Thursday, February 07, 2013

Vegetarians Hate Animals

"The ethics of eating red meat have been grilled recently by critics who question its consequences for environmental health and animal welfare. But if you want to minimise animal suffering and promote more sustainable agriculture, adopting a vegetarian diet might be the worst possible thing you could do...Agriculture to produce wheat, rice and pulses requires clear-felling native vegetation...Grazing occurs on primarily native ecosystems. These have and maintain far higher levels of native biodiversity than croplands...Anyone who has sat on a ploughing tractor knows the predatory birds that follow you all day are not there because they have nothing better to do. Ploughing and harvesting kill small mammals, snakes, lizards and other animals in vast numbers. In addition, millions of mice are poisoned in grain storage facilities every year." [Mike Archer, The Conversation]

Nod to Kevin Lewis


1.  Police lie under oath.  Because they can, and because they think they have to.  Because there is a drug "war" going on.  And that "war," not the one in Afghanistan, is America's longest war. 

2.  Michael McAdoo gets pimp-slapped for UNC's perfidy and corruption.  It's not right.  I am ashamed of UNC.

3.  Landlord unilaterally raises 1 penny per month.  And sends out a notice.  Not by mail, though, because the increased costs of stamps is the reason for the rent increase.  No, really.

4.  Work longer, live longer.  Unless you work in a physically hard job.  But then work somewhere else.

5.  Shopping center in Las Vegas advertises how enviro-conscious it is.  Because instead of using local water, they paid for trucks to carry in water from far away.  Now, far be it from me to pimp for the "loco-wet" movement.  But how is trucking in water good for the environment, since it is more expensive than using local water?  I eat Chilean apples, because they are CHEAPER than local apples, not because they are more expensive.

6.  The "Fiscal Cliff" was silly. What's going to happen now might actually be bad, though

Nod to Anonyman, JB, JL, JO, and MAG

Wednesday, February 06, 2013

Op! Op! Op-Op-Op-Opam Dub-MOE Style

With much love, credit, and respect to Santiago Staviski.  As Angus pointed out, this is likely photoshopped, as there appears to be daylight between the earth and the Dub-MOE's right foot.  This seems unlikely, on Earth, at least.

It's a mighty fine line

between professor and hobo, as this online quiz makes evident.

I only got half of them right.

Boys Will Be....

Article by C.H. Sommers, "The Boys in the Back"

Boys score as well as or better than girls on most standardized tests, yet they are far less likely to get good grades, take advanced classes or attend college. Why? A study coming out this week in The Journal of Human Resources gives an important answer. Teachers of classes as early as kindergarten factor good behavior into grades — and girls, as a rule, comport themselves far better than boys.

The study’s authors analyzed data from more than 5,800 students from kindergarten through fifth grade and found that boys across all racial groups and in all major subject areas received lower grades than their test scores would have predicted.

The scholars attributed this “misalignment” to differences in “noncognitive skills”: attentiveness, persistence, eagerness to learn, the ability to sit still and work independently. As most parents know, girls tend to develop these skills earlier and more naturally than boys.

No previous study, to my knowledge, has demonstrated that the well-known gender gap in school grades begins so early and is almost entirely attributable to differences in behavior. The researchers found that teachers rated boys as less proficient even when the boys did just as well as the girls on tests of reading, math and science. (The teachers did not know the test scores in advance.) If the teachers had not accounted for classroom behavior, the boys’ grades, like the girls’, would have matched their test scores.


Nod to Anonyman

Shut Up and Deal

Interesting example of transactions costs economics, and the "hold up" problem.  It is a generic problem, but auto dealers are a particularly important bargaining setting, because the stakes are high and both sides have power. 

The recent scoop:

If a manufacturer expects substantial regional sales growth, it can survey its local dealerships and then dictate that they expand their operations—showroom, service facilities, lots, everything—to meet the projected volume. The dealer might be less optimistic and reluctant to fork over the millions required to inflate his business by 50 or 100 percent. If, however, he is unco­operative, the factory might add another franchise nearby that will cut into his existing sales. If state laws prohibit that, the manufacturer can cut a portion of the dealer’s margins, relying on a clause in the franchise agreement that specifies the size of the dealership required by each market area. “Market area” being a somewhat nebulous concept, there is much room for disagreement. Additionally, factories have been known to get twitchy when their dealers own another store peddling a brand deemed undesirable or overly competitive, even if the second franchise is housed in a different building. It’s technically illegal for a manufacturer to do so, but adding a brand that the carmaker doesn’t like might trigger a clause in the franchise agreement that cuts a dealer’s margins. One dealer told us that the clause cost him $25,000 to $40,000 a month—enough to motivate him to sell the offending store.


Nod to WH

Tuesday, February 05, 2013

Sarbox vs Competition as Regulating Powers

The Disciplining Role of the Market Versus Government Regulation: The Case of Sarbanes-Oxley and the Earnings Quality of M&A Targets

Ilanit Gavious & Mosi Rosenboim
American Law and Economics Review, forthcoming

Abstract:  This study examines whether and how the passage of the Sarbanes-Oxley Act (SOX) affected earnings quality, proxied by accrual measures, prior to mergers and acquisitions (M&A). Given that the capital markets underwent unusual vicissitudes in the period leading up to the passage of SOX, we subdivide the pre-SOX period into four sub-periods: (1) the pre-technology bubble (1992-1997); (2) the technology bubble (1998-3/2000); (3) the bubble collapse (4/2000-9/2001); and (4) the pre-SOX scandal period (10/2001-7/2002). We document that abnormal accruals moved from significantly positive to significantly negative during the period of the major corporate scandals immediately preceding SOX, and remained negative in the post-SOX period. However, abnormal accruals in the post-SOX period were significantly less negative than during the scandals. Thus, a reduction (increase) in abnormal accruals (earnings quality) seems to have occurred concomitantly with the scandals, not as a result of the passage of SOX. We also document that investors' awareness of earnings manipulation by sellers consistently grew after the bursting of the technology bubble, as reflected in an increase in the discount applied to transaction prices throughout the sub-periods. Hence, concomitantly with the decrease (increase) in the levels of abnormal accruals (earnings quality) occurring during the scandals, the discount to transaction price due to suspected earnings manipulation also increased. Furthermore, the higher discount applied after SOX, relative to that immediately prior to SOX, implies that investors do not rely on SOX to prevent management from manipulating their earnings prior to a sale transaction. We conclude that changes in earnings quality prior to M&A transactions cannot be attributed to SOX. Rather, other events such as the bursting of the technology bubble and revelations of major accounting scandals seem to have affected managers' propensity to manipulate earnings. It seems that market response has a greater effect on managers' behavior than government regulation.

Nod to Kevin Lewis

Monday, February 04, 2013

Learn Liberty: You Can't GIVE Money Away

 UPDATE:  Okay, the above is an exaggeration.  You CAN, in fact, "give money away."  Here is a looping gif of the Ben Bernank as a young fellow, proving the point.


I'll put $100 on that horse, "Hoof Hearted"

This is the sort of thing you only find here on KPC.  NEVER on Brendan Nyhan.  And that's what keeps you coming back!

Nod to Sam Wilson.

Cut cut cut, cut cut Defense

Before the super-bowl yesterday we had the Sunday morning ho-bowl, where Leon Panetta once again proved himself to be a gamer:

“If Congress stands back and allows sequester to take place, I think it would really be a shameful and irresponsible act... why in God’s name would members of Congress elected by the American people take a step that would badly damage our national defense, but more importantly undermine the support for our men and women in uniform?”

Oh, Leon.

First of all, the planned sequester doesn't cut defense. That's right people, defense spending will still go up even if the sequester takes place. In inflation adjusted terms, it will probably stay roughly constant (unless we get that hyper-inflation the WSJ editorial page has been predicting for the last 4 years).

Second, real defense spending is very very high from an historical perspective, thanks mostly to that very very bad commander in chief GW Bush. See for yourselves:

(clic the pic for an even more well defended image (hat tip to Gerardo))

In real terms, defense spending is higher now than during the Korean War or the Cold War!

Finally, defense is a public good. It is non-rivalrous in consumption. We don't need to add another soldier or bomb or drone for every additional 1000 people that live in the country. Our nukes give us the same amount of protection whether there's a 100,000,000 or 500,000,000 of us.

There just is no logic behind the presumption that defense spending always and everywhere must rise. In fact, we could actually take a "savage" cut out of defense and still be a very well defended country. I base this statement on the fact that the US defense budget makes up over 40% of total global military spending.

Headline Meme: A variant on "Links" post

Sunday, February 03, 2013

Two wrongs make a mess

Paul Krugman is sick of morons saying “Keynesians said the stimulus would fix the economy, and it didn’t, so Keynes was wrong”.

And indeed that is moronic. We need to see the counter-factual. We need to see what would have happened without the stimulus.

But Paul doesn't stop there. He asks people making the above argument,"What part of “the Obama plan just doesn’t look adequate to the economy’s need” is so hard to understand?"

Somehow Paul doesn't seem to see that he is making the exact same error for which he's excoriating the "cockroaches".

That is to say, we are still missing the counter factual where we run Paul's 1.2 trillion dollar stimulus and see what happens. He simply assumes that the bigger stimulus would do the job.

In other words, his position is non-falsifiable and unscientific. In fact it's a bit cockroach-y of an idea.

People, at least the cockroaches have an official government attempt at a counter-factual, namely the infamous Romer-Bernstein graph showing that the stimulus would keep unemployment below 8%.

Krugman has nothing but the sound of his own voice.

In other words, we have no data available that allows us to adjudicate between the "stimulus won't work" and the "a bigger stimulus would have worked" positions.

Unintended Consequences: Public Choice

One of the great features of Public Choice is its ability to predict outcomes that always shock public interest advocates.  I mean, why would anyone "misunderstand" the good intent of my good intentions?

Zach Weiner found this gem, in Deborah Davis's book, GUEST OF HONOR, and emailed it to me.  Nicely done, Zach!

Saturday, February 02, 2013

Markets in the Oldest Thing

The rich shale oil formation deep below the rolling pastures here has attracted droves of young men to work the labor-intensive jobs that get the wells flowing and often generate six-figure salaries. What the oil boom has not brought, however, are enough single women...This has complicated life for women in the region as well. Many said they felt unsafe. Several said they could not even shop at the local Walmart without men following them through the store. Girls’ night out usually becomes an exercise in fending off obnoxious, overzealous suitors who often flaunt their newfound wealth...Prosecutors and the police note an increase in crimes against women, including domestic and sexual assaults...Some women have banked on the female shortage. Williston’s two strip clubs attract dancers from around the country. [NYTimes]


Nod to Kevin Lewis

Mr. Tootie, he likes to ride up front!

Looks pretty good for 14, no?

Grand Game: Unbelievably Arrogant Scientist Edition

This's.... well, it's hard to describe.

But I bet you find some howlers.  Please share your favorites in comments.

Nod to M.

Friday, February 01, 2013

Jobs Report!

In January the economy added a net of 157,000 new jobs and the unemployment rate ticked up from 7.8 to 7.9 percent. Just another blah report, right?

Well, no because as is often the case, the news is buried in the revisions to previous months:

The change in total nonfarm payroll employment for November was revised from +161,000 to +247,000, and the change for December was revised from +155,000 to +196,000.

247,000 is a pretty good monthly jobs number and 196,000 is at least semi-respectable.

But this continues to be a horrible "recovery" for employment. We've never really gotten the historically typical run of really big job growth numbers that push employment sharply back up after the recessionary decline, as this chart from Calculated Risk shows:

(clic the pic for an even more sluggish image)

You can see the strongly V shaped pattern of many previous recessions and recoveries and also that the 2001 recession recovery, while anemic, was still much faster than this one.

At this rate we have around 2 more years before employment will recover it's pre-recession peak level.


KPC friend Zach Weiner came up with this idea for a board game called "Monopsony."

It needs work (as he notes), but the premise is genius.  I think he needs some way to bribe government officials to control entry.  Monopsony, like "real" Monopoly, requires government help to prevent competition and to beat the hell out of union organizers.

Reefer...Er....Catnip Madness: Near CATatonia

"It works as a CATalyst."

Yes, a spoof of idiotic drug war propaganda.  And a big hit at Sundance.

Nod to Angry Alex

Cotton Bond Bubble

A fascinating story, both a history and a modern caution.

...on Jan. 29, 1863, the Confederate Congress secretly authorized the Paris-based bankers at Erlanger et Cie. – which rivaled Rothschild for European royalty connections – to underwrite $15 million of Confederate bonds, denominated in British pounds or French francs.

But unlike ordinary bonds backed only by the faith and credit of the issuing country, at the option of the holder an Erlanger certificate could be converted into a receipt for a pre-specified quantity of cotton. Furthermore, the conversion rate was fixed at 12 cents a pound, regardless of the commodity’s market price, at the time about 48 cents. On top of that, the bonds paid a handsome 7 percent annual interest rate.

Put another way, a buyer of a £1,000 bond could convert it into 80 500-pound bales of cotton worth almost £4,000. If the price of cotton continued to rise, the underlying bond’s conversion-value would climb in lockstep. European investors flocked to the bonds, including the future British prime ministers William Gladstone and Lord Cecil.

But like any too-good-to-be-true investment, there was a catch: the cotton was located in the Confederacy. Upon conversion, Confederate authorities were obligated only to deliver the bales to a point within “ten miles of a navigable river or railhead,” where the new owner must arrange transport to the final destination.


Nod to JR, who asks:  "What would have happened in the war if they had followed Benjamin's way to sell cotton future instead of the banker's model?"