Saturday, December 31, 2011

A Year in Review

I thought about doing a "year in review" post.

But I couldn't have come close to doing it this well.

So, with props to KPC friend Prof. Dave Collum, the year in review!

RP's Xmas List

My guy T-Schall will likely not be on Ron Paul's Xmas list.

Article from Bal Sun here (reprinted pretty widely)

Now, full disclosure, T-Schall is my student, back from UNC-CH days. We have published together. So I am hardly neutral on this topic.

But it seems to me that Dr. Schaller has this right. The attraction of Dr. Paul has always escaped me. Yes, he is clearly right about several things. But he is wrong, and not just a little bit wrong, about a lot of important things.

Overall, I am grateful to Dr. Paul. He has been brave and consistent about advancing his views. But the people who come up to me and say, "Oh, you must like _________, he's a libertarian," only to have me stare at them in people are crazy.

Here is a partial list of people you goofballs think are libertarians. They can call themselves what they want, of course. But they are NOT libertarians.

Neil Boortz
Glen Beck
Ayn Rand
Ron Paul

So, when one of this group is discussed, or lauded, or is for some other reason in the news, please don't say, "Oh, you must be happy."

What DOES make me happy? Harry Browne's New Year's Day Resolutions. Harry Browne was a Libertarian.

Fearless Predictions

Here we go:


Obama re-elected

US unemployment rate no higher than 7.5% by the end of 2012, real GDP growth > 2.5% for 2012

Republicans keep House and barely get Senate

Heat defeat Thunder in NBA finals

Albert Pujols will be AL MVP


Putin ain't gonna be President of Russia for 12 more years

Assad Jr. gets the boot in 2012

The Euro zone makes it through 2012 intact

China's 2012 growth rate will be < 7.5%

Let me re-phrase

Thanks for your comments on my previous post. I am interested in being able to use the iPad for blogging when I travel to avoid having to lug a laptop around so I have been experimenting with it.

I have an external keyboard, so typing is not the problem.

I am finding that I can't put in hyper-links to other webpages or include images in my posts either when I log in to Blogger via safari on the iPad or when I use the Blogger iPhone app on the iPad.

It's hard for me to accept that there's not an app that makes blogging from the iPad as easy as using Blogger on a laptop.

But I guess that's what the universe is telling me?

Friday, December 30, 2011

Blogging on the iPad

So far it sucks. Any suggestions??

35 >> 25

Big fun last night in the OKC:

Some partial year end good news!

People, it looks like both the 45 cents / gallon subsidy for domestic ethanol AND the 54 cents / gallon tariff on imported ethanol are both dead as of January 1!

Amazing. I guess when the economics actually lines up with the political correctness, good things can actually happen.

Sadly though, the ethanol mandate (how many gallons of ethanol must be blended into gasoline each year) is still alive and well. At least it can be filled by cheaper and less environmentally wasteful Brazilian sugar-cane ethanol.

Maybe someday, we can just have a Pigouvian tax on carbon and drop the command and control BS. Not holding my breath though.

Thursday, December 29, 2011

Education: yer doin it wrong

In this Times piece on young women leaving the labor force to increase their human capital, the author focuses in on one such person, getting an MA from the university of Denver.

The piece returns to her at the end and causally notes that, when added to her BA debt, the young lady will be $200,000 in the hole when she graduates!!

Given that her BA was from Wartburg College and her MA is in "strategic communications", I hope this person got a tremendous amount of enjoyment from going to school because as a financial investment, this stinks.

It's quite likely that she has consigned herself to an adult life lived out entirely behind the financial 8-ball.

Is the CIA giving Latin American leftists cancer?

Hugo Chavez says that he wouldn't doubt it one little bit.

He says he got the notion from Fidel:

"Fidel always told me, 'Chavez take care. These people have developed technology. You are very careless. Take care what you eat, what they give you to eat ... a little needle and they inject you with I don't know what,'"

It's easy to laugh at this but we actually did try to kill Castro, didn't we? And we helped kill Allende in Chile. And there was Guatemala in 1954, and the Contras in Nicaragua, and "Operation Fury" in Grenada. People, we occupied Haiti from 1915 to 1934.

Hell we stole Panama from Colombia and huge chunks of Mexico too in the Mexican American War.

Basically the US has been a huge bully / PITA/ jerk to Latin America, at least since 1846.

It's not that hard to see where Hugo is coming from.

Wednesday, December 28, 2011

Pour some (corn) sugar on me!

People, the nefarious corn growers want to change the name of high fructose corn syrup to "corn sugar".

Those bastards!

Luckily, we have a noble group mobilizing to stop the cornies' nefarious plan:

The sugar growers!

Yes, the Sugar Association is suing the Corn Refiners Association to stop the name change. If we could somehow get the Cotton Association in on this farce we'd have the trifecta of US agricultural policy stupidity.

It's all over now, baby blue?

Adjusting for inflation, real house prices are back to where they were in 2000. If we are not at the bottom, we have got to be pretty close, no? Could it possibly be a good time to buy?

(clic the pic for an even more vertiginous image)

Monday, December 26, 2011

Germany: Sorry, I gave at the State

The US is the number 1 most charitable nation in the world.

Germans like to see themselves as "giving," but of course when it comes to voluntary giving they actually suck. In fact, most of Europe "gives" by taking money from people at gunpoint. That would be "stealing," friends.

Germany is #26.

Of course, I suppose Germany could claim they gave at the Euro. Still, strong evidence that Tocqueville was right, and state action crowds out private initiative and personal moral responsibility. So, for all my German friends who jabber about how generous Germans are and how stingy American are... how do you like us now?

Germany and France Discuss the Future of the EU

Have been wanting to try to make a XtraNormal video.

This is my first effort. It's time consuming, but pretty fun.

Germany and France discuss the future of the EU in a closed door meeting, with a frank exchange of views...

Germany and France Discuss the EU
by: Michael_Munger

Roll over and see what you can do!

Recently saw this ad, on a site.

Not easy to read, but it says, "Menopause made intercourse dry and painful? Roll over to see what you can do!" And then, I shudder to think why, the picture of a doorknob.

However, to be fair, it made me look twice. Perhaps that is the real function of advertising, yes?

Warning: Contains Graphic Content

After this quite delightful little kerfuffle, Zach Wiener was kind enough to send me the original of this cartoon. Interesting Rorschach test: we learn something about YOU, from who you think is being mocked. This issue discussed at greater length here. (Hint: Zach always mocks everyone, including himself. He is not really a fan of false certitude, or ideologies. Check the crest here...)

Anyway, I got this for Christmas:

In the place of honor, right over the throne, so that men are obliged to stare it, and women will have plenty of time to look at it, too, while they are doing whatever it is that they do that takes 45 minutes in there. (Not very high quality, it's a cellphone pic, so if you want the original comic it's here...)

Way too early instant analysis of the Thunder

One game against a bad team (yes Orlando is a quite bad team) isn't much to go on, but here goes!

The Thunder had (at least) 4 questions going into the season.

1. Would Russell Westbrook take another step forward to becoming an efficient point guard?

2. Could Kendrick Perkins return to his pre-injury level of play?

3. Is James Harden the real deal?

4. Is Serge Ibaka the real deal?

Well, 50% fails most tests, but it does get you into the hall of fame in baseball.

Perkins was awesome. After a bit of a slow start, he did the job on Dwight Howard, ran around like a crazy man, and just generally was a badass. My favorite thing about Perk is how mad he gets when a TEAMMATE gets a rebound away from him.

Harden showed a lot more calmness and confidence. He knows what he can do and he looked ready to be a star.

Westbrook had 7 turnovers and shot 6-17. I have to say though that I am a huge Westbrook fan and I'm hoping for big improvements here. He probably needed training camp more than any other Thunder player.

Ibaka was a no-show. I don't know if he'd rather still be playing in Spain, but he was lost and totally ineffective out there. He was scary bad.

To switch gears, the Magic stink!

Hedo is done. He can't move. He and Anderson can hit wide open 3's when they don't have to move, but little else. If it wasn't for Ibaka's hideous defensive effort and the Thunders perverse penchant for fouling J.J. Redick, Orlando wouldn't have gotten 75 points!

The Magic have both Jason AND Quentin Richardson on their team! In the NBA we call that "two Richardsons too many".

I don't think they were both on the floor at the same time, but if that happens, basketball will never be the same.

Sunday, December 25, 2011

Christmas Wisdom from LeBron

"good regulation should take account of our rather extreme ignorance. That means emphasizing the more general protections, as embodied in a ready supply of safe liquid assets, rather than obsessing over the regulatory micromanagement of particular bank activities."

More here.

Merry Christmas from Angus & Mungowitz

Saturday, December 24, 2011

An Italian-American Christmas Greeting

With all proper respect and much love to Jenn Musirolla, who posted this video. I put it up for the enjoyment of KPC friend Shirley, who has lived it.

The menu at the Mungerella House tonight:

salami, olives
various cheeses
shrimp cocktail
hot peppers

The main event:
calimari in a white wine and garlic sauce
meatballs in homemade sauce (cooked for two days with stew beef and hot sausage and sweet sausage)
melanzane parmigiana
broccoli in sauce
cauliflower breaded and fried in olive oil
fried fish
bread for boonging


Salad with olive oil and vinegar
More bread

After after:

Can I be an honorary gorilla too?

Mrs. Angus and I have been on 4 mountain gorilla treks and saw this same group of gorillas in Bwindi this summer. However, we had to hike for over 3 hours to reach them. This video is AMAZING. OK, the blathering guy for the first minute is a pain, but it gets real good around the 1:55 mark and just keeps getting better from there.

If I ever go again, I'll be sure to wear a black shirt and have plenty of gray hair (one way or another).

Friday, December 23, 2011

Thursday, December 22, 2011

As in medicine, so in development?

Jonah Lehrer has a great article in Wired documenting the difficulty of truly understanding causal forces.

Here is a representative section:

The story of torcetrapib is a tale of mistaken causation. Pfizer was operating on the assumption that raising levels of HDL cholesterol and lowering LDL would lead to a predictable outcome: Improved cardiovascular health. Less arterial plaque. Cleaner pipes. But that didn’t happen.

Such failures occur all the time in the drug industry.

To recap. HDL is the "good" cholesterol and LDL the "bad". Pfizer found a drug that did what the quote describes, but it turned out to kill subjects in the phase III trial and ended up costing the company billions in market capitalization.

In my opinion, much of macro development advice has worked the same way.

Experts observe that successful countries exhibit qualities A, B & C. Developing countries are advised, subsidized, threatened to emulate the successful countries on these attributes. But the patients do not improve!

Education, Institutions, "getting the prices right", openness to trade, the list goes on of macro advice given and to a surprising extent taken by the developing world, without the implicitly promised results.*

The only real difference in the medical and developmental analogy is that Pfizer lost billions of dollars due to their misreading of cause and effect, while the World Bank just chugs on and on with an ever growing size and budget, producing a new World Development Report every year and acting as if the past had never happened.

That is to say, there is little to no accountability for bad advice or improper diagnoses among the IFIs compared to pharmaceutical companies.

* In our 2007 JDE paper, Robin and I show that school enrollment rates, government spending, openness to trade, political constraints on the chief executive,bureaucratic quality, corruption, and overall law and order are all converging over time.

Secular Theocracy

David Theroux on secular theocracy....

That's part un. Part deux coming in January.

Portugal Fires Back!

Portuguese are outraged at Tommy the Norwegian Butter Waif! They respond in kind, pointing out the REAL crisis: no money.

Perhaps a drag race could settle this.

Wednesday, December 21, 2011

Tamils gotz Autotune??

Me, Lebron & the TicketCity Bowl

Our latest piece is up at Grantland.

Money quote:

In sum, we have a system where the games are not designed to produce the best on-field matchups, the competitors often lose money but fight fiercely to participate, outsiders and observers complain vehemently, and the organizers amass and waste a great deal of money with little oversight.

Welcome to capitalism, American style. Get back to us when you’ve found a better system.

What is the capital account?

Writing in the Economist, Mark Thoma says something remarkable:

"A COUNTRY that runs a current account deficit is borrowing money from the rest of the world. As with any loan, that money will need to be paid back at some point in the future. The cost of these loans is the interest that must be paid, and any vulnerabilities to speculative attacks that come with them."

We know that a current account deficit means there will be a roughly equal sized capital account surplus. But there is nothing about the capital account that requires the net foreign investment be in bonds!

Foreign direct investment (FDI) is part of the capital account. If companies around the world build more factories in country A than country A companies do around the world, then country A (all else equal) will have a capital account surplus and a current account deficit. Net foreign purchases of equities are also part of the capital account. If more foreigners buy stocks in Country A that citizens of Country A buy in foreign countries, that contributes to Country A's capital account surplus (and current account deficit).

I don't consider net FDI or net foreign purchases of equities loans. Do you?

Suppose Toyota buys a factory from Ford. Does that mean the US is borrowing money from Japan? Suppose Lionel Messi buys shares in IBM. In what sense is that the US borrowing money from Argentina? There is no requirement that the government or domestic individuals buy these items back later. Suppose I buy a factory from Ford. Is the rest of the country borrowing money from me?

Maybe Mark is speaking broadly, metaphorically, and considers profits of foreign owned factories and dividends on foreign owned stocks as "interest on loans"?

Even if this is so, FDI is decidedly NOT "money that will need to be paid back", nor am I aware of any studies showing that FDI inflows (except perhaps by the indirect channel of creating currency appreciation).

In his blog, Mark says he consulted the Krugman & Obstfeld text before writing the Economist post. Does the book make a similar claim?

People, what am I missing here?

Tuesday, December 20, 2011

Two Excellent Emails on the "Laptops in Classrooms" Question: Part Deux

Another email I got after posting the "Laptops in Classrooms" screed.

Hi Prof. Munger, I very strongly disagree with you, and I'll try to say why to get my thoughts on the table:

All through my undergraduate years, I brought my laptop to class with every good intention: more than any of the reasons you present, a searchable record of computerized notes is, I think, the most compelling reason for allowing computers in the classroom, and that was my goal.

But when I actually opened up the computer, I found myself struggling to accomplish this. I'd just check this one email, look at this one funny website, just have one more line of gchat with my girlfriend (who would have been doing the same from a different seminar), and then get back to the lecture. And suddenly, class would be over, and I'd be kicking myself, vowing never again to use my laptop that way during class.

Sure enough, the next class would come, and my laptop would be out, primed and ready for excellent, attentive note-taking, and a little message would pop up on my sidebar. Or I'd get bored for ten seconds and find myself sucked in as a result to a half-hour-long wikipedia quagmire.

The extent to which I was kidding myself every time I brought my computer to class, thinking it would help me to be productive, is a fascinating study in self- delusion, but I know that I was not alone in this addict-like behavior. Everyone else was doing it too --- some of my gchats were with them! It took me four years, but by my last semester of undergrad, I had quit taking my laptop to class, and I haven't taken it once since entering graduate school. It turns out that forcibly limiting your options is a great way to focus your attention. Human are impulsive --- too many choices can be crippling rather than liberating, because what seems in the moment like a good idea is not, of course, always what you really want to be doing. Feel free to deny this aspect of our nature if you will, but caving to students' demands about having laptops in class is like untying Odysseus from the mast at his first pathetic cry.

By telling your students you do not allow laptops in class, you are not enslaving them: you are setting them free. They are free from the constant distractions of the rest of the world. They are confined in a way, yes: confined to the path they have chosen for themselves --- to the education they are supposedly receiving and the classes they have supposedly chosen.

Pandering to psych studies about attention will not save you. Yes, paying attention is hard. But our minds are not simply ticking attention timers. I have had good teachers who have engaged my attention for 2 full hours (without gimmicky "activities"), and bad teachers who couldn't hold it for 2 minutes. A laptop would have provided an easy escape in the latter case, but it would also have prevented me from having the kind of direct, intense, and full experience in the former. I know because it did, many times, as an undergraduate, and freeing myself from my laptop was a revelation.

Perhaps you will say that this sort of experience is one that all students should have for themselves, but I disagree. The classroom is not a polity, and it is not a typical exchange relationship, as you seem to envision it: it is meant to provide students with an education --- and if a student (or, in most cases, their parents) wants to pay for a Duke degree, then we have the prerogative to decide what that means. And in this case, it should mean helping students form the good habits that my own undergraduate professors didn't have the guts to help me form. We are training them to pay attention in a world that does not simply consist of 15-20 minute segments punctuated by the naptimes or clapping games of our kindergarten teachers.

And this, in turn, should give us a greater sense of responsibility. I agree that there are too many professors out there who "suck" at teaching (inevitable, given the incentive structures in academia, but that's another story). But laptops are not a solution --- agreeing to have laptops in the classroom is simply giving up on good teaching at all. At least without laptops, there are no excuses.

"Pandering to psych studies"? Yikes. To be fair, the author is a political theorist, and the whole empirical thing tends to escape them. Still, a useful analysis.

So, It was Crack Cocaine?

Actual Central Florida Headline:

Man eats cocaine in brother's butt, dies

Police: Man trying to hide drug evidence in squad car

You could read the rest of the story, but frankly there's not much more to tell.

(Nod to Jackie Blue, who misses Florida....not so much)

Two Excellent Emails on the "Laptops in Classrooms" Question

I got quite a few emails about the "Laptops in Classrooms!" screed.

Thought I'd post two of the emails I got from people who thought I got it wrong. Here is one. It is a bit long, but quite thoughtful, and from someone who has seen how things work.

Person 1: I appreciated your post, and I agree with you wholeheartedly that poor teaching deserves 90% of the blame for extended periods of student distraction.
But my anti-laptop views began to take shape during my first semester as a TA at [redacted] University. The professor was a phenomenal teacher, one of the best in our top-ten department. (I don't think I've ever seen a longer or heartier standing ovation for an instructor than the one s/he received at the end of his/her intro course.) There was a significant amount of student-teacher interaction (course enrollment was 80). And yet, a ridiculously high number of students had Facebook and other non-course-related sites up on the screen for ridiculously long portions of the class. From my perch at the back of her classroom, I could see most student laptops. Of course I knew students sometimes check email or Facebook or, but the sheer magnitude of the thing struck me (and I admit, scandalized me). I don't have any way of quantifying this in retrospect, but I can only say that I would bet a small fortune on the proposition that they spent more time more profoundly distracted with laptops than they would have spent distracted without them.
(Of course, I TA-ed for other classes with less talented professors, and level of web-wandering was astronomically high in these cases--approaching 90% of screen time spent on non-class-related pages. As you suggest, those professors were asking for it in some measure.)
This is my case study evidence, but I would make three further random points on this topic.
First, while I appreciate your point about web-based distraction as a mere substitute for daydreaming or doodling, I think there are important distinctions to be made here. This is probably a task for real social scientists, but my hunch is that web content is far more engrossing and tends to account for far lengthier bouts of distraction than daydreaming or doodling. Daydreaming can be fun, but checking Facebook updates is just so much easier on the imagination. I can't remember the last time I've daydreamed or doodled for, say, two hours. But two hours wasting time online? No problem. I'm pretty sure I'm not alone here.
Second-- and this is an explanation that I often give to students in small seminars (20 or under)-- laptops constitute not only source of distraction but also a physical barrier. It is hard to imagine having an excellent dinner conversation with little ten-inch plastic walls sitting in front of each guest. I think these little walls somehow denature or degrade the conversation. I'm here, but not completely. I would also add that they introduce seemingly endless voices and minds into the room whereas (inky view) the high-octane seminar is about the 10 minds in the room engaging one another and a text.
Third, I think laptops encourage stenography as opposed to listening and real note-taking. The pen and paper forces the student to digest material then and there, to discern what is most important, and to get it down. This requires listening, and it even leaves little time for critically evaluating what you're hearing and asking questions about it. Stenography not only doesn't require listening, I think it suppresses listening and critical thinking. (The court reporter is the last person I'd ask to tell me the highlights of the day's testimony. I'll talk to the journalist with the Steno pad.) So in this light, it seems that even the best students--those with Word open rather than Facebook-- are bad laptop users.
Fourth, and most intangibly, I think there is something freeing about removing the web as an option for students. (Here's dangerous claim about positive freedom.) They spend every minute of every day with the web as an option. For one blessed hour, three days a week, my students are free, absolutely free, from the alluring glow of the iPhone and the MacBook. Believe it or not, I think this makes them happy. I think they like to pay attention. But of course, they won't admit it...

Dr. James Harrigan on why laptops should NOT be allowed in the classroom....

The response, also at KOSMOS, taking the "No Laptops!" view.

James Harrigan

Butter Crisis Prompts Desperate Video

"What if it was YOU who didn't have any butter? What if I took your butter away from you?"

TOMMY! Listen. YOUR. GOVERNMENT. is doing this to you, sweetie. There is no butter shortage. It is the state who is f***ing you. You are hilarious because the shortage is entirely a product of your protectionist trade policies. If you needed actual help, we'd be there for you. But if we tried to ship in emergency supplies of butter, we would be ARRESTED. Just like those Swedish butter thugs...

(If you have missed the story, check out our man Angus, with his finger on the private parts of Norway and the butter crisis.)

Grandma Got Indefinitely Detained Now

They took her rights in order to protect her rights....
The most genius plan ever in history!

Scandinavian follies

KPC recently broke the story of Norway's tragic, self-inflicted butter shortage (or as Matt Yglesias would have it, Norway's heroic defense of a diversified economy).

Now let me ask you a question? What do you call buying butter at $35 a pound?

Well in Norway apparently it's a bargain and in Sweden it's a profit opportunity.

Yes people, the marauding Swedes are trying to bring down brave little Norway by smuggling in butter!

Two guys "sneaking" across the border with 550 pounds of butter. In 18 oz. packages. Tragically the article is silent on how exactly these packages were concealed.

The article treats the shortage as somehow exogenous and talks about how it has led to "blackmarket trafficking", like butter was heroin. As we noted before, idiotic trade barriers have produced this bogus "shortage".

Norway: We're not just oil, we're oil and butter! (except when we run out of butter).

Norway: No Dutch disease here, just take a peek at our dairy industry!

Student Brings Typewriter to Class

The Ward Boss sends this little gem. Student brings typewriter to class to take notes.

Ya gotta love the little "ding" when he puts it away.

Where did the kid FIND a non-electric typewriter? Impressive.

Monday, December 19, 2011

A Sweet Tribute

I had missed this. A sweet tribute of the young Buck to his very famous father.

Jack and Joe Buck call their respective Game 6's from Kidd Video on Vimeo.

Also sad to see #5 in the thick of the celebration. Bon chance, #5.

Laptops in Class: I say "Allow Them"

So, a debate between truth and craven falsehood over at KOSMOS.

With me, as always, taking the side of truth. Should laptops be required / allowed / prohibited in class?

Falsity gets its chance, arguing the "ban laptops! They are da debbil's woikshoppe!" tomorrow.

Excerpt: If you have to pay someone to attend you, that’s prostitution. If you have to force someone to attend you, that’s slavery.

I have never understood why so many professors believe that students must be prostituted or indentured. But that is what the “ban laptops” crowd is arguing: We can’t count on students to learn voluntarily. So we have to bribe them, or we have to force them to leave their laptops home.

Look, profs: If you seriously find that most of your students are daydreaming, facebooking, or cruising porn sites (not that that’s a bad thing…), you might want to try an old and honorable solution. Two words.



Men Think Women Dig Them, Women are Surprised By This

The Misperception of Sexual Interest

Carin Perilloux, Judith Easton & David Buss
Psychological Science, forthcoming

Abstract: The current study (N = 199) utilized a "speed-meeting" methodology to study sexual misperception. This method allowed us to evaluate the magnitude of
men's sexual over-perception bias, whether and how women misperceive sexual interest, and individual differences in susceptibility to misperception. We found strong support for the novel prediction that women underestimate the sexual interest of male interaction partners. Men inclined to pursue a short-term mating strategy and men who rated themselves as attractive were especially likely to over-perceive women's sexual interest. As targets of misperception, women's physical attractiveness predicted the magnitude of men's sexual over-perception bias. We discuss implications of gender differences and individual differences within sex in susceptibility to sexual misperception.

Interesting that the prettier the woman, the more the man thinks she is interested in him. All men think they are good drivers, good dancers, and know.

To be fair, though, this is clearly adaptive. Type 1 and type 2 error problem. If only one out of ten women who smile at you actually thinks she wants you, it makes sense to be embarrassed nine times and have a shot at reproducing once. There is no fitness penalty for embarrassment. But there is a fitness penalty for thinking you are ugly and not trying. The fact that most men are in fact ugly is irrelevant.

Nod to Kevin Lewis, who is always a gentleman.

She's Just Capturing the Regulators

(with apologies to Elvis Costello)

Venn diagrams = good. And here are several describing the overlap companies and the fed gov.

Nod to MAG

We are ALL Humean Beings Now

My favorite philosopher, by a wide margin, is David Hume. (Never mind the epistemology stuff, not sure what he was doing there, forget that).

Very nice article in NYT on Hume, and why he gets disrespected.

In fact, it seems to me that Ron Paul is the modern political version of David Hume. Everyone says that he's right about a lot of things, perhaps wrong about some things, but in any case they certainly can't take him seriously, because.... hard to say why, actually.

As Bertrand Russell put it: "Rousseau was mad but influential; Hume was sane but had no followers."

Same as it ever was

While we either resent or enjoy cheap Chinese imports, most of us think of them as a relatively recent phenomenon.

Check out this description of Chinese imports:

"much prettier articles than are made in XXXX and sometimes so cheap that I am ashamed to mention it" The trades "pursued by the XXXXers have all died out because people buy their clothes and shoes from the [Chinese]"

Hmmm, floods of cheap textiles and footwear that are killing domestic industries? Is XXXX the USA and 2011 the year?

No, XXXX is Spain and the time period is the 1580s!

The quotes are from Charles Mann's fascinating book 1493. (page 153)

At least the 16th century Chinese got paid in silver; their unlucky modern day disciples have to take green pieces of paper or electronic IOUs from Uncle Sam.

The Real Reason the State Opposes Charters

In North Carolina, we have many places with overcrowded schools and the need to build more. The cost per student is on the order of $8k or more.

But charter schools can quickly gear up, in places that are overcrowded, and use rental space (as opposed to purchasing land, required by state law). Charters can go without sports facilities (as opposed to having a full set of sports and recreation facilities, as required by state law). Charters can contract out for janitorial services, can do without a full service cafeteria, can go without hallway lockers, and can make do without full service school buses. Regular schools have to have all those things, as required by....well, you know.

So, charters can operate about 1/2 to 2/3 the cost per student of regular schools in NC. And they can be up and running in a year, where it takes five years or more for a new state school.

Why would anyone be against charters?

Because the job of schools is NOT to provide education to children. That's a myth. The job of state schools is to provide JOBS to people who will vote Democrat. It's not clear that charter school faculty will have the correct ideology, since they are hired by the parents who pay the bills, not the bureaucrats who depend on the state for their livelihood.

In New York, the authorities went so far as to send the money BACK, rather than allow flexibility and choice in school provision.

Here is what the state of NY had to say about it:

An audit of the public pre-K system by the city comptroller’s office places the blame for the lack of seats squarely on the city’s Department of Education, saying that in 2010, it got enough money from the state — $29 million — to finance an additional 8,000 seats. When those funds went unspent, they had to be returned to the state. But the department said those funds would have paid for only 2.5 hours of teaching daily, making the programs impractical for working families. What city families need is full-day programs, according to the department, and the state money will not pay for those.

In other words, parents are paying taxes into the system. Since it is unable to provide the educational services it promised when it took the money, at gunpoint, the state could rebate that money, either as vouchers or as part of a charter agreement. Either would solve the overcrowding problem.

But, instead, the state insists that only a full day would serve "working families." This concern for "working families" means that they get....nothing.

Sunday, December 18, 2011

Kobe: He's Not Good

With apologies to P. Boettke, who will continue to insist that Kobe is not just the best player in NBA history, but also a fine human being. Pete is wrong about some other things, too, but he is wrongest about Kobe. Kobe is a worthless, worthless man. This is a spoof, but it captures the essence of the man.

This from Boondocks, August 4, 2003:

Quotes of the week

Great article by David Roodman on getting to the bottom of conflicting econometric results.

Money quote:

The process is standard in econometrics and is called Maximum Likelihood. It is analogous to a blind ant searching for the highest point in the Himalayas. The ant starts somewhere. It explores the immediate neighborhood. It determines which nearby point is highest and goes there. And it repeats, maybe millions of times, until it gets stuck at place where all neighboring points are downhill. Then the ant assumes it is at the highest point.

Hat tip to Roving Bandit

Jon Chait on Krugman's impact on the NY Times Editorial page.

Money Quote:

The most remarkable attribute Krugman has brought to the Times is rudeness.

Article on the Lakers' travails showing the wit and wisdom of Andrew Bynum.

Money Quote:

Lakers center Andrew Bynum isn't fretting the failed trade at all. In fact, he thinks the Lakers are better off with it falling through. "I'm happy we didn't do it," Bynum said. "I don't think you trade two 7-footers for a point guard. Ever."

Hat tip to LeBron

Friday, December 16, 2011

Mancur Olson Lives!

Maybe it's because it's raining hard, and I have to give an exam.

On a Friday night. 7 - 10 pm.

To 80 students. It's an essay exam. It's 1/2 mile away, and I have to carry all the stuff over there, and carry it back, in the rain. Then two days of grading.

Maybe that's why I'm a little incredulous at this story.

Professor requires students to bring snacks to class, or he refuses to teach.

But then I saw this little gem:

In an interview with Inside Higher Ed, Parrott defended his teaching methods. He said he could understand why some students would be frustrated about the missed class time, but that people should view his requirement as a valid pedagogical choice.

A graduate of Cal State's Chico campus, Parrott said that when he was an undergraduate, courses had 12 to 20 students, and those in a class formed close ties among themselves and with the professor. "Those days are long gone," Parrott said. The course in question is supposed to have a maximum of 42 students, although this year he has 52 in the section that skipped snack last week. That makes it hard for students to connect. So does the nature of Sacramento State's student body. "It's a commuter rat race. Students drive in and go home and never connect with their fellow students," he said.

Enter the snack requirement: Parrott said that he's teaching students to work together to set a schedule, to work in teams to get something done, and to check up on one another, since everyone depends on whoever has the duty of bringing snacks on a given week. Typically, no individual should be involved in preparing the snack more than twice a semester, he said.

As the class gets larger, seems like it would be easier to take turns on the snacks, yes? But of course, as Olson showed, it actually gets HARDER to solve the collective action problem, even though the group has more resources than it did before.

Now, out into the rain....

Not the Onion: Lucy In the Sky, With Vulvas

Not sure this is real. A little far-fetched.

But, school kids have been told they can't make hand gestures when they sing "Twinkle, Twinkle, little star."

Given that the British Sign Language gesture for female genitalia is a diamond or triangle shape, it is believed that the gesture was accompanying the line 'like a diamond in the sky', which is known to have caused confusion in the past.
You can see, in this video, the "offensive" hand sign at about 1:18. has it caused confusion, exactly? Did the deaf children think that someone was claiming there was an upside down vulva in the sky? I mean, sure, that would be scary, but I can't imagine that is what they thought.

(Nod to the Blonde)

Disclosure is Not as Good as You Think

New report from IJ, and KPC friend David Primo.

Disclosure: not as good as you think.

From Our Man Koopa, in the Field

Koopa writes from India. Koopa is from Noo Joisey, you understand. But grandma still lives in India, and Koopa is visiting. He had five marriage proposals (some of those were from women, I believe) in his first day on the subcontinent. He writes:

1.2 billion people. Women are everywhere. Hook up law of numbers was born here, except for the cultural desire not to display affection or sex in public. They STILL don't even kiss in the movies. Which is funny - I saw an Indian movie where the actor and actress were acting proper, not kissing, very chaste.

Then a commercial came on for chocolate condoms. I laughed myself silly. The commercial was the most ridiculous thing I've ever seen. The condoms come in a cookie box (no foil packets).

What a place. I should point out that Koopa is an American citizen, has a Duke law degree, and even I have to admit he's pretty cute.

Grand Game: U Mass Amherst PERI Edition

I hesitate to put this up, surely it is a satire or hoax. But I think these folks are serious.

They are going to take all that "excess" liquidity, and make the world better.

Starting with the financial collapse and Great Recession of 2008-09, the U.S. economy has been experiencing the most severe and protracted employment crisis since the 1930s Depression. As the employment crisis has proceeded, U.S. commercial banks and large nonfinancial corporations have been building up huge hoards of cash and other liquid assets. This study examines the impact on job creation of mobilizing these excess liquid assets into productive investments within the U.S. economy over the next three years.


(Nod to @milesoftrials )

Thursday, December 15, 2011

President to Sign Indefinite Detention Bill

He is going to sign the thing.

He is not capable of telling the truth, because he literally cannot tell true statements from falsehoods. His speeches are just applause lines strung together.

I give you... George Hussein Busbama!

UPDATE: My friend Stefan D has this quip, on FB--"Well it's not like the detention is's just indefinite. I would think the detainees would enjoy the guessing..."Will I get out tomorrow?" Every day is like Christmas Eve."

Initial Jobless claims fall!

"Only" 366,000 this past week. Slowly but you know what-ly, the American economy is rising, perhaps just in time to get hammered by the Euro debacle, but rising nonetheless. Good news for President Obama.

Gilligan! Hold the Mayo!

Two grad school colleagues made good.

Tom Gilligan at UTexas

John Mayo at Georgetown

I'd try to make myself feel better by saying I knew them, but they'd both deny it. Because Angus and I...we've got stories.

(nod to Chateau. He's got stories about Angus and me)

Links: Video Games

1. Is Skyrim an economic disaster?

2. Bearded dragon playing ant video game
. May not be real, but pretty funny.

3. Worst game of all time: Big Rigs--Open Road Racing. Although the packaging of Big Rigs states that the main objective of the game is to race their Big Rig to safety in order to deliver illegal cargo being carried by the vessel, while avoiding the local police force, in actuality, there are no police in the game, and no such objectives are presented within the game itself. Much of the game instead centers on the player racing their truck against fellow drivers to the finish line; however, the player's computer-controlled opponent vehicles have no AI and never move from the starting position. In addition, due to a lack of collision detection, there are no obstacles to negotiate within the game, and the laws of physics can be violated frequently.

(Nod to SdM, Anonyman, the Ward Boss, and the Blonde)

Wednesday, December 14, 2011

Caption Contest!

This is Joel Rosch, Sanford Institute faculty and closeted libertarian.

Caption contest!

Peace on earth, goodwill to men!

Yes, I'm pretty sure they are ALL stuffed!

Mike Tyson Does Herman Cain Spoof

This amused me. It is disrespectful, and possibly racist, but it amused me.

As Anonyman notes, "he had me at Pizza Pthursday"

Why do the Dutch hate Christmas?

Look at the Netherlands; twice as rich but almost twice as stingy as Poland. Stingier than the GERMANS (who are almost twice as stingy as the French)! Big ups to the Irish!

(clic the pic for a more Scroog-ian image)

Tall, smug and stingy is no way to go through life, son.

Hat Tip to Tim Harford's Twitter Feed.


Castrating Lambs Can Make You Sick

So, this news story says "castrating lambs with teeth can kill you."

That doesn't make any sense to me. I thought ALL lambs had teeth.

Oh...wait. You mean.... EWWWWWWW!

Nod to the Blonde. Next time she calls Bob Lee her "little lamb" I'll know what she is actually thinking.

Tuesday, December 13, 2011

Financial Incentives and Student Achievement

Financial Incentives and Student Achievement: Evidence from Randomized

Roland Fryer, Quarterly Journal of Economics, November 2011, Pages 1755-1798

Abstract: This article describes a series of school-based field experiments in over 200 urban schools across three cities designed to better understand the impact of financial incentives on student achievement. In Dallas, students were paid to read books. In New York, students were rewarded for performance on interim assessments. In Chicago, students were paid for classroom grades. I estimate that the impact of financial incentives on student achievement is statistically 0, in each city. Due to a lack of power, however, I cannot rule out the possibility of effect sizes that would have positive returns on investment. The only statistically significant effect is on English-speaking students in Dallas. The article concludes with a speculative discussion of what might account for intercity differences in estimated treatment effects.

Nod to Kevin Lewis

Hiding the Sausage....

The story of how the for-profit colleges survived the threat of a major federal crackdown offers a case study in Washington power brokering. Rattled by the administration’s tough talk, the colleges spent more than $16 million on an all-star list of prominent figures, particularly Democrats with close ties to the White House, to plot strategy, mend their battered image and plead their case...The battle got so testy that Senator Tom Harkin, the Iowa Democrat who has led Congressional hearings into the colleges, got into a heated exchange with Mr. Stein, the Education Corporation investor. The senator said that during a hallway conversation after lunch in the Senate dining room, Mr. Stein promised to 'make life rough for me' if Mr. Harkin kept up his attacks. 'I took it as a threat — it was one of the most blatant comments ever made to me in my years in the Senate,' Mr. Harkin said. [NYT]

It appears that it was easy to find Democrats who would sell out the poor people they care so much about, as long as the Democratic elite gets paid. They must be so proud to have Michael Miliken on their side...

Lists of Note: Smells Like Teen Spirit

The list is here.

You likely already know the resulting video...

Had not noticed the Anarchist A on the cheerleader unis before.

Random Observations on the EU crisis

Even if Draghi could wave a designer wand and make the Greek & Italian sovereign debt mountains go away, the Greek and Italian economies would remain horribly uncompetitive even vs. France, let alone Germany.

You know your central bank has little credibility when the market reaction to a promise to lend banks Euros at 1% for 3 years is to push bank stocks sharply down!

Saving the Euro is not the same thing as saving Europe.

There are actually worse things than countries expeditiously exiting the Euro zone; we may see some of them fairly soon.

It's hard for me to see how much blame falls on Germany. They reformed their economy and became super-competitive. People act like that was somehow nefarious.

Thug Story

Wow. Just... wow.

You can presumably identify the cameos here. Pretty impressive cast. I kept looking for that SMOKIN' hot Bruce Majors, but didn't see him.

You'll want to look at this.

My Guy Bill English Explains the Crisis of Liberalism, In a Nutshell

Gamebill gets a quote in the WSJ. And he's right, of course.

A Silver Lining in Europe; And the political lesson for America. Kaminski, Matthew. Wall Street Journal (Online) [New York, N.Y] 09 Dec 2011

European Union leaders are gathered in Brussels for yet another emergency summit, this time to consider a Franco-German plan for fiscal union. After each previous try to stop the bleeding in the past 18 months, markets saw through the palliative and drove up debt costs.

Yet the fog of crisis obscures what's already changed in Europe. A new social-political bargain has started to form. Though not advertised loudly, the solutions on offer, from Ireland to Italy, all scale back the reach and size of the state. This mental and political shift predates the Greek meltdown. The three Ds-- spiraling debt, unsustainable demographics and looming depression--just hastened the reckoning....

Step back to see a bigger picture. The European model isn't pinched by Greece but rather by two related phenomena. In a world of global competition and free trade, EU countries have failed to keep up. Taxes and regulations needed to cover generous unemployment benefits and pensions have sapped their growth and scared capital away, in turn impairing their ability to meet these costs without huge debts. As Princeton historian Harold James notes, "The redistribution game becomes a lot harder to play in an open economy."

Globalization's other byproduct, immigration, changed the look of Europe. Social safety nets were built in postwar boom years when countries were younger and more homogenous. Relatively few people drew on unemployment benefits or other help, and those who did were the familiar neighbors of those who picked up the tab and considered it their obligation. Political scientists call this "social trust." New arrivals from North Africa and Turkey changed that and put economic strains on the welfare system...

There's a lesson here for America. President Obama insists that the U.S. isn't in similar straits, and he has a point for now. Yet our public debt surpassed the euro zone's in 2008, and now touches 100% of GDP.

In a paper presented at a Witherspoon Institute conference this week, German finance ministry official Ludger Schuknecht, who previously headed fiscal policy surveillance at the ECB, notes that the U.S. increase in its size of government over the past decade was on par with those of Italy, Spain, Portugal, Greece, Ireland and the U.K. All the others have tried to rein it in, he writes, but the U.S. "stands out as the country that seems to be quite oblivious to the need for adjustment over the near future." Americans can't say the Germans didn't warn them...

But the terms of debate have to shift here, as they did in Europe's success stories. American reformers, in the words of Harvard political scientist Bill English, need "to make the moral argument that you should spend federal monies to pay for poor children's meals and not fluff union pension schemes."

Insolvency may be a symptom of many Western democracies, but democracy isn't the problem. Voters, who aren't stupid, are as likely to reward as to punish leaders who take the necessary hard steps.

I had not thought of Angela Merkel as a "fluffer" before, but of course that's right.

Monday, December 12, 2011

Grand Game: San Francisco Edition

A truly remarkable cavalcade of idiots, ideologues, and squishy thinkers. A parade of sports and horribles. Hard to believe they are serious, but then lefties are always serious. Wrong, but serious.

I won't spoil it for you. But don't miss the consequence where the company can't even bid on government contracts because now their costs are too high. Presumably we will soon have a set aside to assure that the halt and the lame of SF get their "fair chance" at being the high bidder yet still winning the contract.


(And nod to Anonyman)

Podcastrians: Profits, the Verger and other Stories

My main man Russ Roberts and I vigorously podcastrate the idea of profit, illustrating it with three pedagogically useful stories.

At least, *I* think they are useful stories.

The (Minsky) Empire Strikes Back!

Hyman Minsky is like the monster in a horror movie. You think it is gone... but no. It keeps coming back, over and over...

When Credit Bites Back: Leverage, Business Cycles, and Crises
Òscar Jordà, Moritz HP. Schularick, and Alan M. Taylor
NBER Working Paper No. 17621
November 2011
JEL No. C14,C52,E51,F32,F42,N10,N20

ABSTRACT This paper studies the role of leverage in the business cycle. Based on a study of nearly 200 recession episodes in 14 advanced countries between 1870 and 2008, we document a new stylized fact of the modern business cycle: more credit-intensive booms tend to be followed by deeper recessions and slower recoveries. We find a close relationship between the rate of credit growth relative to GDP in the expansion phase and the severity of the subsequent recession. We use local projection methods to study how leverage impacts the behavior of key macroeconomic variables such as investment, lending, interest rates, and inflation. The effects of leverage are particularly pronounced in recessions that coincide with financial crises, but are also distinctly present in normal cycles. The stylized facts we uncover lend support to the idea that financial factors play an important role in the modern business cycle.

(Nod to A-Denz, who knows things)

Musical gifts: Box Sets and Reissues

As I noted yesterday, there are some truly fantastic box sets / re-issues out this year (and early next year). Here are my favorites:

#1. Neutral Milk Hotel's self-released vinyl only box set.

This is the present of the year. I bought it for myself the day it was announced. Damn thing still hasn't arrived.

#2. Domino Records is re-releasing Palace Music's (Will Oldham) first five albums in digital, cd and vinyl formats.

These are killers. If you don't own "Viva Last Blues" you have holes in both your record collection and your soul.

#3. A company called Dust to Digital (and somehow NOT Revenant Records) is releasing a 5 CD John Fahey box set in an LP sized package.

As LeBron would say, this is self-recommending.

#4. 5 Throbbing Gristle albums have been re-mastered and re-releasedin CD, Vinyl, MP3 and FLAC formats!

Big ups for the high quality digital format. Even the faintest of hearts should try "20 Jazz Funk Greats" or "Greatest Hits"

These are fantastic trippy, sound collage-y albums that stand the test of time and still feel great today. Vital.

#6. 4AD's "house band" This Mortal Coil, also gets the box set treatment.

I'll get this one just because. It's a great gift for a goth significant other!

By the way, if you don't own a record player, it's way past time to get one. I'll post soon on some affordable options.

Monday's Child is Full of Links

Car thongs

Egging on weight loss

Chinese ghost cities: too much housing, in the wrong place, but they can't stop building

Technology makes humans incompetent. "Error chains" seem impossible. Of course, they are rare, and by focusing on "what happened?" after a crash we are selecting on an unlikely event. Still...really? THAT'S what happened? Wow.

Steve Jobs statue in Hungary. Not because he "gave back" (because he pretty much didn't). But because he made cool stuff people wanted to buy.

Nod to Anonyman and Susan

Jon Stewart:: Twice as Nice

On indefinite detention...
without trial...
of American citizens...
captured and charged in the US.

I give you--Mr. Stewart: “When the war on terror ends, and terror surrenders, and is no longer available as a human emotion, you’ll be free to go.”


Let's hear it, bedwetters: Your guy Obama can't be better than GW Bush if he is NO DIFFERENT from GW Bush. This is truly an epic fail. Obama has zero principles, and zero policy interests. This is popular, and so he is for it. Screw the Constitution.

For the record, this legislation clearly violates the 4th, 5th, and 6th Amendments. Combine that with the "enhanced interrogation" techniques likely to be used on prisoners while they are being detained, indefinitely, without trial, without hearing the evidence against them, without even a full hearing before a civil court, and you have a violation of the 8th Amendment also.

Oh, and there's this, from Article III, Section 3 of the main Constitution, without any stinkin' amendments to worry about:

Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

Testimony. Two witnesses. Not indefinite detention without charges. Jeez.

Sunday, December 11, 2011

Chain Kidney Transplants are Not Truly Voluntary

Over at EE, a post about kidney "sales" through chain donations.

Not the Onion: Grand Game Self Service!

Grand Game Time! Smart people do it in the comment section...

Brazilian woman wins legal "right" to surf porn and masturbate at work.

Excerpt: Ana Catarian Bezerra, 36, suffers from severe anxiety and hypersexuality - something that makes her "compulsion orgasmic," reports

A single mother of three children, Bezerra works as an accountant - a seemingly buttoned-up profession for such a buttoned-down condition, reports

In the past, Bezerra would need to masturbate as much as 47 times a day. Her physician, Carlos Howert, has prescribed her a "cocktail" of tranquilizers to help curb her condition. Now she only has to masturbate around 18 times a day, according to Guanabee. One word? Yikes.

Bezerra had to take her employer to court last April, where she won. Now, she will get 15 minute breaks every 2 hours where she can surf porn and get her release, AOL reports.

Don't get too excited though - remember that this is in Brazil, and here in the U.S. there are no court-mandated masturbation breaks available.


This would have been excellent news for Anonyman. He was laid off for three months a while back. Turns out that in Brazil his activities during this time would have counted as "employment," and he could have gotten paid for it. Now THAT is progress!

Angus' 2011 Best Music Guide

Here's my version of the best albums of the year.

1. Peaking Lights: 936

This is druggy drone-y dubby and delicious! "Hey Sparrow" is one of the best songs of the year.

2. Twerps: Twerps

One of two band from OZ on the list. They coulda been in the Paisley Underground. "Dreamin'" is the killer track.

3. Kurt Vile: Smoke Rings for my Halo. This guy is the bizzle. Strong record from top to bottom. Here's "Jesus Fever"

4. Tune-Yards: Who Kill

Gotta love Merrill Garbus. She is movin' on from the territory that MIA has abandoned (no they don't sound anything alike). Here's the video for "Bizness":

5. The War on Drugs: Slave Ambient

Kurt Vile's Philly friends have put out a great great record. Here's "Baby Missles"

6. Moon Duo: Mazes

Stoned out, droned out, sublime fuzz from San Francisco. Here's the video for the title track:

7. Air Waves: Dungeon Dots

A tad uneven, but the high points are just terrific. My favorite song is "Knock-out":

8. Dom: Sun-Bronzed Greek Gods

It's a cheat. This came out in 2010, but I didn't catch on to it til this year (so it's not on my 2010 list and it has to be memorialized somewhere). I've put the "Living in America" video up elsewhere so here's "Jesus":

9. Eddy Current Suppression Rings: So Many Things

This is kind of a cheat because, though it was released this year, it's a compilation album. But I just discovered these guys and have to give them the props they deserve. Here's the title track:

It's been a tremendous year for box sets and re-issues too. I'll post about that very soon.

Happy Listening!

Saturday, December 10, 2011

Now THAT's A Superstore

An exercise in imperfect capital markets. A classic article.

In a system with perfect capital markets, you would be able to borrow against a highly certain future return. A slight discount for risk, perhaps, but if we are talking about a term of a week or so that should be no problem.

Well, this lady decided that she could not borrow against the future earnings to be gained from selling the meth she was going to make. She had a cash flow problem, lack of $$ to buy the meth makin's.

But this woman was an American. From Oklahoma. No barriers like imperfect capital markets were going to hold HER back.

(Gotta like how the news reporter starts out by saying she is speechless, and then jabbers for several minutes).

Point is that our lady went to Wal-Mart, stole the stuff she needed to make the meth, and started cooking it up right there in the store. Yes, she did. Really. You can read about it.

Clearly an example of market failure. P-Kroog will likely want an investigation, a commission, and a new federal agency to ensure that the poor have better access to capital markets. To be fair, the bed-wetters may have a point: THIS loan likely would have been paid back, unlike the crap loans Barney Frank and Mel Watt forced the banking system to make on housing.

Don't forget about the denominator

Perhaps encouraged by the recent drop in unemployment from 9 to 8.6, President O opined that the rate could drop to 8% by November 2012.

Given that most of the recent drop is attributable to people leaving the labor force, I guess Obama is looking for 600,000 more discouraged workers to take a hike before next November?

Mars needs women!

ooops, make that "Norway needs butter"!!

Yes, one of the richest countries in the world has "run out of" butter! Just before the holidays!

Oh, the humanity!

The soaring popularity of a fat-rich fad diet has depleted stocks of butter in Norway creating a looming Christmas culinary crisis.

Norwegians have eaten up the country’s entire stockpile of butter, partly as the result of a “low-carb” diet sweeping the Nordic nation which emphasizes a higher intake of fats.

“Sales all of a sudden just soared, 20 per cent in October then 30 per cent in November,” said Lars Galtung, the head of communications at TINE, the country’s biggest farmer-owned cooperative.

A wet summer which reduced the quality of animal feed and cut milk output by 25 million litres had already limited supplies and the shortage has led some pundits to suggest the world’s eighth-largest oil exporter offer some of its plentiful fuel supply in exchange for butter.

Butter is now selling on Norway’s top auction website, with a 250-gram piece starting at around $13, roughly four times its normal price.

Top dairy producer Denmark lies just across a narrow sea channel, but its stores of creamy butter will be kept out of the country by the high import duties of Norway, the only Nordic nation that does not belong to the European Union

.....and there we have it. Domestic demand surged, domestic supply faltered and IMPORTS ARE FORBIDDEN!

Norway doesn't need butter, they need FREE TRADE!

We often see stories about localized shortages of global commodities and they invariably have bizarre trade restrictions behind them.

Perhaps the poor Norwegian, tragically now unable to eat a stick of butter for Christmas brunch can console themselves by knowing that their domestic butter industry is very profitable.

Friday, December 09, 2011

Individualists Trust People, Collectivists Trust the State

Culture, Cooperation, and the General Welfare

Nick Berigan & Kyle Irwin, Social Psychology Quarterly, December 2011, Pages 341-360

Abstract: Solutions to social dilemmas require cooperation. Given that there are
commonly multiple avenues for cooperation, sometimes social dilemmas require coordination of strategies in addition to sufficient cooperation to be successful. This study examines one social dilemma where such coordination is necessary: supporting the general welfare. Using World Values Survey data from 33 nations, we compare active membership in charitable organizations versus attitudes toward government welfare programs as examples of two different types of cooperation. We argue that culture influences the form of cooperation a group adopts via the amount of trust it generates. Specifically, individualist cultures promote relatively high levels of trust, which produce first-order cooperation (here, involvement in
charitable organizations). Collectivist cultures generate relatively low trust levels, facilitating second-order cooperation (here, greater support for government welfare programs). Findings support our arguments and thus suggest that culture, mediated by trust, shapes individuals’ perceptions about creating and sustaining public goods.

I would be interested in Mr. Overwater's reaction. Am I misinterpreting this? Do I have the causation backwards?

Japanese Light Trucks: Not What You Think...

Japanese light trucks? You mean like a Nissan 4 cylinder? Not for those wacky, wacky sons of Nippon.
(Please click for an even more deranged image)

Nod to Jackie Blue. No, you cannot "borrow" $125k to trick up your 1997 Subaru Forester with a "Scary Clown!" theme. It wouldn't be the same, anyway.

Truly Bad Economics

Do they do it for the money?

Utpal Bhattacharya & Cassandra Marshall. Journal of Corporate Finance, forthcoming

Abstract: Using a sample of all top management who were indicted for illegal insider
trading in the United States for trades during the period 1989–2002, we explore the economic rationality of this white-collar crime. If this crime is an economically rational activity in the sense of Becker (1968), where a crime is committed if its expected benefits exceed its expected costs, “poorer” top management should be doing the most illegal insider trading. This is because the “poor” have less to lose (present value of foregone future compensation if caught is lower for them.) We find in the data, however, that indictments are concentrated in the “richer” strata after we control for firm size, industry, firm growth opportunities, executive age, the opportunity to commit illegal insider trading, and the possibility that regulators target the “richer” strata. We thus rule out the economic motive for this white-collar crime, and leave open the possibility of other

Wow. I wouldn't accept this as a paper from a sophomore undergrad. The authors assume that everyone has IDENTICAL preferences toward income/leisure trade-off, and identical preferences on risk.

Let me propose an alternative. White collar workers in these firms are heterogeneous. They have differing risk preferences, and differing valuations of leisure. Therefore, the people in the "richer" strata will be those who value money most. Further, since we only observe those who are EMPLOYED, we are selecting on those who took the very highest risks throughout their career, as a matter of preference, not of strategy. (So, if 100 people took big risks, and five won, those five are likely to constitute the "richest" strata. The other 95 are unemployed, but we don't see them).

Is it a surprise, really, that the people who value money most and who are the biggest risk-takers would be the ones who dabble in insider trading schemes? Or is it a surprise that the people who are satisfied with their income and avoid risk do NOT engage in these schemes?

This paper would make sense only if all preferences are identical and if assignment to wealth strata were random. Since assignment to wealth strata is endogenous, and correlated sharply with the characteristics that make insider trading likely, I say: "back to school!"

(Nod to Kevin Lewis, who never really leaves school)

Thursday, December 08, 2011

Billy Beane, John Paulson & the January effect

My second Grantland column with LeBron is now up. This time we made the main masthead instead of being in The Triangle! Still no mention of Rex Chapman though.

A Story of Love, Deception, and Chronic Diarrhea

Dutch Boy sends this Facebook romance story, between a scammer and a person with a lot of time on his hands.

But we benefit a lot from the account! Just amazing.