Saturday, August 10, 2013

The incredible shrinking deficit

Cardiff Garcia sends us this cool deficit reduction chart:

If you like your numbers raw, then there's this,

"In dollar terms, the Congressional Budget Office estimates for the July fiscal balance (which will be released next week) suggest that the deficit totaled $722bn in the 12 months ending in July, down from a peak of $1.471trn in December 2009; we now expect the deficit to total $650bn in FY 13 and $550bn in FY14".

Plenty of people are lamenting this show of "austerity" with unemployment still high.

If  we had been better Keynesians in the past, we would have used the "boom and not the bust" for "austerity", and could have run an expansionary policy longer. But in the absence of a proven connection between fiscal stimulus and sustainable job growth (sorry Brad and Larry), and the presence of our high and still rising debt levels and the continual damaging political theatre around debt ceiling breaches, I am fine with this rate of deficit reduction.

What is not so great about the deficit reduction we are getting is that it doesn't address longer run budget issues, and the deficit is projected to start rising again in 2015 and get ugly shortly thereafter.

I'm happy we've reduced war spending and cut the military (at least as a % of GDP). We can do that some more. But I don't see any achievable solution to our long run deficit drivers. People we can't even get chained CPI as the benchmark for social security increases. That was treated like running over grandma with a reindeer.

The good side to me is that our government actually "worked". Politicians saw the huge deficits as a problem and enacted policies to reduce them (at least for a while). The bad side is that the policy process burned tons of trust and political capital without addressing our real, long-run budget problems.

Why Can't We Use Our Electronics on Planes?

Because...planes are MAGIC!

NSFW.  And check out that cute Adam Lustick, working! (And a nod to WH)

Friday, August 09, 2013

Amazing Op-Ed in WAPO

Even by the standards of the craven, screed-vending WaPo this is amazing. Excerpt:

By now, even the economics profession concedes that our openness to the developing world — call it the Global South — has played a role in depressing the incomes of U.S. workers...But how much of this problem originates in the Global South and how much in the American South?...In the northern system, workers have more rights and higher incomes. In Dixie, they have fewer rights and lower incomes...When it wants to slum, business still goes to the South...[I]f the federal government wants to build a fence that keeps the United States safe from the dangers of lower wages and poverty and their attendant ills — and the all-round fruitcakery of the right-wing white South — it should build that fence from Norfolk to Dallas. There’s nothing wrong with a fence, so long as you put it in the right place.

Nod to Kevin Lewis for the find. Some observations:

1.  Look, y'all:  we tried to leave.  You wouldn't let us.  We tried and TRIED to leave.  'Til Stoneman's cavalry* came, and tore up the tracks again... Now I don't mind choppin' wood, and I don't care if the money's no good. Take what you need and leave the rest, But they should never have taken the very best.   You had your chance, ya Yankee S.O.B.  Now you are stuck with us.

2.  If you build the wall where this guy says he wants it, he'll keep OKLAHOMA and (most of) ARKANSAS.  In the part he loves, and respects as being liberal and progressive.  I don't think Mr. Myerson gets out much, frankly.  Maybe we should draw big paint lines on the state boundaries, so he can actually learn some geography from his window seat at 30,000 feet, flying back and forth to Portland or San Francisco.  Problem is that Mr. Myerson's wall will have to start at Baltimore, I think.  And just like in the war, DC will be surrounded by hostiles.

3.  "Even the economics profession"?  Seriously?  Mr. Myerson actually advertises his ideology as a qualification, a reason you should admire him.  In his world, at least.

*Corrected.  I had Joan Baez's version in my head.  She said "so much cavalry..."  The above lyric is the original.  If you want to know...
If you want to me chills.

I bet I kin break 10,000 aigs....

Remember that scene from "Cool Hand Luke," where he bets he can eat 100 eggs?  This is a remix, I guess you'd call it, but it's pretty great:  "When it come to the law, NOTHING is understood."

French farmers went one better:  They bet they could break 10,000 eggs.  Outside a tax office.  To protest low prices.  (Note:  not to protest high taxes, to protest low prices.  Even though higher prices would in effect be a higher tax, on everyone else.  Gotta love Gallic logic.)

The French version.  An English translation (sort of). M.K. offers this interpretation (edited a bit, don't blame him):

It announces breathlessly that some goods will be on sale from June 26 to July 30.  Note that also that certain "economic zones" are excluded from this, and their sales dates are different, being carefully rotated in accordance with the....MASTER...PLAN! If you live in Guyana, you'll have to wait until October 3 for your cheap socks. 

The paragraph below the list notes that, thanks to the Economic Modernization Act (lol) the number of days for permitted discounts has been restricted. Now you know why the French drink, and smoke those ridiculous cigarettes.

And then, M.K. offers this lagniappe: Apparently in highly competitive or struggling businesses, the final weeks leading up to the sale period is a time of rising bankruptcies due to shrinking cash flows amplified by consumer hold-back and retailers' inability to lower prices to save their bacon...  

Thursday, August 08, 2013

The Mannings (Not Bradley) Do A (Sort of) Rap Video

Peyton, in that wig, is disturbing.

Discriminating Linebackers?

Compensation Discrimination for Defensive Players: Applying Quantile Regression to the National Football League Market for Linebackers and Offensive Linemen 

Nancy Burnett & Lee James Van Scyoc 
Journal of Sports Economics, forthcoming 

Abstract: Keefer’s recent article in the Journal of Sports Economics, “Compensation discrimination for defensive players: applying quantile regression to the National Football League market for linebackers,” finds wage discrimination in the National Football League market for linebackers. Following Keefer, we examine both ordinary least squares and quantile analysis, as well as Oaxaca and quantile treatment effects decompositions though we explore the market not only for linebackers but also for offensive linemen and limit our study to rookie players. We would expect to find stronger evidence of discrimination, as rookies are captured sellers. However, we find no pattern of discrimination against Blacks. 

Nod to Kevin Lewis

"Oaxaca decomposition treatment"?  I always thought that involved smoking weed.  But no...

Peter Leeson, Peewee Pirate!

Holy Smokes!

Here's Peter Leeson, scholar of the first rank.  I use his book, The Invisible Hook, in my intro Econ class every fall, and students love it.  Really great stuff.  So, taking nothing from my admiration.  Luv ya, Pete.  Mean it!

But here....well, here is Peewee Herman.  Golly.  I wonder if Pete L likes "Tequila!"

Wednesday, August 07, 2013

CK Rowley

Angus and I both had some bumps in our relations with Prof. Rowley, who died August 2 after a long illness.  It appears he was working on a biography of James Buchanan, which, for those of us who know the history...well, let's leave it at that.  That's what he was working on.

I am writing a memorial of CKR for TIR, and it will be out in the fall.

Charles sometimes was difficult.  But then so am I.  I owe Charles a lot, because through the years he supported my work and published it in many different places.  Of course, sometimes in between he would launch tac-nuke strikes for some slight, real or imagined.  But his work for Public Choice, and for the cause of liberty, should be acknowledged and honored by all of us.

I always wondered if Charles was happy.  He worked very hard, on a lot of things.  But it seemed like there was always something else, something he wanted and never got.  Rest in peace now, sir.

This week's sign of the apocalypse


Once again I ask, if crap like this can happen, why do we even have a government at all?

Hat tip to The Poke.

Hiring and Jewish Economists

By my Duke Econ colleague Roy Weintraub...

MIT’s Openness to Jewish Economists 

Roy Weintraub 
Duke University Working Paper, June 2013 

Abstract: MIT emerged from “nowhere” in the 1930s to its place as one of the three or four most important sites for economic research by the mid-1950s. A conference held at Duke University in April 2013 examined how this occurred. In this paper the author argues that the immediate postwar period saw a collapse – in some places slower, in some places faster – of the barriers to the hiring of Jewish faculty in American colleges and universities. And more than any other elite private or public university, particularly Ivy League universities, MIT welcomed Jewish economists.

Nod to Kevin Lewis

Interesting Policy

So apparently the way to answer questions about substantive problems is to talk about food.

Reporters then have SOMETHING to report.  Whereas if you just say, "No Comment!" it sounds rude.  Check it out.


Your one-stop "recovery" visual (thanks to @cobrown ):

I think Joan Baez might have reacted this way:

Now you're telling me
You are recovering
You need another word for it
You who are so good with words
And at keeping things vague
Because you need some of that vagueness now....

Maybe an Obamery?  An apparently permanent five percentage increase in dependency on government handouts?

3D printer for home fabrication a win?

Jackie Blue writes:

Dis true, Mr. Economist?

My response:the first commenter says what I would have said, only he says it better.

John: "25 hours per item, I will assume they already factored in the need for ventillation and power for the device and move to the real issue. Quality control, repairs and finishing are going to eat up many hours the first time each person creates an item with many mistakes along the ways likely requiring reprints and modifications before it will work. Between the labour cost and the material losses from each reprint, I very much doubt their estimates of cost per item. This is the same logic that people use to say I can renovate my own house for half the cost. It may be true if everything goes well but since they lack experience will end up doing everything twice and wasting alot of material through the process eating up most if not all of the DIY savings. 

Besides, most of the 3D printed items can be found in a dollar store, so unless you are comparing some high end spatula to a 3D printed one, there is no savings."

So, that's what I think.  But it might be true that it is a small business opportunity. A place that's remote from transport could have a person set up a higher speed printer, and then run it to fabricate a bunch of things that would be expensive to bring in. There are parts of Australia, and of course much of New Orleans, that are like that.

Tuesday, August 06, 2013

Phil Schrodt on Retiring from PSU

Wow.  This is really something.  62?


Unexpectedly, writing Seven Deadly Sins rendered me useless as a methodological  instructor. I am convinced that garbage can models are worthless, but in order to get tenure at any place worth getting tenure, you’ve got to publish garbage can models, and lots of garbage can models, and that is not going to change any time soon. In my former subdiscipline, the response to Achen’s 2002 critique of garbage can models was a journal-length methodological suicide note, Conflict Management and Peace Science Vol. 22, No.4. I’m not going to win that battle.

There is absolutely nothing worse than the stereotypical old fart in the cluttered office telling people “It’s all crap!!!”—while pulling down, year after year, a handsome if static salary—and I’m perilously close to that. In classical Chinese philosophy there is an oft-repeated motif of the sage who writes a book and then departs beyond the frontiers, never to be seen again. Perhaps 7DS is that [non-]book.

The Fear-Industrial Complex

The people who make money from your fear, your irrational fears, would prefer you not see this.

I would prefer that you do see this.  And that's still possible....I just don't want to be called a "fear-Munger."

Monday, August 05, 2013

Monday's Child

1.  Zenn car.  Again, lefties discover that regulation sucks.  Why they don't generalize this conclusion escapes me.

2.  Your help?  It hurts.

3.  If someone robs you, you don't have to show receipts to prove the property was yours.  But if a bank makes a mistake and takes your house, YOU have to prove that you owned the stuff they stole, sold, or threw away.  Now....why, exactly?

4.  Not sure this is really true.  A little too pat.  On the other hand....there are people who think this way.

5.  The EYM is moving to NY, to attend NYU, in just over two weeks.  This doesn't look very fun.  (He has a dorm for the first year, but then...)

after the jump...more

Sunday, August 04, 2013

Why Do Prescription Drug Makers Advertise?

Advertisements impact the physiological efficacy of a branded drug 

Emir Kamenica, Robert Naclerio & Anup Malani
Proceedings of the National Academy of Sciences, forthcoming

Abstract: We conducted randomized clinical trials to examine the impact of direct-to-consumer advertisements on the efficacy of a branded drug. We compared the objectively measured, physiological effect of Claritin (Merck & Co.), a leading antihistamine medication, across subjects randomized to watch a movie spliced with advertisements for Claritin or advertisements for Zyrtec (McNeil), a competitor antihistamine. Among subjects who test negative for common allergies, exposure to Claritin advertisements rather than Zyrtec advertisements increases the efficacy of Claritin. We conclude that branded drugs can interact with exposure to television advertisements. 

Nod to Kevin Lewis

Delta Dawn?