Wednesday, January 31, 2007

An inconvenient film about "Inconvenient Truth"

Watch Mine your own business. I haven't seen it yet, only because I was turned away after every libertarian in town came out of the woodwork for it.

But I got this email:

P.S. Below, please find some of the "Fun Facts" that we showed at the D.C. screening.
1. An Inconvenient Truth (AIT) is the third highest grossing documentary film. Its revenues are:
a. $24.1 million
b. $17.3 million
c. $41.3 million
d. All of the above
Answer: All of the above. AIT earned $24.1 million domestically and $17.3 million at foreign box offices, for a total of $41.4 million.

2. An Inconvenient Truth is -- or soon will be -- required viewing for students in:
a. Norway
b. Sweden
c. Scotland
d. All of the above
Answer: All of the above. The film is already required viewing in Norway and Sweden. Scotland is currently integrating AIT into its curriculum.

3. An Inconvenient Truth is currently being viewed:
a. In home screenings
b. At places of worship
c. In the U.S. public schools
d. All of the above
Answer: All of the above

4. Participant Productions will be training 1,000 Climate Change Messengers to:
a. Enhance their knowledge of climate change
b. Equip them with debating skills
c. Teach them how to be community activists
d. All of the above
Answer: All of the above

Addendum: And now the policy results.

French culture from an English perspective; a continuing series

Max, a little taste of home for you. (HT to Tyler).

And how do you lure the right stores in, assuming you can decide what the right ones are in the first place? Jane Jacobs doubtless has some answers, but this [is] France. If you give the Parisian city government a slush fund to subsidise interesting shops opening on the Champs Elysees, hey, guess what, the mayor's best friend's brother-in-law has just decided to go into the bespoke millinery business.

My general point is that, for as long as the French think they can suspend the laws of economics in a 400-mile mile radius around Clermont-Ferrand, we should delight in any weird policies they may attempt (eg, declaring yoghurt a strategic industry; imposing a 35 hour week and then regretting it). Just to see what happens.

Actually, Jane Jacobs would recommend intervention in this case. She claimed that neighborhoods tend naturally to become specialized and homogeneous, and so government should zone for diversity. That's about the only idea of hers I don't like. How is the government's definition of diversity better than that of the neighbors who live there? And why should we expect the government to more effectively, ie efficiently, achieve diversity?

Outmatched in the blogosphere

I'm joining the chorus and voting for Overcoming Bias as the best new blog. It's even better than this blog. Part of their advantage is there's like 20 of them and only one of me. And it's unfair because I have to go to class. And they have Robin Hanson, who is just operating at a higher level than the rest of us. I'm not just saying that because he teaches my health econ class. Or maybe I am. But others have said the same.

Here he is on excessive signaling in education:

This example illustrates the concept of inefficient signaling: the effort to make yourself look better than others comes in part at the expense of those others, which means that all else equal we do too much signaling.

Signaling is an important concept. Nearly everything we do can be reduced to signaling. I'm getting a PhD to signal my intelligence. I'm posting about jazz to signal I'm not a complete loser/nebbish. But Robin is arguing that this can go too far. Here are my comments:

Robin, I know this is just an example, but I still think you're not covering all the bases appropriately.

Your example is privately inefficient but not necessarily socially inefficient, since you have ignored the benefit to employers of sorting the good employees from the bad. I'm sure you know that it is socially efficient if the marginal benefit is greater than the marginal cost, which here equals either 12 or 6. Looking at real world numbers, let's assume all of the costs of attending grad school are opportunity costs. So it's one year's salary, say $50,000. I think it's plausible that employers would value this employee quality information at more than $50,000, since the employee's career is likely 20+ years. Further, it's plausible that the costs of education would be shared between employees and employers.

The only clear reason I see for inefficient signaling in this real world example is that grad school is subsidized by the government. Mere social approbation and disapprobation I do not see as necessarily producing socially inefficient levels of signaling. Please explain how that might be.

My fear is that Robin's analysis is just the sort of thing that leads to government intervention. Somebody says that women spend too much money on boob jobs, and so the government must ban them. I say move away from California if you don't like boob jobs. In essence, I am very skeptical of any argument that presumes to understand the social process. As Adam Smith recommended, when in doubt, go with individual liberty.

Addendum: To clarify, I think what Robin does is illuminating and of great value to society, but I hope public policy types completely ignore him. Perhaps society would be better off if economists could agree to only publish their work post-humously, kind of the way presidents do. Maybe I should start by blogging less.

OK, enough of that. But I think it goes to an important question, which Dan Klein has thought about considerably: Should economists turn inward and remain academic, or should they address the Everyman? See his answers here and here.

Saturday, January 27, 2007


A certain someone just reminded me I should spend more time at HR-57. I forgot to tell certain someone that Bossa Lounge is another excellent place for jazz, and you can find me there usually on Sunday nights for the late show. I knew this blog was good for something. Truly, Thad Wilson and the Young Lions are phenomenal, especially their drummer, Quincy Phillips, who you have to see to believe.

Addendum: Another new favorite haunt, though more bird music than jazz: the Botanical Gardens. It's perfect in the winter. I learned that the proper name for snake plant is "mother-in-law's tongue."

Friday, January 26, 2007

Bush's healthcare proposal

If you haven't been following the healthcare discussion over at MR, you should. Either that, or just stop voting or paying any attention to politics. I'm almost there myself. First, Krugman succinctly describes the two sides of the issue in economic terms. Next, Alex shows why Joan Robinson's quote, like a fine wine, is getting better everyday.

This is another example where knowing a little history can be more useful than having a PhD in economics. Healthcare spending was roughly 4% of GDP between 1925 and 1955. Then it began a steady growth rate and today it is 16% of GDP. The only blip occured in the 1990's, when the HMO revolution briefly reduced the growth rate to zero. So, what happened in 1955 to start this madness?

That's what I asked Robin Hanson last night in health economics class, and I didn't get a satisfactory answer. He mentioned something about FDR's price and wage controls. Indeed, according to this article, that caused employers to offer other benefits, including health insurance. Then, in 1942 the federal government started subsidizing employer sponsored health insurance. What do you think happened? As the article mentions, the number of people insured by employers went up 12 fold between 1946 and 1957, to roughly 32 million. That must have been a significant part of the insurance market, and likely big enough to effect prices. That is, those 32 million got the gold-plated ball rolling. The law of unintended consequences strikes again.

I have to say Bush is right on this one: out of control health care costs do seem to be linked to employer sponsored health insurance. Unfortunately, his proposal is an arcane bunch of exemptions which can be spun in any direction the pundits choose. Why can't he just propose banning all exemptions, deductions, subsidies, and loopholes, and "level the playing field" that way? Oh, that's right, because without the lobbyists' money, the Republican party would go broke.

Wednesday, January 24, 2007

On the minimum wage

There is no good purpose served by complicating matters. By definition, the minimum wage bans jobs below the prescribed minimum wage. So those jobs are destroyed as a first effect. More people, primarily kids, are out of work, replaced by cheaper alternatives, such as automation. Illegal and black market employment increases. Product prices go up to reflect the higher cost of inputs.

So why do some economists still support it? I figure because it makes them more powerful. Tyler discusses Dan Klein's research, which, as always, is a fascinating look inside academia. It reminds me of Joan Robinson's quote on economics:

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

Addendum: Tyler and Don Boudreaux skillfully discuss the heart of the issue: How concerned about inequality should we be?

What does DC home rule have in common with the war in Iraq?

Both are inspired by the same flawed idea that democracy is always and everywhere the best form of government. We know the results in Iraq: tens of thousands of casualties. And we know the results in DC: Marion Barry. Sure, we've got a sober mayor now, who wants to "take over the schools," whatever that means. But Marion's always there, on the City Council now, tempting him with the crack pipe. I say the nation's capital should be treated as an experiment. I like the charter schools, but we need to go further. We need to try out some other forms of government. And we need to stop interfering with foreign governments.

There's a simple solution here: Pledge to the world that when we topple a dictator, we will then make him mayor of DC. Mayor for life, even. Imagine what Saddam would have done with DC's crime emergency. Or just think what fun we could have with Kim Jong Il as mayor, bumping into him on the metro, etc. In fact, I hear Kim's not buying his own propaganda anymore, so he might even agree to this arrangement. Then we could stop yakking about 6 party talks.

There's nothing but upside here, people. Let's make it happen with a constitutional amendment. Who's with me?

Nota bene: Yeah, some of you will remember how I originally argued for this war, but that was before I met this man. And, appropriately, under this proposition I would have had to live with a tyrant.

Addendum: It's comforting that many of the smartest people I know also fell into this trap. And, they too, as Washingtonians, would have been stuck with a tyrant.

Tuesday, January 23, 2007

Why are cities so expensive?

It all comes back to this guy, and people like him. Ed Glaeser' s work suggests the same radical idea, that housing prices have gone up primarily because of regulation. It restricts the supply! Supply goes down, the price goes up! Why does it take research to make this point?

Addendum: By extension, it should also be clear that excessive regulation in cities is also the root cause of sprawl. As this article states:

No other region in the country, however, has created as many jobs in recent years as the Washington metropolitan area. Between 2000 and 2005, the region added 359,000 new jobs, said Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, citing Labor Department statistics. That was 75,000 more jobs than the nation's No. 2 job engine, Miami. "We've been adding jobs faster than we've been able to add resident workers," he said. "Had we been able to produce more housing, we could have added more people."

Monday, January 22, 2007

Tolerance as a virtue

As Fr. Connor argued yesterday, that's the gospel according to Oprah, but it is not the Christian Gospel. Tolerance is not a Christian virtue.

Well, I checked up on this, and he's right, there is no obvious way to construe any of the seven virtues as tolerance. By the way, this sort of thing is news to me, since I was not raised Catholic, and spent most of my formal education in public schools. I have an excellent grasp of "current affairs" and "Alabama history", but no real idea what the hell moral philosophy is.

What I've learned is from economists like Deirdre McCloskey, who argues in her new book that economists have for too long focused on prudence, and ignored the other six virtues: temperance, courage, justice, love, hope, and faith. This derives from the grand daddy himself, Adam Smith, whose most influential book, "The Wealth of Nations", deals primarily with prudence. His other book, "Theory of Moral Sentiments", deals with temperance. She argues he intended to write a book about justice as well, but died before he could. P. J. O'Rourke, in his new book, argues that Adam Smith instead lost the nerve, after realizing that his policy prescriptions at the end of "The Wealth of Nations" were rediculous.

Fr. Connor further argued that our national obsession with tolerance derives from the Civil War, in which more Americans died than in all our other wars combined. I've always found political correctness objectionable, but never wondered really where it came from. My experience in Europe tells me Fr. Connor is at least right about the facts: we are different. In Europe, you can call a spade a spade. Of course, this is also means you can call an immigrant all sorts of horrible things. But I don't think European zenophobia and racism derives from this liberty. Rather it comes from homogeneity, and specifically a lack of interaction with immigrants.

The same can be seen in the American South, where very little immigration in the last 200 years has produced a relatively homogeneous culture. No doubt, the South is a richly colorful place, and quite unique and interesting when compared to, say, the Midwest. But that's living off the past. Today it is marked more by intolerance. Nothing a few million Mexicans can't fix.

Addendum: Turns out immigration is more complicated than I thought.

Sunday, January 21, 2007

The second largest economy

Turning now to something I really know nothing about, how did Japan get so rich? I'm reminded of this persistent question, which went unanswered through two semesters of macro, by Fr. Connor's coffee hour spiel, "The Gospel According to Oprah." Somehow, he worked in a reference to W. E. Deming's role in transforming the post-WW2 Japanese economy, as a bean-counter! Control charts, baby, control charts.

Perhaps also the Macarthur constitution had something to do with it, although the important elements, ie guarantees of individual freedoms, appear to have already been there in the Meiji constitution of 1889.

I'm also aware of Mancur Olson's argument that Japan and Germany rebounded so vigoursly after WW2 because they were suddenly freed of the sclerotic effect of special interest groups, which were destroyed with everything else during the war. Now of course the special interests have fully recovered. However, I'm pretty sure the important transition in Japan, as in Germany, occured before the war. I just don't know what it was.

Rodney Stark suggests that religion never helped much. He shows that, unlike the monotheistic religions, and Hinduism which he argues is effectively monotheistic, beliefs in Shintoism and Buddhism are not correlated with moral beliefs*. The difference arises because Christianity, Islam, Judaism, and Hinduism all posit the existence of a moral God, whereas Shintoism, Buddhism, and Taoism do not. So, then I hear that crime in Japan is almost non-existent. What gives? I know at least 3 of you have lived there, so let's hear it.

*I corrected this.

More on our crappy public schools

I forgot about Joanna, she's speaking to my heart on school choice issues. And she's trying to do something about it. 50 years after Milton Friedman first proposed vouchers, who are these people defending the status quo? I mean besides the douche bag politicians, who are the special interests behind them? Is the teacher's union responsible? Joanna, somebody, tell me who's responsible, and show me some of their pictures.

Here she shows the typical arguments against school choice, but it seems to me most of us are apathetic and don't even bother to consider the arguments. This leaves policy to be dominated by special interests. A la public choice, I assume union members get the concentrated benefits, in the form of higher salaries, job security, light teaching loads, etc., while the rest of us suffer the dispersed costs of poor education.

Addendum: So I met one of those advocates of the other side at church today. Her name is Amy, and she is also the wife of our rector, Father Lane Davenport. Anybody know how to delete a post? OK, taking to heart Sam's very nice sermon on fear, I'll leave this up for now. Amy, if you find this, please join in the debate. It sounds like you know of what you speak.

Saturday, January 20, 2007

Trader Joe's meets the District

I just made my weekly trip to Trader Joe's to replenish my collection of wines costing $3 or less. This is the new one at Foggy Bottom, the only one in DC, as far as I know. It's usually bustling, but tonight it was cheek to jowl. Slowly I realized the people I was running into in the dairy section were waiting to checkout, with the line stretching all around the interior perimeter of the store. No one was pissed off. At the Sandanista Safeway, everyone's pissed off. It gets tense when the line exceeds 5 people. If you're listening, Trader Joe's, please open another fucking store in the District. You're the best thing that's happened to this city. I often ponder where your next location should be, figuring your demographic is cheap bastards like myself who aren't opposed to well run franchises. Stay away from Mt. Pleasant, which has a slew of highly competitive bodegas offering excellent produce. Your best bet is Adams Morgan, or 14th and U. Your third location should be at 10th and Pennsylvania, the new condos going up next to Cato.

Friday, January 19, 2007

Why are academics twice as likely to be atheists?

Robin Hanson asks the question, Tyler Cowen and Jane Galt pick up on it, but I alone have just written a paper on the topic of atheism in academia. This is no conincidence. All except Jane are professors of mine, as is Larry Iannaccone, who beat us all to the punch on the economics of religion.

Here are my comments posted at the other blogs:

The 1975 Carnegie Foundation National Survey of Higher Education revealed the same basic facts, especially that academics are twice as likely to be atheists. It also revealed that atheism is highest among social scientists, whereas "hard" scientists to not exhibit higher than average levels of atheism. I figure there are four ways to explain this:

1) Academics lack exposure to the business world, and are less moral because of it. Sounds harsh, but this is Adam Smith's idea.
2) Also from Adam Smith, academics are prone to group-think, and produce sciences which are "a mere useless and pedantick heap of sophistry and nonsense." Here, the bad science is the secularization thesis, which has dominated the study of religion for 100 years.
3) Academics seek fame more than fortune, and this is at odds with Christian theology.
4) Academics seek to persuade and influence society, partly because their minority views put them at a disadvantage. This applies to atheism as well as extreme political views.

I do find support for all of these. Let me know if you'd like to see the paper.

Addendum: More from Arnold Kling, and my posted comment:

I don't doubt there is a certain degree of socialization going on, but I still think selection explains most of it. If I'm recalling correctly, this is supported by Wuthnow's article "Science and the sacred" found in "The sacred in a secular age" edited by Phillip Hammond.

I'm going to go check that out again myself. There's a lot of good research on this summarized in that article.

Skip the ATMs, especially in India

I haven't used an ATM in years. Being an economist, ie cheap bastard, I instead use my Discover card to get cash at the grocery. I've never understood why so many people are willing to pay those fees. Maybe because the fees are really quite low when compared to those in other countries. Now I see why microloans are so popular there.

Wednesday, January 17, 2007

Too much of a good thing, student loan edition

Here is Richard Vedder on why lowering the interest rates on student loans is not the answer. There is actually a sound economic argument for subsidizing education. Since slavery is illegal, poor students cannot offer sufficient collateral to obtain loans in the private market. But then put that argument alongside your own personal college experience. How many kids did you know who were really that poor? How many did you know who were spending most of their time emulating Bluto on Animal House? I was going for Otis.

Tutoring at George Mason has shown me the real problem: the sorry education students get before college. Many students come to me with calculus problems having never learned algebra. This creates an insurmountable barrier of intimidation.

The bottom line is that our universities are the envy of the world, and our K-12 is below par. This is because our university system atleast resembles a free market, whereas K-12 is dominated by a federal monopoly. Check out The Marva Collins Story to see what I mean.

Most European universities charge either a nominal tuition or none at all. I lived in Sweden for a while and attended Lund University. There is no Swedish word for tuition. They get student loans for beer money. The parties were great, the classes generally sucked. Do not expect any more Nobel prizes to come from Sweden. Also, do not expect to find any Swedes who cannot do algebra, or speak reasonably good English for that matter. There K-12 system does seem to work much better than ours. I'm not entirely sure why. I suspect it is more locally controlled than ours. Anyone know? Gisela?

Another famous person I ran into last night

David Levy also noted the obvious lack of diversity among libertarians, and economists as well. I offered a rather un-PC explanation: rational choice. Are men any more rational than women? I don't think David bought it. Here he is, with Sandra Peart, on the origins of the term "dismal science."

Reason happy hour

First impressions: duderonomy. How do libertarians expect to effect policy if they can't even attract women? Nonetheless, it was a lot of fun, and I did get to meet this lovely lady.

Monday, January 15, 2007

Hurry up with the revolution

This blog is inspired primarily by my profs, Tyler Cowen and Alex Tabarrok, who blog at I've read it for a little over two years now, and with a healthy dose of skepticism about blogging. This is what I gather:

1) "Tyler" is actually an android representing an entire research faculty, locked up somewhere in South America.
2) Blogging may be the only well-functioning institution in the world. Religion is doing OK in the US, where it remains fairly unregulated. Everything else is screwed, from academia to the mainstream press to the law. Forget about free markets in goods; they've been on the run for 100 years.
3) This blog will pale in comparison. All I can promise is many fewer posts. And maybe some of my apathetic friends will join the revolution. Surely my mom will.

Sunday, January 14, 2007

Another libertarian setting out to offend the world

Actually, just the elites of the world, especially politicians, pedants, and vacuous journalists. Stupid people of all stripes irritate me, but it's the ones with power that I'm after. Maybe you think that makes me an elitist, and you'd be right. But give me a break, I'm unemployed! I'm an economist in DC, trying to get rich off a blog! Who the hell reads this crap anyway?