Hamid Karzai has a very good idea

Here is change we can believe in:

"Afghan President Hamid Karzai threatened over the weekend to quit the political process and join the Taliban if he continued to come under outside pressure to reform, several members of parliament said Monday."

Hey Hamid: Don't let the door hit you in the butt on the way out, bro!

People, if Karzai was in charge of the Taliban, we'd have wrapped this whole business up quite a while ago.

The Main Thing We Stand For is Reelection

(Nod to Tommy the Brit. Careful with the video camera in the rubbish bin, Tom!)

The Nets? THE NETS?

Bizarre timing: Coach K to the Nets?

Couldn't they have waited a day? Why leak it now?

I guess I know, so people will write about it, but wow.

Tiny Butler

I am getting (as Cheech Marin used to say) a little sick up and fed with the dominant story of mighty Duke versus tiny Butler.

...on the verge of another improbable David-vs.-Goliath story, with tiny Butler in the NCAA national championship game against mighty Duke, you have to understand that the impact of this historic confrontation can't be contained within Indiana's boundaries.

It's so much bigger than that. Butler's presence in the national championship game is a true American sports success story.

"This," said Butler guard Ronald Nored, "could never happen in major-college football."

Sure, Butler has 4,500 students.

But Duke has only 6,250 undergrad students.

Michigan State, by contrast, has 47,000 students. West Virginia U has 30,000. U of NC, Duke's arch-rival (and my own favorite team) has 25,000 students.

Duke is also "tiny." But Duke kicked WVU's ass, and nobody talked about "David" winning that game. Duke beat UNC like a drum this year, and nobody raved about the tiny school winning.

The reason that Butler is not favored to win tonight is NOT that they are tiny. The reason is that Butler is not very good.

The real story (and frequent readers here know I am no Duke fan) is that Duke, in spite of being 1/4 the size of its most frequent rivals, consistently wins, doesn't cheat, and graduates all of its players with actual college degrees in actual college subjects. Why isn't THAT the story here:

Duke University provides education to students who otherwise could never afford it, and manages to win while doing it!

Mungowitz Gets Adam Smith Pin Factory Wrong!

Fred Stahl writes:

Dr. Munger,

I enjoy your podcasts with Russ Roberts. You two always sound like you are having more fun than you deserve. ( MM NOTE: Russ is certainly having more fun than HE deserves!)

Yesterday I was searching for the hunters and sandwich shop story—you know, the one showing how economies of scale make specialization more efficient even if everybody is equally skilled. I was a student in Dr. Roberts’ microeconomics class last semester when he presented the story, attributing it to Buchanan. I found a transcript of you and Roberts talking about it in an April 2007 podcast. I also came across your 2007 article on division of labor in the Library of Economics and Liberty: FEATURED ARTICLE | APRIL 2, 2007
I'll Stick With These: Some Sharp Observations on the Division of Labor

On reading the article, I saw that it might leave misconceptions about Adam Smith’s analysis of the pin factory. Here is the relevant part: And this is the period where Smith formed his impression: he saw pins being made by 3-6 men, in a small shop, each of whom performed several tasks at different points in the production process. Smith's widely quoted conclusion, which was actually just a quick estimate, was that there 18 different steps in the pin-making process.

The best research I have seen says that Smith never actually visited the pin factory he wrote about. Consequently, he would not have been able to make a estimate of the number of operations, quick or otherwise. Smith used data on a French pin factory published decades earlier. As Rothbard tells it, Smith accused his friend Adam Ferguson of plagiarizing his bit about the pin factory. Ferguson fired back that they both got the story from a French source.[1] The facts fit Ferguson’s charge. The French factories had 18 fabrication operations, as Smith mentions, whereas an English factory typically had 25. Edwin Cannan attributes the source of Smith’s production information to an article on pins that appeared in a mid-17th century French encyclopedia, thirty years before Smith wrote Wealth.[2]

One other small point, Wealth has 10 workers in the pin factory. By the way, apparently few if any economic historians know that in his 1832 On the Economy of Machinery and Manufactures, Charles Babbage re-analyzed Smith’s pin factory. In contrast to Smith’s arm waving, Babbage used detailed cost and time data and concluded that Smith missed an important source of productivity. Smith wrote about division of labor by task. Babbage pointed out that the manager who divides labor by skill can hire cheap children and women for the unskilled work and expensive men for the bundles of skilled tasks. The productivity gain is a factor of 3 to 4, as measured in cost per pin.[3]

Rothbard comments about Smith:
Much of his analysis was wrong, and many of the facts he did include in the Wealth of Nations were obsolete and gathered from books 30 years old

Notes:
[1] Rothbard, Murray. An Austrian Perspective on the History of Economic Thought, Vol. I and II, Edward Elgar Pub. 1995. Chapter 16. Excerpt available from Mises Institute, March 31, 2010 from http://mises.org/daily/2012 under title “The Adam Smith Myth.”
[2] Edwin Cannan edited the 1976 edition of The Wealth of Nations published by The University of Chicago Press. The attribution appears in Footnote 4 on page 8 as Vol. 5 of Encyclopédie.
[3] Babbage, Charles. 1835. On the Economy of Machinery and Manufactures. 4th ed. London: Charles Knight. Reprint: New York: Augustus M. Kelly, 1963. Babbage presents his detailed cost and time study data along with his analysis of the pin factory in Chapter 19.

Very interesting, Fred, and thanks! I haven't seen footnotes in an email in a while; many people have gone in the direction of the thing called "links." Still, I'm sure you are right, and that I am wrong about the story. Lots of good info there, Fred!

I'd be interested to know what ASLL thinks of my errors. Sufficiently corrected now?

Thunderation

A delightful piece

A delightful little article, on one man's travels among the strange and mysterious "Econ" tribe.

One of the chief priests, a "Dr. Romer," once appears to have worshipped different dieties, but now worships the god called "Porkulus." Angus had pointed this out at the time, of course, but it is worth remembering.

(Nod to the NCM)

Hot Links!

1. Kobe cashes in before the new CBA bites down on superstars.

2. Turns out Kenyon Martin does NOT like popcorn.

3. Tyler C is a club kid?

4. According to this, me and Mungo should just give up and fold KPC.

5. Ray Fisman strikes again.

Some Days, You Learn Things.

JS writes:

There some days when you learn things. I have been looking at transit data and saying that transit only covers 15% to 30% of operating expense from their fare boxes except in top 5 markets where it can up to 30% to 48%. Well after reading Sam Staley’s blog at the Reason Foundation, I now have to rethink this since it now appears that there has been some fare box stuffing. It turns out “Some 120,000 federal workers in the Washington region receive up to $230 a month for transit, which amounts to taxpayer-funded free rides or at least a hefty bite out of even the most expensive trips.” according to the Washington Examiner. Amazingly that could add up to $331 million a year for a transit agency that collects $683 million a year in fares with a $1.9 billion operating budget.
The examiner later states that “For years, federal employees received free and subsidized parking. Taking away the perk hasn't been a viable option: When President Carter tried it in 1979, federal employees protested and started a boycott of U.S. savings bonds”.
So what can be done? May be the Feds can apply a little Ricardian comparative advantage. Find the price point that Federal employees think the dough that they will get is equal to the transit or parking and get out of the “Green Washing” with the transit and the diametrically opposed “Brown” parking subsidy at the same time. There are markets in everything and I for one would be happier to be paid in dollars than in subway tokens or parking passes. I think it would be worth seeing if federal employees felt the same way.
Nor is it gloom and doom for the transit agency. There are plenty of consumers who would be willing to pay to avoid DC traffic. Now, they just would be a little more like choice riders.

Tell the Truth?

Interesting concept. Get politicians to promise to tell the truth.

"I, as an elected official, make a personal pledge to tell the truth, the whole truth and nothing but the truth while representing my constituents and conducting the business of the office to which elected."

Only about their public acts and duties, mind you. If Bill wants to lie to Hillary about Monica, that's between them.

I should note that I met Miles when we both had kids at RCHS.

Discuss, please.