer, and I suspect that Madison would agree, that such claims are akin to believing that your dog owns your house.

Remy on Occupy Wall Street

UPDATE: The camera woman is crying, the guy is crying, and they are bizarrely, defending some conception of property rights. This is OURS, you can't take it. "We" can take yachts, and money, and property, from OTHER people, but not from this snotty kid.

Vladette the Impaler?

So, Raleigh women are getting war chests? Does that look like this?

Aaaaieee! Run for lives! She will stick you with her war chest!

(Nod to the Blonde)

In the Navy...

This is disturbing. Or it would be, if it were not so predictable.

that's nacho cheese

I love Mexico but MAN oh MAN are things messed up there. Check this gem from the WSJ:

Days after the Casino Royale fire, Monterrey's leading newspaper published a video showing the brother of the PAN mayor of Monterrey, Fernando Larrazabal, receiving wads of money at one Monterrey casino. The paper suggested that many of the city's casinos, which lack legal permits, were paying off city officials—and drug gangs—to stay open.

The mayor has denied wrongdoing. His brother, Jonas Larrazabal, says the money was payment for selling cheese to the casinos.

There is a grand Mexican tradition of the politician's brother as bagman (Raul Salinas, you KNOW I'm talking about you), and apparently the PAN is not immune to it.

The whole article is interesting and depressing. A thriving illegal casino industry operates with impunity across the nation.

Good Grief: What does Obama have against Lee Myung-bak?

The South Korean president is here to celebrate the US-Korea FTA signing. Here is what our President has planned for him:

"Obama on Friday will then take Lee for a road trip to Detroit, home of the U.S. auto industry."

Let's break this sentence down, Tosh.O style:

1. A "road trip"? Are they DRIVING FROM DC to DETROIT? Who's paying for gas? If they use an electric car, how many days will that take?

2. Where, upon arrival, UAW officials will bury Lee under a parking lot, Jimmy Hoffa style?

3. Maybe President Lee has a thing for vacant lots or $11,000 houses?

4. Umm, Mr. President, I don't think Detroit is actually the Home of the US Auto industry anymore. Are you going to use a time machine and take him to Detroit in 1966?

Plenty of room in the comments for more!

Clever, Clever Satire

This was a comment on a post about a computer game, HOMM VI.

Do me a favor and ask Robert Paul Wolff and Brian Leiter this question: why are they spared the wrath of the 99%? Tenured professors, raised in privilege, products of Princeton and Michigan law school, living lives of luxury and leisure in comparison to the steel worker, the coal miner, the day laborer.

How does the the spoiled privileged Leiter respond to the following: Fairness is considered over the course of a lifetime. This does not exempt the privileged lives of professors, the beneficiaries of capitalism living lives of relative luxury and greed in comparison to steel workers and coal miners. We do not take current distributions as the baseline and simply move on from here. As a matter of fact, this is exactly the objection made against most utilitarian property theorists. Therefore, the unjust distributions that you have benefited from, the skills you have developed because of your privileged position within the capitalist regime, all these resources you have enjoyed will not be forgotten by We the 99%. And here we are. It is time to pay the piper, and this includes the professors as well as the bankers, CEOs and corporate attorneys. It is time for Brian Leiter, Robert Paul Wolff, Paul G. Allen, Warren Buffett, and the rest of the privileged few to make good on their debts. They must now give up their comfortable positions at Univ. of Chicago, etc. and pick up a shovel. It is our time to bask in the sun.

Not sure how Robert Paul Wolff or Brian Leiter would respond, sir. Don't know either, never met them, had to look them up on Google. I can say this: Here is the distribution of income in the U.S.:

You'll notice that 99th %ile is $506k, 95th %ile is $200k. There would be very few college professors above the 96th %ile, I would think.

As for Robert Paul Wolff....he is a Marxist Anarchist who was briefly at U of Chicago, 1961-1964. He never went to Princeton, either as a student or instructor, though of course he likely gave talks there. You may be talking about Brian Leiter, of course, but since I found looking up Robert P. Wolff (he's one of YOURS, fercrissakes!) to be utterly uninteresting I stopped my research, exhausted, and went back to my couch where nubile grad students could fan me and feed me delicious fresh fruit.

In short, what you have written simply must be a moderately clever satire. Because otherwise you are confirming that you "99 percenters" are just as loony as I believe you are.

What kind of country are we living in?

In 2005 Albert Florence, driving in his car with his family was improperly arrested on a bogus warrant. He was held for 6 days in a county jail in New Jersey and, during that time was "repeatedly strip searched".

And by strip search I mean, "strip naked for inspection, lift his genitals, squat and cough."

Albert sued and the case has reached the Supreme Court. The lawyer for the jail says automatic strip searches are necessary. "It's impossible to determine whether or not a minor offender is a risk or not," he said. "You could be a minor offender because you've just been stopped for a speeding violation" or "you could be a murderer."


YIKES!

People, in what world do even murderers routinely drive around in their cars with their families with dangerous weapons in their rectums or taped to the back of their testicles?

Secondarily, even in New Jersey, police certainly can look up a person via computer and quickly determine their criminal record. So yes, you could be a speeder or a murderer, but we can find out in 5 minutes or less!

Needless to say, the geriatric recluses that populate our Supreme Court did not exactly cover themselves in glory during oral arguments in this case:

Justice Ruth Bader Ginsburg asked if "showering in the presence of officers" violated the Constitution's ban on unreasonable searches. Goldstein (lawyer for Mr. Florence) said no, but that a close inspection at an "arm's length" would be a violation.

That answer didn't sit well with Justice Sonia Sotomayor. "It's OK to stand five feet away, but not two? That doesn't make much sense to me."

What about a visual body cavity search, she asked.

"There's a material difference," replied Goldstein, between a "visual body cavity inspection ... where you require someone to bend over, and cough" to expose the anus, and a visual inspection of a naked prisoner at arm's length. But he contended neither should be permissible without some individualized suspicion.

Justice Samuel Alito asked whether it would be permissible for jail authorities to require every prisoner to shower with anti-lice soap in front of an officer 10 feet away. Goldstein said that would be permissible. So "your only concern is searches that go farther than that?" asked Alito. Goldstein said that was "exactly right."

Justice Anthony Kennedy noted that, at least when he was in private practice, county jails were much more dangerous than penitentiaries because "you don't know who these people are"; you "arrest them for traffic [offenses] and they may be some serial killer."

What is so hard for these morons to understand. You don't "repeatedly strip search" someone for a freaking traffic violation.

Full stop.

The august justices seem to have all watched the entire set of "Porky's" movies before donning their robes.

HOMM VI

Tomorrow, HOMM VI. Finally.

I played the demo. It's okay. Not nearly as annoying slow as V, or bizarrely not funny as IV.

HOMM II is my favorite game, all time, any genre. But part of that must have been the timing. There just wasn't much like it then.

Illegal Advising

A Jewish professor was advising a student. He told her she might not like the course taught by famously anti-Semitic Columbia Prof. Massad. And Prof. Massad is, indeed, pretty famous.

And, now, the professor who gave advice is under investigation, by the U.S. Government! for "steering," like when a real estate agent tells an ethnic couple they might be more comfortable in their own ethnic neighborhood.

An actual investigation by the DofEd Office for Civil Rights. Because he gave her ADVICE. I give students advice all the time. Am I going to be recorded, and have my advice checked by the Feds? Like when I say, "Don't take ____'s course, he's not very good, I will run afoul of the anti-mediocritism laws? "You are a mediocritist! You discriminate against mediocre people! Bad! Bad!"

All Hail R. K. Gaddie

There's a protest in his kitchen and he's telling the world:

Solar Fail: Chicago

The problem with solar energy is that it is much more expensive than purchasing energy from power companies.

Much, much more expensive.

It is true that this difference can be reduced by subsidies. But people underestimate how much of a subsidy is required. With installation, batteries, and disposal of toxic waste (batteries are much more poisonous than the exhaust of power plants!), solar panels are almost never cost effective.

And so, we see, yet again, that grandiose claims run afoul of economic reality. "Green" energy is a huge net waste of resources. Far from making things better, solar panels and solar subsidies are increasing unemployment and causing enormous damage to the environment.

(nod to the Blonde)

The Rule of Law...of Nature Red in Tooth and Claw

Paul is a "rule of law" scholar, and a smart guy.

But I don't understand this lament. I agree with the sentiment, but not the contradiction.

Abuse of power is not a perversion of government. Abuse of power is the ESSENCE of government. We trade off abuse of private power, theft, and foreign aggression against the certain knowledge that our own government will abuse the powers we give it to protect us against the bad things in the first part of this sentence.

Or, as the young Edmund Burke put it:

Parties in Religion and Politics make sufficient Discoveries concerning each other, to give a sober Man a proper Caution against them all. The Monarchic, Aristocratical, and Popular Partizans have been jointly laying their Axes to the Root of all Government, and have in their Turns proved each other absurd and inconvenient.

In vain you tell me that Artificial Government is good, but that I fall out only with the Abuse. The Thing! the Thing itself is the Abuse!

Observe, my Lord, I pray you, that grand Error upon which all artificial legislative Power is founded. It was observed, that Men had ungovernable Passions, which made it necessary to guard against the Violence they might offer to each other. They appointed Governors over them for this Reason; but a worse and more perplexing Difficulty arises, how to be defended against the Governors? Quis custodiet ipsos custodes?

In vain they change from a single Person to a few. These few have the Passions of the one, and they unite to strengthen themselves, and to secure the Gratification of their lawless Passions at the Expence of the general Good. In vain do we fly to the Many. The Case is worse; their Passions are less under the Government of Reason, they are augmented by the Contagion, and defended against all Attacks by their Multitude. (source link)

So, Paul: I'm with you for being upset at government abuses of power. But how could even your fertile imagination for a moment believe that it could be otherwise?

Be careful what you wish for

In my survey of international economics class today we had an excellent discussion of possible end-games for the current Euro crisis.

One point that really struck home with me was when a student asked "Why did Greece even want to be in a monetary union with Germany in the first place"?

Indeed.

Greece was a serial defaulting, non-tax collecting, relatively corrupt, but seemingly happy country. They were never going to be Germany, and I can't understand why they wanted to be Germany. Yet they moved heaven and earth to meet the Mastricht criteria and get into the Euro. They hired Goldman to swap around their future revenues, and maybe they fibbed a little bit too. At the time, many people were surprised that they made it in.

Short term, they got a ton of cheap (for them) credit and enjoyed a spending binge. But their economy grew ever less competitive and their external position ever weaker. Now they are down and out, humiliated, wracked by social unrest, and pretty much flat broke.

Yet they still want to stay in! People, Greece is never going to be Germany. I don't say that as a negative about Greece but as a statement of history/culture. The values are different, the comparative advantages are different. Thus, German monetary policy is not really ever going to be right for Greece. Unless Germany is willing to adopt them and put them on a perpetual allowance, the Euro is not going to work out for Greece.

It's time for Greece to pull the full Argentina, or as Hillary likes to say, press the reset button.

The greatest threat to the Euro

Excellent German condescension from Der Spiegel: "Do you want to be the man who destroyed the Euro?"

But the Slovakian guy hammers him: The greatest threat to the Euro is the bailout fund itself!

The story....

My man Joel R asks, "Is this the only European leader making sense? Forget about Germans - who on the whole probably benefited from euro policies - why should a relatively poor country - for Europe - bail out the banks?"

A Charter'd Libertine

School Choice, School Quality and Postsecondary Attainment, David Deming et al., NBER Working Paper, September 2011

Abstract: We study the impact of a public school choice lottery in Charlotte- Mecklenburg (CMS) on postsecondary attainment. We match CMS administrative records to the National Student Clearinghouse (NSC), a nationwide database of college enrollment. Among applicants with low-quality neighborhood schools, lottery winners are more likely than lottery losers to graduate from high school, attend a four-year college, and earn a bachelor's degree. They are twice as likely to earn a degree from an elite university. The results suggest that school choice can improve students' longer-term life chances when they gain access to schools that are better on observed dimensions of quality.

----------------------

Measuring the Effect of Charter Schools on Public School Student Achievement in an Urban Environment: Evidence from New York City, Marcus Winters, Economics of Education Review, forthcoming

Abstract: This paper uses student level data from New York City to study the relationship between a public school losing enrollment to charter school competitors and the academic achievement of students who remain enrolled in it. Geographic measures most often used to study the effect of school choice policies on public school student achievement are not well suited for densely populated urban environments. I adopt a direct approach and measure charter school exposure as the percentage of a public school's students who exited for a charter school at the end of the previous year. Depending on model specification, I find evidence that students in schools losing more students to charter schools either are unaffected by the competitive pressures of the choice option or benefit mildly in both math and English.

I haven't read either of these papers. But I wonder if selection isn't driving both. In the first case, parents who care enough to get their kids to switch are the sort of parents who are more likely to encourage college. And in the second case, the parents of kids who are doing poorly in math and English are the ones who switch to charters, perhaps because (again) they want to ensure their kids succeed. That may well be wrong in one or both cases, of course. But selection is so tough in studies where you are measuring consequences of choices that are endogenous.

(Nod to Kevin Lewis)

Do you believe in magic? Ryan Avent does!

Avent joins the crew attributing untapped magical powers to the Federal Reserve:

"Losing its credibility as an inflation-fighter, some of it anyway, is precisely what the Fed needs to accomplish. As Paul Krugman has put it, the Fed needs to promise to be irresponsible at some future point, thereby raising expectations of future inflation. That, in turn, will boost current inflation. Consumers will want to spend their money in the period before its value erodes, and through that mechanism future inflation becomes current inflation.

So the question then becomes: can the Fed convince markets that it will be irresponsible in the future? The answer, quite obviously, is yes. The Onion helpfully suggested one way in which this might be accomplished. At a recent dinner, colleagues of mine joked about other ways to solve the problem. One suggested that Ben Bernanke might ask to have his salary indexed to gold or the Swiss franc. Another said the chairman should take to the podium to tell Americans they'd better start spending their dough soon before it's worthless, lighting a cigar with a $100 bill all the while. More practically, Mr Bernanke could raise his desired inflation target or simply declare that the Fed won't touch rates for a certain period, no matter what happens in the broader economy."

People, if the Fed has credibility as an inflation fighter it is for the Rogoffian reason that we have appointed inflation adverse central bankers. That is, people whose preference is for low inflation.

Please repeat after me:

THE FED HAS NO MECHANISM TO BIND ITSELF TO LIVE UP TO ANY ARBITRARY PROMISES IT MAY MAKE TODAY ABOUT THE FUTURE!!!

Promises to act against one's preferences in the future that are made without any commitment mechanism are simply cheap talk and are extremely unlikely to shape agent's expectations or actions.

We could appoint a central banker whose preference was for high inflation. In that case any promises to create low inflation or deflation in the future would be incredible and ineffective for exactly the same reason today's conservative central bankers' promises to create future inflation would be incredible and ineffective.

This is not a Tinkerbell situation folks; believing in magic is not going to get us through the crisis.

Equality or Income? I'll Take Markets for BOTH, Please!

Interesting article. The relation between growth and inequality is complex.

Excerpt: The late Yale University and Brookings Institution economist said that not only can more equal distribution of incomes reduce incentives to work and invest, but the efforts to redistribute—through such mechanisms as the tax code and minimum wages—can themselves be costly. Okun likened these mechanisms to a “leaky bucket.” Some of the resources transferred from rich to poor “will simply disappear in transit, so the poor will not receive all the money that is taken from the rich”—the result of administrative costs and disincentives to work for both those who pay taxes and those who receive transfers.

Do societies inevitably face an invidious choice between efficient production and equitable wealth and income distribution? Are social justice and social product at war with one another?

In a word, no.

45 czars!

The Ruriks (rulers of Moscow)
Ivan I 1325-1340
Simon 1340-1353
Ivan II 1353-1359
Dimitrij Ivanovich 1359-1389
Vasilij I 1398-1425
Vasilij II 1425-1462
Ivan III 1462-1505
Vasilij III 1505-1533
Ivan IV, the terrible 1533-1584
Feodor I 1584-1598
Boris Godunov 1598-1605
Feodor II 1605
Dimitrij, the false 1605-1606
Vasilij IV Sjujsky 1606-1610

The House of Romanov
Michail III 1613-1645
Alexej Michailovich 1645-1676
Feodor III 1676-1682
Ivan V 1682-1696
Peter I, the great 1682-1725
Catherine I 1725-1727
Peter II 1727-1730
Anna Ivanova 1730-1740
Ivan VI and grand duchess Anna Leopoldovna 1740-1741
Elizabeth 1741-1762

The House of Holstein-Gottorp-Romanov
Peter III 1762
Catherine II, the great 1762-1796
Paul I 1796-1801
Alexander I 1801-1825
Nicholas I 1825-1855
Alexander II 1855-1881
Alexander III 1881-1894
Nicholas II 1894-1917

Just over 30. Compare that to the....czars of Obama! There are 45 of them.... all at once!

Nod to the Blonde.

P-Kroog!

Always the critic, always with the details...P-kroog objects to this graph.

Some background on the upward sloping aggregate demand argument. Proving once again that P-kroog is just not that good a macro-economist. ("Minsky moment?" Have Angus draw you his famous "Minsky curve" sometime. It's downward drooping.)

Nod to Kevin Lewis

Perfect

A venn diagram. It pretty much says it all.

Nod to James Sinclair, and thanks to Steve Horwitz.

Will Wilkinson on Ron Paul

Will W gives an analysis of Dr. Ron Paul.

The U.S. could do worse, and almost certainly will do worse, for President.

But I really am confused how people identify RP with "libertarian." It just ain't so. A friend recently told me that RP was "the most libertarian of the major candidates." Okay. But Mussolini* was the most libertarian of the Axis dictators, but that doesn't make him a libertarian.

(*No, I'm not saying RP is Mussolini; I'm saying that the "he's the most XXXX of the YYYYs" doesn't mean the person is actually XXXX).

On the other hand, I was and remain sympathetic to the claim that the main part of the state-sponsored Repub party, and the state-owned media, ignore RP because he is TOO libertarian. That's a fair critique, as Jon Stewart points out.

Are firms acting irrationally by not investing more?

In an amazingly hubristic NY Times opinion piece, Richard Thaler tries to nudge American companies into doing the right thing:

Corporations are hoarding cash at record rates. The Federal Reserve recently reported that nonfinancial companies in the United States were holding more than $2 trillion in cash and other liquid assets — money that is earning next to nothing. A considerable amount of that cash has been accumulated in the last two years — and the totals exclude the substantial sums the companies hold abroad in foreign subsidiaries. Of course, it can be sensible for businesses to have a source of emergency cash, but many appear to be stockpiling so much that it’s hard to imagine what emergency they fear. To cite just one example, Google is holding more than $39 billion in cash...

Yet is such caution rational? As a shareholder, I would worry about a company that says it can’t find investments that can reasonably be expected to earn well above the tiny return of its cash.

Investment does not necessarily have to involve increasing capacity. Are there no plants or equipment that need upgrading? No promising research-and-development opportunities to be explored? Not even any parking lots that need to be repaved and painted?

I also do not buy the idea that companies need all this cash for acquisitions. If they really want to buy another business, they can issue stock to do so.

It's pretty hard to unpack all the errors/hubris in this quote, but let's try.

The biggest error Thaler makes is that he implies that the idea that firms are acting irrationally by delaying investment can be confirmed by the fact that positive NPV projects are not being done.

"Yet is such caution rational? As a shareholder, I would worry about a company that says it can’t find investments that can reasonably be expected to earn well above the tiny return of its cash."

The problem with this "logic" is that it is contradicted by the entire body of modern economic literature on investment. The literature shows that there is an option value to waiting to invest until conditions are favorable.

See for example "The Value of Waiting to Invest" by McDonald & Siegal (QJE 1987 cited over 2000 times according to Google Scholar) or "Waiting to Invest: Investment & Uncertainty", by Ingersoll & Ross (Journal of Business 1992 cited over 350 times according to Google Scholar).

Here's a crucial sentence in the Ingersoll & Ross abstract:

"The ability to delay a project means that almost every project competes with itself postponed"

The second mistake Thaler makes is downright embarrassing. He seems to assume that investment by firms is actually zero!

Are there no plants or equipment that need upgrading? No promising research-and-development opportunities to be explored? Not even any parking lots that need to be repaved and painted?

Umm, what evidence does Thaler show that these routine tasks are not being undertaken? Firms are sitting on a lot of cash, but firms are also currently investing over $1.5 trillion dollars (in 2005 dollars) this year. That should be enough to pave a few parking lots.

Finally, Thaler informs us that: "I also do not buy the idea that companies need all this cash for acquisitions. If they really want to buy another business, they can issue stock to do so."

Amazing! This is true just because he says so? The horrible condition of the stock market, the problems in the IPO market (which is different but clearly related) are apparently irrelevant; just issue stock, you bungling morons!

This is really one of the worst editorials I've ever seen by a respected economist.

Separated at Birth: Gronke and Grienke

Pretty amazing. Dr. Paul Gronke, of Reed College

....and Zach Grienke, pitcher for Milw. Brewers

I'm just sayin'...

Carnival Fraud: Really?

So...sheriff's deputies run undercover sting operation to pester people at carnivals.

Because we all want to make sure that no one actually wins any prizes.

Anthony Dewayne Ellis, 32, of Locust Grove, and Kenneth Lea McLeod, 50, of Ashland, Va., agreed to change the rules of a game for undercover Tulsa County sheriff’s deputies, according to an arrest report.

The carnival workers were operating a game involving throwing darts into star-shaped holes when they gave a discounted price to the deputies, who later asked “what it would take to win the big prize,” the report says.

The workers awarded the prize — a stuffed character from the game Angry Birds — after letting the deputies play for $20 regardless of the outcome.

The game’s posted rules required paying $5 to throw darts into the holes for prizes of escalating value, the report says.

State law requires that rules for carnival games be posted at all times. Contradicting the posted rules is a misdemeanor.

(Nod to Jackie Blue, who never cheats)

All We Are Saying, Is Give.....

Actually, I have no idea what they are saying.



You have to like the "Information Man!" thing from the highly educated plumber's helper just after 2:10.

But my favorite is the guy who want "the government" to run the banks. When asked, what about Republicans....um, no, not them. The "government."

Patenting Dad

Creativity and the Family Tree: Human Capital Endowments and the Propensity of Entrepreneurs to Patent

Albert Link & Christopher Ruhm, NBER Working Paper, September 2011

Abstract: In this paper we show that the patenting behavior of creative entrepreneurs is correlated with the patenting behavior of their fathers, which we refer to as a source of the entrepreneurs’ human capital endowments. Our argument for this relationship follows from established theories of developmental creativity, and our empirical analysis is based on survey data collected from MIT’s Technology Review winners.

(Nod to Kevin Lewis)

Not Only Not the Onion, But Not Monty Python

This goes well beyond a simple "not the Onion." This crosses well over into "not Monty Python" territory. (If you think I'm wrong, do watch this early planning meeting of "Occupy Wall Street," where they decide on their program, their demands, and who they will follow...)

Protesters at "Self-Absorbed Atlanta" (yes, they call it "Occupy Atlanta," but my title is more accurate) have set up a system where they can solve a bunch of problems that don't actually exist.

1. How to talk when you have a weak megaphone. Normal solution: get a better sound system. Self-Absorbed Atlanta solution: have a simultaneous translation, English to English.

2. How to signal approval. Normal solution: applause. SAA solution: little jazz hands waving, so no ones' voice is drowned out by applause. Of course, nobody is going to see the individual hands in the sea of hands, either. Either way, minority disagreement is going to be overwhelmed. EXCEPT: SAA requires unanimity! So you CAN see the one nut job/racist/star trek fan who wants to block things. Do NOT talk to the jazz hand that says "no!" (If you are not familiar with Jazz Hands, here is a quick guide to SAA hand signals!*)

3. Finally, if you can stand to watch for that long (I skipped after two minutes, I have to admit. SAA can really do some powerful auto-politicism), go to the 8.5 minute mark. Congressman John Lewis stood up to Bull Connor, and crossed the bridge at Selma on Bloody Sunday. But he was no match for the self-righteous idiocy of Self-Absorbed Atlanta.



As Pelsmin, who sent this in, notes: "This is a perfect illustration of how the extreme left's desire to liberate people from oppressive societal conventions like democracy will lead to something like the Soviet bureaucracy." And Soviet civil liberties, too! An invited speaker suffers the heckler's veto, in this video. Wow!

*Okay, no it wasn't. But I made you look. I think that video should replace Rick-rolling with "Tiny-rolling."

Atheist Hymnal

(nod to the LMM)

New Blog: Euvoluntary Exchange.

New Blog! All things "Euvoluntary."

It is really just for information, and to provide examples for folks who want to use the concept of euvoluntary exchange (either because you think it is useful, or stupid!) in teaching and writing.

At the upper right there are some resources and background information. I'll be adding to that as time goes by.

In the meantime, please do send examples, comments, or critiques, especially of things that happened in the world or the classroom.

And I'll post them, right away. If there is analysis to be done, it will still be back here on good ol' KPC. The new blog is really just an information source.

Business Headlines

Rising wages in China push jobs back to U.S. Look, we told you so. We did.

Amar Bhide: limit the rates banks can pay on deposits!

Lynn Sneary condescends to a venture capitalist who explains why jobs are caused by growth, not vice versa.

The Final Answer: You are BOTH Crazy

There was a bit of a kerfuffle over this comic, by Zach Weiner.

Everyone, including me, was sure that the comic was mocking whoever we were not. Economists laughed that philosophers were so ridiculous, and philosophers thought it funny that economists were so shallow and arrogant. Jacob was sure he knew, for example. But then to be fair a few folks, at least, over here thought that the philosopher was ridiculous.

At KPC we want to KNOW. So I wrote to Zach W himself. And the answer is... you people are ALL crazy. And hilarious. (quotes with permission)

As to the joke: If it went right, hopefully it made fun of both. I actually did a similar treatment of philosophy vs. engineering a while back here:

In that one, hopefully it's clear that the engineer is simplifying in a way that is both informative and problematic. Since Economists are essentially engineers who work with human lives instead of mechanical systems, the perspective is more or less the same.

Curiously, it was popular in both the reddit.com economics forum and the reddit.com philosophy forum. The former thought it was making fun of philosophers for being useless, and the latter thought it was making fun of economists for lacking a sense of profundity.

So yeah, making fun of everyone. Zach Weiner, SMBC

My own conclusion: the Philosophers are not interested in an answer, really. If faced with this real life situation where a decision is required would either respond purely emotionally or else would lie on their backs and kick their little legs in the air, hoping that the problem will go away. Philosophers and grandma both die, because Philosophers aren't interested in answers, only questions.

The Economists would save the Mona Lisa, and spend the rest of their lives trying to forget the haunting screams of the grandma as they carried the Mona Lisa out of the room.

But the problem with policy analysis generally is you don't get to say, "I don't know." You have to do something, you simply must. Philosphers spend all their time wondering if they can get both thumbs up their butt at the same time, or if they have to take turns. Economists spend just a very brief time figuring out "the answer," which is always wrong, and then they pretend they already knew that.

This is Why Al Gore Invented the Internet*

(*although he never, ever actually claimed to have invented the internet)

1. In porn movies, there is sometimes a classroom setting (I am told, I would NOT know, of course). The question is: are the things written on the blackboard actually correct and useful, or did the director just phone it in? This blog answers that question (SFW, unless you work in a church).

2. Awkward Wedding Photos. Once you give the title, there is little more to say, frankly.

3. (A repeat, but always at the top of the list at KPC) Kim Jong Il Looking at Things.

4. Hospital jobs, by district (or state). You didn't even know you didn't know that, and now you know.

5. The Perfect Pet Petter. Again, nothing to add.

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

In Honor of Steve Jobs....

Some time ago, I published a celebration of private innovation, "Two Steves and One Soichiro." One of the "Steves," of course, is Mr. Jobs.

Rereading it, I am reminded sharply how badly we would have done in innovation if democracy had been the decision rule. Just look at the quotes from the "experts" in the article. Wow.

Every Solvent Country is the Same, But Each Insolvent Country is Insolvent in its Own Way

As readers of KPC, you are of course among the world elite, the cognescenti, the "go-to" people. But I want to make sure you understand why it is that everyone is so worried about Greek default. After all, Greece has 9 million people, about the same size as North Carolina. Why worry?

In 2007-8, the reason that we had to bail out a bunch of big banks is that they had totally loaded up their balance sheets, including their reserve requirement assets, with illiquid and not very valuable CDOs and derivatives on other kinds of mortgage-backed securities. So, the problem was not so much the orginators, because they had dealt the crap and disappeared. The problem was the "smart banks," who had picked up all this bad paper because it had a high rate of return, and lap-dog rating agencies had continued to call it AAA, meaning it satisfied Basel Rule requirements for reserves.

This is a no-lose from the perspective of the banks. They got 7-8% if things go well, and get bailed out if things go sour. The guarantee of a bail-out essentially forced the banks to invest in crap, or else leave money on the table.

Amazingly, it has happened AGAIN. I almost can't believe it, but it has. The problem with Greece is not that anyone gives a flying firetruck about Greece. The problem is that Deutschebank and all the big American banks have once again loaded up on a high-risk bet. Greek bonds, especially if purchased at a discount last summer, pay a large return. We have to bail out Greece, the argument goes, NOT because it will help Greece but because otherwise the big banks will go under. It's pure theft, extortion. German citizens have to give money to the Greek government to save American banks. Because the banks bought up all that Greek debt to make money. And they are going to win. Again.

It's enough, I tell you, to make me sympathetic to the Occ Wall St folks. They have a point. Seriously, they have a point. They are insane, unfocused, and ignorant of basic economics. But there's something happening here, and what it is, is now all too clear.

Anyway, just a M. Lewis's "The Big Short" was useful for understanding the American crisis of 2007-8, his new book, "Boomerang," is great for understanding the current echoes around the world.

His basic thesis echoes Tolstoy (though these are my words, not his): Every solvent country is the same, but every insolvent country is insolvent in its own way. Iceland went nuts on derivatives, Ireland had a housing bubble that left three bedroom houses selling for upwards of 40,000,000 euros, Greece doubled the salaries, and workforce, of its public sector, California....well, I don't want to think about California.

Did someone say monetary expansion?

It has become almost fashionable to claim that the Fed is not doing nearly enough to revive the economy. This conclusion follows from the same logic that the "stimulus was too small" meme employs: Has the economy recovered? No? Then policymakers have not done nearly enough.

Check out what's happened to the monetary base since the crisis began:

(clic the pic for a more vertiginous view)

The base has gone from a path of roughly doubling each decade to more than tripling in three years.

Look on my works, ye Mighty, and despair

Here is a picture of a new Congressional district cooked up by a bunch of geniuses in Maryland:



YIKES!!

Do you believe in magic?

In a recent post, Scott Sumner claims that the Fed can easily credibly commit to a nominal GDP target. He further claims that the act of choosing the target in itself would allow the Fed to hit the target without any great amount of monetary expansion:

"The Fed has plenty of credibility, that’s not the problem. The problem is that they are using the credibility to assure investors that low inflation is here to stay. With the right target, there would probably be no need for massive quantitative easing, or other extraordinary policies.

The punch line is that the problem isn’t the Fed’s unwillingness to do enough QE, twists, or cuts in IOR, the problem is the Fed’s inadequate target, just like in Japan."

In other words, the Fed can credibly commit to arbitrary future policies so well that a simple announcement of a new policy path will put the economy on that path without any heavy lifting required.

In other other words, magic!

People, the Fed has no ability to make credible commitment to future policies that might conflict with their period by period preferences! Read Kydland & Prescott. Read Barro & Gordon. Repeat after me: time inconsistency, time inconsistency, time inconsistency.

All the Fed can do is act each period according to its own preferences (yes it's weird to treat the Fed as a unitary actor given all the dissents we've seen recently, sorry).

Many societies have responded to this dilemma by invoking the Rogoff gambit; we appoint conservative central bankers. They deliver low inflation not because they are following some policy rule or pre-determined path, but because their preference is for low inflation!

The idea that there's a magic bullet out there that solves our economic problems, that the Fed could fix things by putting out a press release with a couple sentences about their plans for future NGDP growth, is wrong and somewhat dangerous.

It would from many a blunder free us

(clic the pic for a more enlightening image)

Hat tip to Felix

Linkulation

The links of October....

Central planning...of the internet?

Compensation, schmompensation: Elizabeth Warren says you don't own NOTHIN'!

"Cost-effectiveness" analysis

Gag me with a microwave: The "myplate.gov" button. No, this is NOT the Onion.

Talking

You can say whatever you want.

And we at the U will tell you what you want!

New video from FIRE

Pitching is Over Rated?

Jackie Blue sends this outrage.

Pavitt found hitting accounts for more than 45% of teams' winning records, fielding for 25% and pitching for 25%. And, the impact of stolen bases is greatly overestimated.

He crunched hitting, pitching, fielding and base-stealing records for every MLB team over a 48-year period from 1951-1998 with a method no other researcher has used in this area. In statistical parlance, he used a conceptual decomposition of offense and defense into its component parts and then analyzed recombinations of the parts in intuitively meaningful ways.

Well, as long as it's "intuitively meaningful," right? Charlie is a professor of Communication. Me? I "intuitively doubtful."

Cut cut cut, cut cut defense!

People, the federal government wastes a crap-ton of money. Let's get serious about cutting spending over the next 10 years. Here's a start:

Defense: Cut $200 billion a year. That's two trillion over 10 years. Don't worry, we'll still have a freaking huge military as current spending is north of $700 billion per year.

TSA: Eliminate it. That's $50 billion a year or 1/2 trillion over 10 years.

Agricultural Subsidies: Eliminate them. That's maybe $25 billion a year or 1/4 trillion over 10 years.

Homeland Security: Cut it in half. That's another $25 billion a year or 1/4 trillion over 10 years.

People, that's $3 trillion of REAL cuts. Easy-peasy. No entitlement reforms (which I favor as well), no cutting Obama's choo-choos and windmills, just declining to screw ourselves quite as much as we have been doing.

Anyone have numbers on other low hanging Federal fruit we can harvest?

Bizkit

This poor pup evidently had seizures, and has since died.

Still, all dogs do this, just not so violently.

Great Googly Moogly

Have you seen the 13 demands post from Occupywallst.org?

It's a doozy.

I'm stunned to see "open borders" in there with no fossil fuel, free college, cancellation of all debts for everyone, $2 Trillion in new spending. Also very surprised to not see anything about the wars and defense spending.

Firms Maximize Profits?

Senators discover that firms maximize profits.

(Nod to Chateau)

People Prefer Cheesy.... Jokes

These are some bad jokes, so I like them. And, they are CHEESY!

Nod to Tom H.

Hey Tyler: Taxes ARE going up

A lot.

The "Bush tax cuts" expire. Obamacare incorporates a myriad of substantial tax increases that come on line very soon.

Plus, our President has now figured out how to package tax increases on the wealthy as a jobs program (sorry President O. I didn't mean it. Please don't drone me)!

Yet Tyler says Republicans are silly to not make an additional tax deal, even if the stuff they want is unlikely to materialize because "taxes will eventually go up in any case, because they must"

I can't see why it's so obviously correct to be advocating for more tax increases than the one we already have on our plates.

I for one am strongly in favor of tax cuts relative to the current policy path we have.

Hit the BRICs

This doesn't seem good:

(clic the pic for an even more depressing image)

The Cartoon

Nice follow-up by Jacob L. on "the cartoon." on "the cartoon."

Here is my original post. As Jacob L notes, there was a lengthy discussion on FB about it.

The point is that this cartoon is a Rorschach test. I read it as mocking the philosopher. Most people, far and away most in my sample (biased, if anything, toward econophiles) saw the cartoon as mocking economists.

As always, disagreeing with me does NOT make you a bad person. It does, however, make you wrong.

Grand Theft Educ

Angus already mentioned this.

But you may not have read the story. Excerpt:

From California to Massachusetts, districts are hiring special investigators to follow children from school to their homes to determine their true residences and decide if they "belong" at high-achieving public schools. School districts in Florida, Pennsylvania and New Jersey all boasted recently about new address-verification programs designed to pull up their drawbridges and keep "illegal students" from entering their gates.

Other school districts use services like VerifyResidence.com, which provides "the latest in covert video technology and digital photographic equipment to photograph, videotape, and document" children going from their house to school. School districts can enroll in the company's rewards program, which awards anonymous tipsters $250 checks for reporting out-of-district students.

Only in a world where irony is dead could people not marvel at concerned parents being prosecuted for stealing a free public education for their children.

The only way the teachers' union, the AFT, can keep a lid on this is to keep parents "away from the table." The solution, as I said when I ran in 2008, is means tested voucher. The wealthy have choices now. It's the poor folks who need help.

As it is, we are just putting people in jail for "stealing" what all my leftoid friends assure me is a public good.

ATSRTWT

A History of Violence....

Steven Pinker gives a lecture on violence. There is a lot LESS of it, by the way. This is a good thing.

Governments gone wild

1. Jailing moms for lying about their residency to get their kids in a better school

2. Felony prosecuting oil companies for killing a bird

3. Setting a goal of doubling exports, but refusing to bring several completed PTAs (that would definitely expand our exports) up for a vote in Congress

Have a favorite? Have other nominees? Tell us about it!

The Onion as Truth

This is uncomfortably true, though from the Onion.

What Man Thinks Is Recycling Takes City Workers 2 Hours A Day To Sort
October 1, 2011 | ISSUE 47•40

NEW YORK—City sanitation experts confirmed yesterday that the supposed “recycling” of Manhattan resident Ron Klauff was in fact a conglomeration of various recyclable and nonrecyclable refuse that takes city workers an average of two hours and 288 gallons of water to sort and clean each week. “These days, being eco-aware is more important than ever,” said Klauff, filling a plastic shopping bag with a mixture of yogurt containers, wire hangers, and broken electronics that a civil servant will later have to sift through in the middle of the night. “You have to do your part, even if that means gathering all of your soda cans and stacking them neatly inside your pizza boxes.” Because Klauff is the only New York resident who does not carefully sort and separate his recyclables, officials are considering just tossing everything he throws out into a landfill

Yup, the "only one."

Throw Like A Girl

This young woman has obviously been practicing in that corner. Still...not bad. And it is great the way she shows up the left fielder: "Here ya go, bud, is this what you were after? (A fake video, according to our commenter, but well played)

And this....you have likely already seen it. But that look from the wife, the "why didn't I marry Chen Li instead of this idiot?" look. We have all gotten that look, husbands. And deserved it.

Of course, women aren't perfect. This woman totally steals a ball from a little girl .

der Dukatenscheisser, and other things

We often comment, here at KPC, about two things:

1. The strangeness that is Deutschland
2. Poop

It turns out that one of the strange things about Germany is the many linguistic uses Germans have for poop.

And if you don't believe, here's the straight poop on it.

Published in 1984 by a distinguished anthropologist named Alan Dundes, Life Is Like a Chicken Coop Ladder set out to describe the German character through the stories that ordinary Germans liked to tell one another. Dundes specialized in folklore, and in German folklore, as he put it, “one finds an inordinate number of texts concerned with anality. Scheisse (shit), Dreck (dirt), Mist (manure), Arsch (ass).… Folksongs, folktales, proverbs, riddles, folk speech—all attest to the Germans’ longstanding special interest in this area of human activity.”

He then proceeded to pile up a shockingly high stack of evidence to support his theory. There’s a popular German folk character called der Dukatenscheisser (“The Money Shitter”), who is commonly depicted crapping coins from his rear end. Europe’s only museum devoted exclusively to toilets was built in Munich. The German word for “shit” performs a vast number of bizarre linguistic duties—for instance, a common German term of endearment was once “my little shit bag.” The first thing Gutenberg sought to publish, after the Bible, was a laxative timetable he called a “Purgation-Calendar.” Then there are the astonishing number of anal German folk sayings: “As the fish lives in water, so does the shit stick to the asshole!,” to select but one of the seemingly endless examples.

That one about the fish is my new favorite saying. Anytime somebody complains about anything in a faculty meeting, they are going to hear that one. Inspired.

Nod to Anonyman; I bet you knew that, without looking. Anonyman has his sh*t together.

A Short Quiz: Does Plagiarism Pay?

What do you do with someone who clearly, and unquestionably, plagiarized large portions of his thesis?

Well, if you are the CSIS, you make a "Distinguished Statesman" position for Karl-Theodor zu Guttenberg.

To be fair, the ability to say "I stole a bunch of stuff and pretended it was mine" is a reasonable prerequisite for being a statesman, distinguished or otherwise.

Lagniappe: Germany's Foreign Minister is Guido Westerwelle. Yes, Guido. And he is openly gay, a brave man to come out and still serve in public office. I do admire him for that.

Now, you might think that being Foreign Minister for Deutschland would be pretty easy. All you have to do is say "no" whenever someone suggests that you should have a military, or any role in any foreign country. After all, having the Foreign Minister of Germany start muttering about "lebensraum" makes everybody jittery. So Herr Westerwelle should be able just to take naps and have a nice Kaffee mit Sahne at the Balzac on Friedrichstrasse, just a short walk from Ministry building.

But when Weserwelle supported the government decision to stay out of Libya (a decision the US should have taken also, btw!) he actually gets in trouble.

The moral of this story is: if you want to be promoted and revered as a statesman, steal stuff. If you want to be abused and criticized, do the right thing.

Punctuation is everything

(clic the pic for a more glorious image)

In-bred Cat

From the LMM

By Jove, I Think She's GOT it!

A friend who has been teaching about "euvoluntary exchange" got this from a student.

When he first explained the concept of BATNA and the situations in which BATNA is too low, I was all for changing those situations. However, we need to remember that if we're going to take away somebody's best option (even if it is a crappy one) then we're also going to have to give them a better alternative.

That is as good a concise summary as I could possibly imagine. Telling a poor guy in India who needs medicine for his daughter that he cannot sell his kidney is a rotten thing to do, unless you can also help him somehow. If you aren't going to help, give him access to the market!

And, we can't help everyone. But the market can.

Why Economists are Paid a LOT more than Philosophers

David Deerson sends this link. I laughed. An excerpt, though you need to look at the whole thing. Heh.

It's funny 'cause it's true.

UPDATE: Wow! My philosopher friend Kevin Vallier thinks that this cartoon, above, is making fun of ECONOMISTS! And I have to admit he may be right! To me, this cartoon illustrates why philosophers are useless low-paid parasites, and economists are collossi, bestride the world of academics! Okay, THAT's not right. But seriously, who is this cartoon mocking? To me, it is clearly mocking the philosopher. Since economists can actually answer the ridiculous koans that philosophers think are impossibly deep and unanswerable, the economists don't get to play!

Kevin's response: I think the critique of the economist is that he [the economist] is exceedingly perverse because his model of moral decision-making ignores a whole host of important considerations that any normally functioning human being recognizes. Now, I think the normally functioning human needs a good dose of economic thinking, but I do think that the sort of instrumental, consequentialist reasoning of most economists is woefully inadequate as a complete model of moral reasoning. I *think* lots of economists believe this too, even if they often ignore it, at least stereotypically.

Wow! that is 100% different from my reading of that cartoon. The fact is that an old woman is worth only a small fraction of the Mona Lisa. And I can prove it: the society spends a LOT of money to protect the Mona Lisa, with security and climate control. The old woman has to pay for her own locks on her door, and her own HVAC.

Jobs: The Good, the Bad, and the Texas

The Blonde sends a very interesting map of job changes in the U.S. Here is my county, Wake County, NC. (Do click for a more glorious image; this is a screen shot, so no interactivity. To get the interactive map, go back to here)

Notice that we are back where we were in 2007, for total jobs. (Unemp rate is up, though, becuase we have had in-migration and growth from births)

The big hammer down was construction jobs. Biggest employment sector, professional services, has just about tread water, though it is moving up slowly.

You can do it by state, also. Here is Oklahoma.

If we only had that ram, John, we could mate and have fun.

So, yes, I defended Bev "Governor Dumplin'" Perdue.

Because at another appearance, she saw some sheep and told the co-founder of SAS, "If we only had that ram, John, we could mate and have fun." How can you not enjoy that?

Look, folks: she is not quick and witty. You don't have to be smart to be an elected official.

But she was clearly joking.

Maybe I'm just defensive because I often say things like that, and people can never tell if I am joking. They can tell it's not funny, of course. But they can't tell if it was supposed to be funny.

UPDATE: From the Blonde, who is not entirely convinced Bev was joking, comes this "separated at birth" photo...

Toilets exploding in DC

Perhaps we should just start over and build a new capital.

Because even the toilets are blowing up in Washington.

(Nod to Anonyman)

I'm Sure I Think I'm Sure This is a Joke

Dutch Boy sends this, from the Kinston paper.

Not sure how to describe it. I'm sure I think it is a joke, I think.

But this may be the first time an article has engaged in self-grandgame. Impressive. I think.

“I’m no prude,” says Paulette Burroughs, 39, of La Grange. “But something I saw in that store was way over the line.”

Burroughs said she made the discovery Monday afternoon while planning a “Dancing with the Stars” viewing party at her home.

“We had a real good time, except for when old Nancy Grace decided to turn one of her sweater puppies loose,” Burroughs said. “That thing looked like it’d been eatin’ lemons all day.”

Martin comes to class!

Uber-reader Martin came to class and gave a very nice lecture on democracy. Worked well, and I appreciate the good lecture.

Separated at birth

People if you put a porn 'stache and a $200 haircut on Tyler Cowen, HE'D BE MOHAMED EL-ERIAN!

See for your selves:

Don't cry for me Argentina

In my international econ class, we just finished reading and discussing Bluestein's excellent book: "And the Money kept rolling in" about the Argentine financial crisis.

It's distressing to see Greece following the same path and the international community making the same mistakes today.

In class today, we are going to act out the crisis, PTI roleplay style, with heads on sticks! From Rogoff to Cavallo to Mulford to Menem to O'Neil to El-Erian.

Here are some of the heads waiting to receive their sticks:

Flip-flops

Here's Cleveland Cavs owner Dan Gilbert, one of the leading hardline owners in the current NBA lockout singing a very different tune in 2005:


"To me, NBA franchises are like pieces of art. There are only 30 of them. They aren't always on the market, especially a franchise that would have been such a natural fit ... If you just looked at the Cavaliers in terms of revenues, profits and balance sheets -- and you paid this amount for it -- people would say "You're insane! You're nuts." But if you look at all the tentacles, the impact on our other venues, it makes tremendous sense. We have now opened a Cleveland office [of Quicken Loans] and that's tremendously successful. Our employees love it that we're associated with the Cavs and can come to games -- that helps us attract and keep better people. There are a lot of non-profit things that can be done with pro sports. It brings an unbelievable amount of excitement."

Quote is from here.

Two interesting Malcolm Gladwell NBA posts are here and here.

Double Fail

We all know that the Middle East is full of fail, but sometimes the fail is too good to pass up.

Consider first the "Palestinian Spring" story.

So here's an entrenched calling for his own ouster? After all the Arab spring involved deposing existing leaders.

Next up is that well known reformer King Abdullah giving women the right to vote.

Not in the upcoming election of course, but later. This will make a big difference in Saudi policies I'm sure as votes mean so much in the Kingdom.

PS: If you are wondering where I get off calling a geriatric despot a "reformer", it's right in the AP story linked to above:

"The right to vote is by far the biggest change introduced by Abdullah, considered a reformer, since he became the country's de facto ruler in 1995 during the illness of King Fahd."

Vegan Strip Club

This review (sent by Raoul) is...I suppose "serious" is not quite the right word. But it is not a hoax, it seems.

The reviews are the best part. For example: "if you like naked ladies and chili cheese fries, come check it out."

UPDATE: (Yes, cheese is not vegan. However, "cheese" could be. Soy "cheese," that sort of thing).

And Kindred points us to this, to be filed, as he notes, in...whatever category it is already. (No fur jokes, please)

Are markets like the honey badger?

Jerry Evensky says yes:

In my introductory economics class I explain that markets are amoral – not moral, not immoral ... amoral. In that sense they are like computers ... incredibly powerful at processing immense amounts of information in useful ways, but totally agnostic as to the use. Computers can be used to educate, to elucidate, to heal ... or to develop weapons of mass destruction. They don’t give a damn, nor do markets ... nor does homo economicus.

(that's the full quote, the "... " parts are in the original. I have enlarged the money part)

um...what?

I have no idea what this study purports to show.

Positive emotion word use and longevity in famous deceased psychologists

Sarah Pressman & Sheldon Cohen
Health Psychology, forthcoming

Objective: This study examined whether specific types of positive and negative emotional words used in the autobiographies of well-known deceased psychologists were associated with longevity.

Methods: For each of the 88 psychologists, the percent of emotional words used in writing was calculated and categorized by valence (positive or negative) and arousal (activated [e.g., lively, anxious] or not activated [e.g., calm, drowsy]) based on existing emotion scales and models of emotion categorization.

Results: After controlling for sex, year of publication, health (based on disclosed illness in autobiography), native language, and year of birth, the use of more activated positive emotional words (e.g., lively, vigorous, attentive, humorous) was associated with increased longevity. Negative terms (e.g., angry, afraid, drowsy, sluggish) and unactivated positive terms (e.g., peaceful, calm) were not related to longevity. The association of activated positive emotions with longevity was also independent of words indicative of social integration, optimism, and the other affect/activation categories.

Conclusions: Results indicate that in writing, not every type of emotion correlates with longevity and that there may be value to considering different categories beyond emotional valence in health relevant outcomes.

(Nod to Kevin Lewis, who is never drowsy, afraid, sluggish)

Back in Black

Records are back. They are so back that even The Economist has taken note:

One innovation that has helped vinyl sales is that albums often now come with codes that let you download a MP3 version of the music (occasionally, they come with FLAC downloads, but not often enough for nuts like me who sometimes buy both the LP and the CD(to get a high quality download)).

Apparently at lot of the young 'uns buy LPs and never play them.

Here's Dom from one of my new favorite bands (Dom):

“The reason we sell vinyl is that there will always be a market for it...people probably already downloaded the music anyway, and they’ll buy the record because of the big artwork and because it’s something you can hold on to.”

At Chez Angus, we have ditched the CD player. We have 800+ albums stored in lossless files and a cabinet full of LPs.

Government by waiver

The Obama administration has really gotten into a groove with selective non-enforcement of unpopular laws. First Ms. Sebelius got the ball rolling with hundreds of waivers from the provisions of Obamacare. Now Arne Duncan gets his chance with the announcement that the Dept. of Education will selectively grant waivers from the consequences of not hitting the educational targets in NCLB.

Aaaargh!

They are giving waivers now for targets that come due in 2014!

Of course, "comply or face the consequences" is totally out of the question. Just ask Matt Yglesias:

"Simply refusing to grant waivers would be an unworkable non-starter. The issue is whether to just hand the waivers out, or to impose conditionality."

Anybody still think we can pass a bill now that actually would lock in long-term deficit reduction?

Anyone?

Bueller?

The laws of health care

1. Everyone Dies!

2. No amount of taxation can reverse #1.

3. Much of our health care spending is wasteful

1 and 2 are golden. need more good ones though.

Thanks and apologies (but no blame) to Dan Diamond, Austin Frakt, & Don Taylor.

Sol-Gate

I don't even need to make any remarks about this any more.

Just read the WaPo about Sol-Gate. That's WaPo, not WaTimes, btw.

Solyndra was not Teapot Dome, but it's heading that way. Really, really bad stuff for Obamanoids.

(Nod to Anonyman)

My Dog Owns My House? I don't think so...

If I need security, I get a dog. If a group of us need security, we might sign a contract and get a really big, strong dog. Let's call it...I don't know... GOVERNMENT. It's big, stupid, poops in places it shouldn't and wastes a lot of time sleeping and licking its "Representative Wiener", because it can.

But, suppose that big smelly dog also does a reasonably good job protecting my house, and yours. We build factories, we create wealth, we do a lot of useful things.

And it's true that we needed the dog, for security, so we could concentrate on things that idiotic, lazy dogs can't do.

For some reason, Elizabeth Warren concludes from all this that our dog...OWNS OUR HOUSE! That is just a non sequitur. It's a DOG. But here is what she says.

“There is nobody in this country who got rich on his own — nobody! You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.

Actually, you didn't pay for them, ma'am, the factory owner did. Why would my dog own my house?

The full, surprisingly idiotic video...

(Not sure where I first heard the "why should your dog own your house?" formulation, but my good friend Tony de Jasay is a likely source)