We Get Letters!

An email exchange from today....

TP:   Dear Dr. Munger,  I enjoyed your video, "What Do Prices “Know” That You Don’t?"  The title reminds me of something that Bill Gates said to me.  I created the prediction markets project within Microsoft in 2003 and I was asked to brief Bill on them.  He immediately understood how prediction market prices work and then said that the reason they might help him was because [paraphrased], "If the market prices differ from my own beliefs, then either they know something that I don't know or I know something they don't know, and either of those may need remedy."   Cheers, TP

MM:  That's very cool, and an interesting difference between economists and entrepreneurs.  I assume you know the joke about the economist and the entrepreneur.

Economist and entrepreneur are walking down a street in San Francisco.  The entrepreneur sees a $100 bill, and generously offers to split the “found” value with the economist.

The economist refuses, saying that it’s not possible.  “After all,” the economist announces, if there had been a $100 bill in the street, someone would have picked it up.  In equilibrium, there are no arbitrage profit opportunities!”  

The entrepreneur shakes his head in scorn and pockets the full $100.

So, the economist sticks to the first part of your formulation.  For the economist, "they" always know everything, and that's embodied in price.  But entrepreneurs
know that prices are wrong, often, sometimes by a lot. 

That means the entrep's pick up the $100, and the economist turns out to be right after all.  But only because smart people go around looking for wrong prices.

UPDATE:  Scott Ainsworth writes.... A story from Georgia - When walking with economists in front of the econ/business buildings on the Georgia campus, I noted that there was a lot of money lying around the ground - pennies and dimes mostly. The obligatory equilibrium jokes followed. One of the economists said that picking up pennies was not worth his opportunity costs. I admitted that I still picked pennies up. More than one person looked askance at me - until I stated that I was the shortest person in the group. Opportunity costs survived and equilibrium was restored. For the economists, it was a very big day - and I was 23 cents wealthier.

Does He Actually Get It?

Is this just an accidental use of the right word, or does Senator Michael Bennet really understand what is going on?  From an NYT piece by Maureen Dowd -  

He thinks the trouble is not so much a clash of Democratic and Republican orthodoxies as it is a clash of past and future.  “I think the inhabitants of the past are fighting hard to keep the rents they acquired in the 20th century,” he said.

The story is about why Michael Bennet   - a Democratic senator  - voted against the cliff deal.  He gets a smiley face, from KPC.  If more senator talked about rent-seeking, instead of doing it, we would be better off.

Is this the way 2013 is going to be?  Going to Maureen Dowd for good information, and Democratic senators for wisdom?  Golly.

Government Spending

Lots of data, facts, and pictures on government spending in the U.S.  Interesting to look at, and more than a little disturbing.

Here's a good one.  Government pension obligations.  We are either going to spend a whole lot of our annual budgets on pensions, or else we are going to renege and not pay the pensions we promised.  Either way, somebody not happy.

The IDK Problem: New Learn Liberty!

The folks at Learn Liberty (and I do mean the lovely Elisabeth McCaffrey, among others), are SO great at taking a pretty bland idea and doing something wonderful with it.  This turned out WAY better than I had any right to expect.  I have ALWAYS wanted to blow up into a cloud of colored smoke at the end of a video.  It hurt, but only a little.


(UPDATE:  Since people have asked, "Al Trewis" is an altruist, not someone for whom all is true.  That would have been clever, since if everything is true, nothing is.  But I'm not that deep.  He's just an altruist.)

(UPDATE II:  A number of people have said, "But you didn't talk about ____!"  Especially farm subsidies that distort prices.  Well, first, yes I did.  I mentioned that the subsidy for ethanol was cut, and that that changed things.  And second, it's a four minute video.  The number of things I did NOT talk about is essentially infinite.)

Whatever happened to the 22nd Amendment?

Is it just me or does it really seem like George Bush is now in his 4th term as president?

He finally got 99% of his tax cuts made permanent. Warrantless wiretapping is proceeding full speed ahead. We are still running huge deficits. Drones use continues to rise.

Hell there's even a natural disaster where people are mad about the lack of a government response!

I just don't see how conservatives get all tied up in knots about president O. After all, despite some differences in style and tone, he's pretty much one of them.

Unknown Mortal Orchestra

UMO is coming to Norman! 3/11 at Opolis. Mrs. A and I will be there!



Here is info on the whole tour. This is amazing music.

Buy a Condo, Get a Green Card!

"Investment" in a ski resort in Vermont.  William Stenger is building a new resort town, using citizenship as a sweetener.  Generally, I am skeptical of incentive programs for investments, but I am pretty strongly FOR letting rich people emigrate to the U.S.

 

Excerpt:

 

The price tag for the entire project, which Mr. Stenger says will create 10,000 direct and indirect jobs over several years, is $865 million.

But even more unusual than the size of the undertaking is the method by which Mr. Stenger and his business partner, Ariel Quiros, are financing it. They have tapped into a federal program that gives green cards, or permanent residency, to foreigners who invest at least $500,000 in an American business — the reward for the investment is a chance at United States citizenship.

Mr. Stenger has already attracted 550 foreign investors from 60 countries to put up $275 million for the first phase: a hotel at the Jay Peak ski complex, an indoor water park the size of a football field, an ice hockey arena, condominiums, restaurants and stores.

The second and third phases, now under way, require 1,000 additional foreign investors to put up $500 million to overhaul Newport and to develop the nearby Burke Mountain ski area.

Mr. Stenger and Mr. Quiros are putting up $90 million themselves. But even at $785 million, this is one of the single biggest projects in the country financed under the investor program.

Congress created the visa program in 1990 to help stimulate the economy. Because of a cumbersome process and complaints of fraud and corruption, it was long underused.

But a confluence of events in recent years has led to its rather sudden revival: the program was improved; the financial crisis of 2008 made it hard for developers to get loans from commercial banks; and foreign nationals, especially in China, were accumulating vast wealth and were eager for their children to study and live in the United States.

In 2006, the government issued just 802 of these EB-5 visas to investors and their families; this year, it granted 7,818.

The program is now growing so rapidly that in the next year or two the number issued will probably reach the annual limit of 10,000. For the first time in the program’s history, applicants may be turned away.

 

Good program, bad program?   

 

Nod to JR

Smokin' Hot Policy Choices

Two studies on tobacco control policies.  Interesting.  Pretty long, though, so I put them after the jump.

Happy New Year from your friends at KPC

Any thoughts, people? Tell me in the comments.

As Always, H. Browne's Libertarian New Year's Resolutions

For our annual tradition, here is Harry Browne's list of things Libertarians (note the "big L") might want to do.

The list.

Apparently, John-O was interested enough that he bought Harry's book.  This one actually has a cheap Kindle version, though the book itself is expensive, even used.  

I have to admit, I like this one, it's clever, funny, and effective.  There are at least ten of those little nuggets that I use routinely.  And it's only $14, from "The Advocates."