Truck and Barter Where Sympathy and Hedonism Collide |
Church of Apple
BY
Bob
I was reading through some research from Piper Jaffray this afternoon and ran across some remarks about Apple: Wildcard: The Apple Option - Another Reinvention. Given the magnitude of the success of the iPod , we believe that Apple will retain certain investors that will have a very high tolerance for lackluster performance seen in the Mac segment. We feel there is value in the "Apple option," potentially allowing the company to falter numerous times without investors becoming disgruntled. The Apple option is the bet that the company will be able to reinvent itself again through an iPod- like product and we believe that the huge success of the iPod will serve to offer the company significant leeway in the development of new products and potentially in keeping investors patient during difficult times. We feel that the Apple option is a psychological phenomenon that will drive shares of AAPL higher in the near-term. Translation, Apple's shareholders tolerate mediocre performance, so buy the stock because it's going higher on some irrational belief in the company. For those of you afflicted with this psychological phenomenon, they have a $30 price target, but list it only as a market perform.
4/30/2004 08:40:44 PM
So, what's the risk price for losing the shotput event?
BY
Ian
IOC Gets Olympics Cancellation Insurance
4/30/2004 01:04:50 AM
Speaking Of Which...
BY
Ian
Looks like Prof Kiesling's place of work is going to be getting one of my profs come next year. The loss to da sowt-side is the North Shore's gain, that's for sure.
4/29/2004 01:00:54 PM
California Energy Competition
BY
Ian
For my part it's going to be short pieces and quick pointers for the next day or two. (Unless someone has a really good tutorial on Heckman two-step estimation in STATA 8. The help file is a little light on this one.)
Enacting these measures would encourage investment in California's energy infrastructure, ensure long-term electricity reliability and reduce the likelihood of blackouts, Schwarzenegger said.I'm presuming that the logic of this would follow the lines of: new energy companies realize profits can be had by selling to big buyers, install infrastructure to help do so, state reaps benefits of having energy companies revitalize the grid. Or something like that. (No one will mistake me for an energy policy person. To that, there's no better place to go than The Knowledge Problem.) My mind naturally wanders to potential hold-up problems, but I'm sure one good flex by Arnie should smooth over any contracting problems...
4/29/2004 12:40:34 PM
New Site for Price Transparency in RX Drugs
BY
Ian
On the eve of the new discount card program in Medicare, a new site has been launched allow enrollees the chance to compre prices on the medications they take and even choose the right card/program for them.
4/29/2004 09:55:29 AM
US-China Trade Relations
BY
Ian
Looks like the US has chosen the carrot over the stick in economic dealings with China.
WASHINGTON- - The Bush administration announced Wednesday that it has decided against launching unfair trade investigations into China's currency practices and alleged violations of labor rights.I wonder if the experience with steel tariffs has shied Bush away from the combatative course on dealing with trade issues. Perhaps economic policy has moved out of the shadow of foriegn policy? The administration view of China as a peer competitor to be clamped down on might either be losing favor, or someone has decided that trade wars are bad proxies for real ones.
4/28/2004 02:59:11 PM
More on Iraqi Economic Statistics
In the post below I note the glaring absence of macroeconomic data about Iraq, but soon there will be data--at least for those with the right connections (not me). CPA leaders think that economic data are essential to optimize their planning, and recently put out a contract bid for economic data and reports (details here):
The contractor shall provide deliverables that include, but are not limited to: economic studies, reports, analyses, charts, graphs and other standard economic products to be produced at weekly and monthly intervals subject to final definition by the CPA project coordinator in consultation with the contractor. Work is to be done in Iraq. The contract requires all economists to be native Arabic-speakers with English fluency and a graduate degree in economics or business: 2.2. Pursuant to this contract, the contractor will be available for, at a minimum, monthly meetings with CPA project coordinator to discuss project implementation and emerging economic issues in each of the regions of Iraq and to collaborate with the other economists and CPA personnel throughout Iraq. Project economists shall also attend at the CPA project coordinator’s request at the contractor’s cost.
2.3. The economists will be required to receive training to include primarily on-the-job-training and other possible training programs provided by entities identified by the CPA project coordinator. This training will be provided by CPA at no cost to the contractor. The contractor will be required to make the economists available for this training at the contractor’s cost
2.4. The contractor shall ensure that at least one of the economists will live and work in each of the larger metropolitan centers of Iraq. Emphasis is placed on having at least one economist living and working in each of the following locations:
Baghdad
I'm interested to see the quality of data that will be culled by a privately-run, government-funded economic statistics and research agency with a one year firm-fixed price contract. There will be a minimum of 20 top economists, but the rest of the corporate structure is left to the contractor.
This leads me to one of my main research interests. Question: Does the expansion and stabilization of the Iraqi economy require the production and distribution of macroeconomic statistics by the goverment? Will such data improve the efficacy of central planning? Other than a more stable US economy after major macroeconomic statistics began to be kept in the 1930's, (which is a rather weak correlation), is there any theory or evidence to suggest that keeping such statistical data is a requirement for good economic governance?
4/28/2004 01:52:30 PM
Econ News from the Iraqi Front
An avalanche of data are available about the US economy, but data about the Iraqi economy simply don't exist. If you're the top Iraqi central banker--Sinan Shabibi, Iraq's Alan Greenspan--how do you gauge output and unemployment? Well, you use your own eyes:
"I see many tangible, everyday signs the economy is moving forward. One cannot miss the huge influx of automobiles in the country, the recent installation of satellite TV dishes on most building in Baghdad, the widespread use of cellular telephones, and the markets and streets stacked high with consumer goods and the presence of shoppers," Shabibi said.
Mr. Shabibi is trying hard to get private banks into the country:
At the moment, only six licenses have been granted to foreign banks to operate in Iraq between now and Dec. 31, 2008.... "The accelerated introduction of foreign banks will result in the implementation of new lending programs and other banking services that will help speed the formation of new Iraqi businesses and help create new Iraqi jobs," Shabibi said in a speech at the Financial Services Roundtable in Washington.
See also Mr. Shabibi's recent explanation of economic policy under Saddam: I welcome this opportunity, on the occasion of the winter meeting of the G-7 finance ministers, to share my thoughts on the progress we have made in reconstructing the Iraqi monetary and financial system and the challenges that lie ahead.
To appreciate the nature of our task, it is important to keep in mind the state of our financial system under the Saddam regime. Policies in the financial and monetary area, like other economic policies, were directed toward meeting the self-serving military goals of the regime, and much needed improvements were neglected. Indeed, the monetary and financial system degenerated over the dozen years prior to the conflict last spring, undermined by the corrosive effects of rapid inflation resulting from monetary financing of the regime’s agenda. At the same time, the regime’s reckless military activities depleted the nation’s assets and plunged the country into a hopeless debt burden. Here are pictures and design plans of the Iraqi central bank, built under Saddam.
In another bizarre note, a whois search tells me that the Federal Reserve Bank of New York owns the domain name central-bank-iraq.org; although the web site is currently not being run, requests to operate a foreign-owned bank in Iraq are to be sent to a central-bank-iraq.org email address.
4/28/2004 01:07:15 PM
Cheap Music Downloads
Bastard Sword points us (via this excellent article) to a Russian music download site. No, it doesn't cost $1 per song, or even $0.80 per song, but 500 MB for $5, which at 5MB per song yields about $0.05 per song!
That's the apparently insane price proposition that a Russian site called allofmp3.com offers its customers. You buy your music by the megabyte, at the rate of 500 MB for $US5 and you dial in the sort of encoding you want: MP3, MPEG4-AAC, OGG, MPC, WMA etc at various bit rates using different encoders _ say the LAME alt-presets. If we were prepared to pay more for the bandwidth, we could elect to have the music encoded with lossless algorithms, giving us the same quality as the original CD.
Computers at allofmp3.com encode them on the fly and spit out the files, at an impressively fast rate. It will even email you when they're ready, or you can use their software, Allofmp3 Explorer, to manage the transfers. The software - like everything else on the website, from the catalogue to the order and payment mechanism - is surprisingly well written and professionally presented, the range of popular music is vast, and the quality of the music is at least the equal to anything we've heard.
Some economists might consider Russia a normal country, but Russians never will.
4/28/2004 12:03:10 PM
What's up with Drudge?
In a bizarre misread of this news report, Drudge claims, "BOOM: Median Price of a Home in California Increases 22% -- in One Month!", when the report actually begins by saying, "The median price of an existing home in California in March increased 22 percent and sales increased 4 percent compared to the same period a year ago."
That's a 22% increase in a year, not a month. If you read the table, the actual increase for the month was 0.2%.
Must credit T&B!
UPDATE: Drudge realizes error, and promptly fixes mistake. But T&B has a full screenshot!
4/27/2004 03:24:14 PM
Decadence and depravity.
BY
Ian
Through Kevin (who's got another hot project you should all be reading regularly -- after T&B, that is), I caught wind of this interesting article on the state of horserace betting (RR). The whole thing is worth a read if you're interested at all in games and lotteries (the distribution of probabilities across a set of possible outcomes, that is). There were a number of thoughts that sprang to mind as I read through it, so I'll just excerpt and respond. The comment section is there for the usual bouquets and brickbats...
The simplest answer is no. The odds are the odds are the odds. Whether I bet 2 bits or 2k, I'm facing the same odds. Now, to complicate things, in the case of horse-racing's parimutuel system large bettors often have the side-effect of being "market-movers". That is, when someone lays down a large wager on a long shot, odds making changes in proportion to the size of the bet to reflect the new potential information. If someone is willing to make that bet, they 1) are possibly incredibly risk-seeking, 2) might have enough money that the loss is small relative to overall spending, or 3) know something other people don't. Changes occur with just about every bet in this process; while small amounts have limited effect, massive amounts of money may dramatically shift the odds.
This question is the more interesting one, to me. My answer would be that they've presented not only a false dichotomoy (why can't it be both?), but have made a conclusion I don't agree with: financial markets aren't games.
One of the interesting things to me about racing or any game using this kind of system, is that the bettors are in a game that is, in many ways, similar to a zero-sum game. Certainly, everyone can bet on the same horse, and everyone could be declared a winner. Once the betting was set that way, however, the payout would be minimal on a win. The odds could approach 1-200, so a $200 bet nets you a single dollar. The actions of others has reduced your potential winnings. (No, this technically isn't zero-sum: I simply use that to illustrate that what one player does can alter another players earnings in the opposite and possibly equal direction). By pooling the wagers, players play against each other, as opposed to the House. At a blackjack table everyone can win, and everyone can lose. Payout is based on the odds set by the house. The amount I bet or win doesn't affect the amount you can win or lose. Not so in horseracing. In this way, every player, regardless of wager levels, is looking to take down every other player. It just makes the winner better off to have gotten the best of everyone else. (Imagine being the only person to win on the other side of the 1-200 supposed "sure thing". A $100 bet turns into a down payment on a house.) This is the real meat behind the Hunter S. Thompson declaration: "The Kentucky Derby is Decadent and Depraved."
If that's true, might I recommend another school? Someone found they can provide a similar service (the betting, in this case) at a cheaper cost and decided to reflect that in the fee charged for the service (rebates can be seen as cutting down profit for the rebate shop) and can capture a good portion of the market for a low per-customer aquisition cost. Sounds like a great business plan to me. What the above quote seems to be doing is conflating the horseracing with the gambling. A racetrack could be described as having a product and a service: the race and the bookmaking. One complements the other, but in no way demands its presence. If you're losing business in one, either find a way to make it more competitive, or find a way to make more profits from other (I'd recommend hiking up those prices at the concession stand -- you've got a captured pool of customers in desperate need for food and drink).
All good, clean fun.
4/26/2004 07:40:32 PM
Partisan Pot-Shot
BY
Ian
Time to let some of my colors show.
Hmmm. Interesting. Could it possibly be due to the cost of being unionized puts union carriers out of reach? The numbers from this article certainly make it look possible. (BACK doesn't have access to their data online. I'm as suspicious about news reporting on statistics as can be, so grains of salt are necessary. Though, these would be relatively simple data to get right for the paper.) Labor cost growth contributes to revenue decline, so the numbers (12% and 10% respectively) can't be combined easily, but it's not a rosy picture anyway you look at it.
4/26/2004 03:39:37 PM
Courting the Gay Dollar
From Gay News Now, we find that, as always, smart companies are targeting advertising and reshaping their messages:
[D]irect advertising to gays by big corporations was almost unheard of just a decade ago when Subaru began courting the gay dollar. Their strategy was met with such success that many other companies soon followed. At first, they simply used mainstream ads run in gay-themed publications, but more and more often, they’re creating ads specifically for this demographic. For instance, Volvo’s recent ad campaign that ran in The Advocate, Out, and HRC’s Equality Magazine featured, among other pictures of same-sex couples, two men with a baby, and a woman embracing her pregnant partner. The text reads, "Whether you're starting a family, or creating one as you go... Whoever makes up your family, think about making Volvo a part of it...."
The list of companies that are advertising directly to the GLBT market seems to be growing every day. There’s even a website that keeps track of them all. As their mission statement says, CommercialCloset.org works to lessen social discrimination of the gay, lesbian, bisexual and transgender community by encouraging corporations and ad agencies to improve GLBT portrayals in the powerful, persuasive medium of mainstream advertising....
When companies see their support of the GLBT community bringing rewards, not only will they continue to support us, but you can be sure other companies will be quick to follow. In the corporate world, the bottom line is always the almighty dollar. We’re all just working together to make that dollar a little less green and a little more rainbow.
The average U.S. income is 8% higher in gay households--for a "gay market" totaling $550 billion in spending power annually. The 2000 Census found 600,000 same sex couple households.
In other news, the old Brawny paper towel man was fired to make room for a more metrosexual version. I kid you not:
The press release from the company reads, "Gone is the blond hair and mustache. The Brawny Man for the new millennium is dark-haired, dimpled and clean-shaven, although he still wears his familiar plaid shirt." The new guy appears multi-ethnic and his new commercial proves him to be "metrosexual" too. Here's a website showing the evolution of the Brawny Man.
4/26/2004 12:53:16 PM
Two Perspectives
BY
Ian
Personally, I go back and forth a lot on my opinions for the function of the IMF and the World Bank (to the extent that I've taken to calling it the International Moral-hazard Foundation when on a tear). At just about any level, I'm of the mind that the presence of guaranteed bailouts and assurances from lenders of last resort must necessarily have an impact on the financial behaviors of countries that might be in a position to need such measures. For instance, in the case of the Asian financial crisis of late last century, there was good reason to believe that the presence of bailout guarantees helped pushed asset prices in South Asian countries way, way too high, helping to contribute to the eventual fall when the investments turned out to be worth -- as my Scottish friends like to say -- f*$k all and bailouts stopped coming through.
And now this, on the attitude one country is taking towards the IMF:
Of course, this is not to say that Venezuela is doing all the right things; simply that there is room for the idea that countries can and should pursue their own path.
4/26/2004 11:52:04 AM
Monopoly vs. Committee Standards
BY
Kevin
Jan Ozer of Streamingmedia.com has an excellent article on the impending death of MPEG-4, a video standard:
Hat Tip: John Farrell
4/23/2004 11:08:08 AM
More on the y.e.
BY
Kevin
I mentioned a month ago that many Russians now use an indeterminate unit of currency, the y.e., when posting prices. I have now received Russian spam with prices quoted in y.e.:
4/23/2004 09:45:17 AM
Trucking and bartering in India
BY
Yazad
I accepted Kevin's invitation to blog on T&B in January but never really got on to post here. Apologies for the delay! Quick intro: I'm a libertarian based in Bombay, India. Studied economics (major) and political science (minor). Currently work for a foundation that promotes transparency and accountability in government. Run my own blog. I've been fascinated by economics, specially what Marshall described as a study of mankind in the ordinary business of life. That's what my posts are also going to focus on: the economics I see as I wander around, living life. It'll be a largely Indian perspective and I'd use the Indian rupee when mentioning prices. For a quick conversion, 1 US $ = 50 Indian Rs. (although the rupee has been gaining recently and the current exchange rate is around 44 to the dollar) My first post is going to be on trust in the marketplace.
4/23/2004 09:17:47 AM
China Hints at Yuan Float
BY
Ian
This happened sooner than I though. Well, that is, if it's actually going to happen. From the little I know of Chinese politics, though -- and it really is little -- the leaders aren't the sort to let too many loose comments out without good reason.
"We don't think the fixed system is good. We think that a floating system is good," said [central bank deputy chief] Guo Shuqing in an interview with the Financial Times.That's good to hear. Though, a few paragraphs on, it seems like their idea of "float" is a bit different than mine: Mr Guo said that his staff had done a lot of research on the likely impact of switching to a basket of currencies, suggesting it was the most likely choice.
4/22/2004 05:32:48 PM
Lessons in Revealed Preference
BY
Ian
Via Asymmetrical Information comes a link to an article about a very cool machine: a mag-lev train in regular operation.
Surely there are other causes [for low ridership], from the nearly $10 a one-way ticket cost originally - reduced to $6 this week in an effort to lift ridership - to the five-minute hike from the terminus to the airport, to the train's once abbreviated, somewhat irregular schedule in the early months after it began operation.One can almost hear the engineers and designers wanting to have a good talking-to with these people. Non-Rider: It's not close to the gate.Now, I would have assumed that saving 45 or more minutes on a commute would be enough to offset the costs of walking to a terminal, catching a cab from the station, etc. But, as it turns out, not everyone is in such a hurry to get wherever they're going. At least, not so much that they're willing to shift their habits for it. Efficiency isn't everything, I suppose.
4/22/2004 01:54:58 PM
Declining teacher quality?
BY
Ian
Apparently, it's not so much that women of high aptitude opt out of teaching because better jobs can be had at a higher compensation, but rather it's that the teaching job pays so poorly for improvements in skill. So says a study from Hoxby and Leigh, as reported by the Heartland Institute. (NB: The multiple Hoxby pieces is due to my having simply run across them in a short period of time, rather than any concerted effort to espouse one position. That said, it's more than reasonable that the uniformity of source should raise some questions.)
A specific example of The Teaching Commission's influence can be seen in Schools Chancellor Joel Klein's recent call for changing the way teachers are paid in New York City. Klein proposed teacher bonuses based on student achievement and higher salaries for teachers who work in troubled schools or difficult-to-staff fields like math and science. "Lockstep pay, seniority, and life tenure" are the heart of the problem, said Klein in a January 2004 speech, sponsored by Crain's New York. "Together they act as handcuffs and prevent us from making the changes that will encourage and support excellence." Generally, I agree that such measures are surefire ways to ensure a good portion of your workforce is unmotivated and underperforming. Extra effort brings no extra reward, while shirking earns no punishment. The very expectation should be that you will see high levels of underperformance. That said, though, correcting the problem simply isn't as easy as basing pay on student achievement. (I think the other measures, such as assigning risk and subject premia are far simpler, though they do raise their own issues.) Coupling pay to performance necessarily means having to measure performance, which most often means testing children in schools: an idea that sees its fair share of debate. Other measurement techniques would most likely require in-class monitoring, which would be both disruptive to class and massively expensive. Even if we simply allow for testing to occur, the policy isn't simple or even assured to create higher achievement scores. First, there's the problem of seperability of effort. In most grades above elementary school, and even in some lower grades, students will have more than one teacher providing lessons in a variety of subjects. To which teacher should the benefits accrue if the class performs better? If the money goes to a school in general for a broad-based improvement in scores, then it is up to the school to partition out benefits in a process that may exhibit problems that mirror current issues -- deference to seniority, lack of recognition of greater training in some teachers, etc. Secondly, the prediction of achievement scores isn't based simply on level of teacher training or effort. One has to take into account the variance among natural skill of the students as well as a considerable effect of simple random chance. Test scores can be subject to a number of influences that don't correlate with other factors. How many people take the SATs or GREs a second time because they just had a bad day the first time they tried? So, even if a state were able to find a level of compensation that created a general level of higher effort and induced better-trained people to become teachers, there's still the chance that achievement scores might not reflect it. Nothing is ever perfect, and there has to be some sort of trade-off between improved educational performance by students and the teaching status-quo. In the absence of better measures, I tend to favor testing. And I roudly reject a notion that some school administrators appear to be certain of: But the principal's enthusiasm for the Bush education reforms is tempered by the knowledge that her school, like many others, will probably never be able to meet the performance targets. Several characteristics of the student body have historically correlated with low test scores: Nearly one out of four Raymond Park students is in special education; 35 percent are African American; 54 percent are eligible for subsidized lunches, a common benchmark of poverty. Under No Child Left Behind, every subgroup is required to demonstrate "adequate yearly progress" until it reaches 100 percent proficiency. Underfunded schools is one thing; suggesting that certain groups simply cannot perform is another. Since I tend to dislike criticism without recommendations, here's mine: tough licensing standards and much higher starting pay. While the study above indicates that the "pull" of higher paying jobs isn't the major contributing factor to seeing higher-aptitude women avoid teaching, creating higher standards (possibly requiring advanced degrees or certification classes that mirror master's programs in admissions requirements) would initially reward the woman who was willing to seek more training (as a proxy for higher aptitude) by being tied with a higher base pay. The idea would be to reward the extra effort to enter the profession with a differential between possible pay with and without such training/effort. Pay increases could be then left to the assessment of principals and others who have more direct ability to measure the effort and productivity of a particular teacher. Though I've not seen research one way or the other, from reasoning alone I would not be surprised to find that one of the reasons that children in private schools do better is because the teachers were of a skill level that met the requirements of the private institution in providing the higher compensation. That's not devoid of problems itself, of course, most notable of which is the sheer feasability of essentially ending the system the teacher's unions hold so dear. Then, how does the system create higher certification standards when the process is sure to be packed with the underperforming teachers who would certainly be unqualified under the new rubric? And, obviously, there's the issue of locating the money to pay the higher salaries. Then again, I'm not sure how much longer this country can afford to keep the system we've got.
4/22/2004 10:22:36 AM
That Pesky School Vouchers Question
BY
Ian
I have to admit off the bat that I support the idea of school vouchers in the abstract. The proliferation of choice when it comes to education strikes me as a good thing simply on the face of it. Instinctually, I pretty much disregard the entire "taking money out of public schools" debate since, for most every program I've seen, the money for the voucher is as much as or less than the effective per-student funding that comes out of state and Federal monies (I've looked at the property-tax funding and Federal grant issues in-depth in Illinois). Should the school simply have one less student, the funds for that student wouldn't be included in the school's appropriated money (all else equal, of course). Plus, there's the whole notion of introducing competition into a system that has, in my opinion I grant you, become riddled with complacency. Above and beyond the ideological issue, however, I've yet to see a good study demonstrate that voucher systems actually hurt the public schools students would opt out of.
"We may speculate that, owing to discrimination by teachers and administrators, staff feel more comfortable underserving students and taking rents when they work in schools that serve black students, as opposed to non-black students." This, after mentioning just a few pages before that the location of voucher programs are places where the poor student population is predominantly black, seems an odd assertion. In Chicago, at least, the vast majority of teachers in poor, high-black population schools are, themselves, black. Is the assertion that black teachers are feeling more able to shirk in their efforts to serve black students? It's not methodologically important -- just an odd note to strike, to me. As I mentioned, I've not read it through with the attention it most likely deserves. My biggest oustanding issue so far, however, is that while differencing including the growth trend is useful, I don't see (and would certainly appreciate being pointed to, if I've missed it) anything addressing the question of regression to the mean. Harry at CT points out the importance of the 97-98 school year; the question is, of course, how persistant any downward trend prior to the treatment program was, and whether the change is fully do to the program or if there might be some sort of die-off of a previous shock (a really bad year or two prior for reasons like budget shortfalls, union problems, test changes, etc) that is helping the treatment appear more significant than it really is. Just some pot shots from the gallery. Take a read, if you're so inclined. (For the non-technical, skip the lines with the greek letters, and read the rest. Hoxley writes well enough to make it accessible for a wide audience.)
4/22/2004 02:37:08 AM
The Ferengi Rules of Acquisition
BY
Kevin
Light posting on T&B continues while I push hard on the Wal-Mart blog. In the meantime, I present to you some interesting Ferengi Rules of Acquisition:
4/21/2004 01:08:32 PM
Prominent Japanese Economist Arrested
BY
Bob
A fellow student from Japan brought this story to my attention: A Kanagawa Prefectural Police officer stood and watched at the middle-aged man in the expensive suit as he tailed young women in miniskirts as they walked around Yokohama Station. There's more in article.
4/21/2004 12:55:19 PM
Indian elections
BY
Dragos
Some of you may know that 2004 is the year with elections happening in several countries. Spain held elections in March, and others are countries such as India, USA or Romania. You can see the entire calendar for yourself, what I find it really interesting though is that Indians - who just started the Parliament election process today - are doing all the voting electronically. And we are talking about 650 million voters for 543 candidates!
4/20/2004 02:13:37 PM
The stock market
BY
Dragos
NBA Dallas Maverick's owner Mark Cuban writes a very good piece about what stock market is and what exactly drives the demand and supply for a stock. It should be taken with a grain of salt but I tend to agree that it is all about making noise and marketing it accordingly, at times you may even call the stocks value proposition empty words very nicely wrapped up. I particularly liked this:
4/20/2004 01:59:56 PM
Quick Book Recommendation
BY
Ian
To those who will listen to me when I happen to get up on yet another soapbox, I often decry the lack of more general economics education in the country. That highschools don't routinely offer economics courses strikes me as a glaring omission from basic educational numeracy. Beyond just knowing a little about supply and demand, I tend to think it is one of the best ways to foster rigorous analytical thought, whatever your personal interests might be. I still contend the only two real skills I got from my undergraduate education were 1) a decent ability to construct and analyze arguments, and 2) how to string together a few coherent sentences, either in support of an argument, or just for general communication. Random other courses (did I really take "Literature of the Cold War?") were just ways to have a decent time spending some federal loans.
4/19/2004 10:34:06 PM
Internet Trends
BY
Dragos
A must read presentation (pdf) from the Wall Street analyst Mary Meeker or the "queen of the internet". It's about 12 trends driving change on the internet, mentioning that the search-find-obtain (SFO) will provide the basis for the next killer application for the web. Also, online gains share from the offline, residential broadband became a standard as it hit the critical mass and thus prices started to decrease so that the internet became the growth distribution medium of the century. It is interesting to see that some of the things predicted by Mary are already happening -- see Google and Amazon case.
4/17/2004 11:41:42 AM
Does Incompetence cause Unemployment?
Yes it does, says USA Today:
Manufacturers across the USA are having problems finding qualified employees, even though millions of factory workers lost jobs in recent years....
Traditional, labor-intensive, assembly line jobs are largely a thing of the past. Employers are looking for workers who are experienced with technology, are analytical and are problem solvers....
Employers say it goes beyond skill, saying they are having problems with work ethics...
Could this possibly be true? A vast swath of the unemployed are simply unprepared to be employed?
It's implied that the even the top workers in the current pool of unemployed lack basic skills, have little work ethics, and just can't do the job required. But it's also possible that manufacturers are not paying high enough wages to attract the skilled unemployed. Perhaps in the labor market, as elsewhere, you get what you pay for.
Some manufacturers are having a hard time finding people who can write correctly and show up on time, while others want creativity in addition. These are two separate labor pools, and perhaps two separate problems.
Those 3 million competent former manufacturing workers are NOT just waiting around, begging to be hired. The labor market is tremendously dynamic, and it is very likely that most of those 3 million workers are in other manufacturing jobs, have jumped ship to the service industries, joined the military, started a business, have left the labor force, etc.. Are manufacturers putting enough effort in trying to steal former manufacturing employees away from the service industries they've entered?
4/16/2004 12:57:11 PM
Tax Day Notes: I Have to Pay for What?
Via Marginal Revolution, I read this odd piece from Charles Murray at the American Enterprise Institute on a possible modifcation to the tax code: allowing payers to direct the funds they pay to the programs they prefer.
4/15/2004 06:04:49 PM
Insourcing Manufacturing Jobs
Businesspundit notes a wonderful example of entrepreneurial insight -- pizza vending machines that make a fresh pie in 90 seconds. And they're made right here in the USA by our robust manufacturing sector:
Vending machines that deliver hot pizzas in less than two minutes are to be installed in railway stations and other public places around Britain.
The Wonder Pizza UK company is importing the machines from the US and plans to install 2,000 in the UK over the next three years.
However, as I found out after a little digging, these made in the USA vending machines--and the frozen pizza--were previously made in Italy as late as August 2003!
The units and the pre-made pizzas will be shipped for the first few months from Wonder Pizza headquarters in Torino, Italy. But, the three said production of all aspects of the business will eventually take place in the United States with manufacturing of the machines planned for the Midwest.
Here's to the insourcing of manufacturing jobs!
4/14/2004 04:27:21 PM
Why "Truck and Barter"?
Occasionally, T&B gets a flurry of hits looking for the meaning of Truck and Barter. I refer students to Book 1, Chapter 2, Paragraphs 1 and 2 of Adam Smith's Wealth of Nations:
Of the Principle which gives Occasion to the Division of Labour
This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.
Whether this propensity be one of those original principles in human nature, of which no further account can be given; or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to enquire. It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts. Two greyhounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towards himself. This, however, is not the effect of any contract, but of the accidental concurrence of their passions in the same object at that particular time. Nobody ever saw a dog make a fair and deliberate exchange of one bone for another...
For at least the past century, economics has focused on exchange--supply and demand--as a fundamental social phenomenon. But the propensity contains two other aspects--namely, trucking and bartering. Aren't truck, barter, and exchange all synonyms? Well, if they were identical in meaning, why would Adam Smith, and a host of other famous names, keep listing them all together?
Reading through the Oxford English Dictionary, I gather that in a formal sense, they all describe the same acts.
However, this reading ignores the fine differences. To me, it appears that exchange was the most general term--a trade of anything for anything, with few connotations. Also, what we would call a "barter economy" was once called a "truck economy", apparently because truck implies commerce--or exchange for profit. Believe it or not, although barter seems so pure, as it is defined as an exchange of equal values, it actually sometimes had a sordid conotation, as if the act was trickery or huckstering. This makes sense, since we know now that trade occurs when values are divergent, which in a world of asymmetry leads to an unequal distribution of the surplus. Think about it; if values were equal, would you trade? No, you would trade only when you value something else more than what you have, and vice-versa.
4/13/2004 05:24:53 PM
Waste Water as a Negative Externality
Economics uses a standard classic example--a factory polluting upstream and somebody using the river downstream (like a clothes washer)--to show that a well-defined and enforced set of property rights can lead to outcomes that are economically efficient. Under robust situations, well-defined property rights help find the least cost way of eliminating externalities (situations in which two persons' actions conflict by affecting each others opportunity cost). This will let a balance of highest valued use (either all factory output, all clothes washing, or something in between) continue unimpeded.
However, to many people in the real world, direct state action seems to be cheaper and far more efficient in getting what they want. Along these lines, a reader asks the Washington Post how best to handle a neighbor's clothes washer waste line that empties directly into his garden. The post tells him to be friendly, and then if that fails, use the brute legal force of regulatory state:
A more practical approach would be to discuss the matter face to face with the neighbors, assuming they are inclined to cordiality, and to ask that they relocate the open end of the drainpipe. If neighborliness and friendly persuasion fail, you can report the matter to the local health department, building department or equivalent agencies. In most areas, draining such water onto exposed ground is illegal. It's particularly egregious when disposal occurs on someone else's property.
Notice that the responder does not suggest that the complaining gardener has a right not to have his neighbor's waste ooze onto his property. Instead, nobody (including the letter writer) has a right to ooze waste anywhere--even on his own property.
To me, this is a strange response. If the neighbor threw empty soda bottles into the garden, it would be not be solved by health inspectors, but with civil action in court to resolve trespass--unlawful interference with another person's property. Hence, another approach for the gardener to take, after being rebuffed with gentle asking, is to inform his negihbor that he will take him to small claims court for damages totaling the replacement of all the soil and plants in the garden--and the labor to set them there.
Now, I ask you, which method is the most efficient solution--in this case, and as a general rule?: For nothing to happen? Voluntary compliance? For the neighbor to pay for the right to dump waste water in the garden? For the health inspector to clamp down? Or to go to court?
4/13/2004 01:04:53 PM
CornerSolution.com: GMU Econ Grad Blog
Ten graduate students studying economics at George Mason University have come together on cornersolution.com to discuss the issues of the day from a general free-market economic perspective.
We at T&B welcome you to the blogosphere, and look forward to ruthless blog-eat-blog competition.
4/13/2004 07:28:40 AM
Gas Prices -- The Hysteria Is Spreading
BY
Ian
As has been mentioned in several places around the blogging community, the furor over the "record high" gas prices is largely a construct of an incompetent media in search of a story. I was content to just ignore the process as more posturing by a press corps that refuses to pursue even a basic level of numeracy.
Blagojevich also says he supports a measure sponsored by several lawmakers that would prohibit retailers and suppliers from using a state of emergency, such as a severe tornado, to increase gas prices. The legislation would require gas prices to stay at the level they were seven days before an emergency happened. The way people are carrying on, one would think we're back to the days of the 70s oil crisis, queueing up for hours to get our rationed 5 gallons of gas. So far as I can tell, it's now a couple of bucks more expensive to fill up my tank. Obviously, we're not. And isn't there something rather irresponsible about the highest power of the state using the media to further this idea by using a term usually reserved for the actions one might see following a severe shock to our country? The Guv is worried about the possibility of "unjustified" gas price increases, but offers us no way to judge what might be considered "unjustfiable" about deciding to set a gallon of gas to $5 (and thereby almost guaranteeing the station loses all business aside from lotto and candy bar sales in a matter of minutes). What, pray tell, is so dangerous about providers responding to a market change?This comes absent any proof of illicit activity (such as price collusion or undisclosed dilution of gas). A rise in prices alone, it appears, is enough to warrant investigation, forcing the stations to respond to the investigative group. For those of you into institutional economics/political economy, I believe this might be a good example of the strategic use of transaction costs. Blogojevich claims this is a way for the state to fight rising gas prices. I can't think of a worse way of categorizing this type of policy. The policy attacks not the prices, but the providers of the gas. Not that I would agree with such a policy, but actually addressing the question of prices themselves would require simply setting markup rates, tax levels, or the price per gallon outright. By inspecting the relation between the price paid by gas stations and the ultiamate sale price, the explicit accusation is against the seller. Of course, most people probably got that out of the name "price gouging", since someone has to be doing the gouging with the prices. Instead of fighting rising prices -- which will continue to be set by factors well beyond the range of Springfield, Illinois -- this fights the ability of gas providers to go about making a living. Frankly, I'm not entirely sure it's a good idea to fight price "gouging" to begin with. Outside of making somone pay $5000 for a bandage while they're bleeding to death (violating good samaritan laws, by the way), I'm not convinced of the horrors of suddenly pricing scarce goods such that only those who value it highly enough, actually get it. Aside from the efficiency factor, there has to be consideration for the fact that, in the face of a true shock, restricting prices can result in shortage (or complete absence) when the good isn't replenishable in stores, gas stations, or wherever. If the price of gas should be $5 a gallon, and the state has set it to be no higher than $2.50, you're just about guaranteeing shortages, lines, rationing, and more. Once you go down that road, it's almost impossible to find the off-ramp.
4/12/2004 08:05:52 PM
Sistani on the Lottery
Al Sistani tells us that participation in a lottery is not acceptable:
Question:I am really confused and having hard time explaining the difference between betting in:
Why is the first permissible and the second impermissible?
Answer:Lottery is a sort of gambling and there is nothing one may do to deserve the property. But horse-racing and archery are for a purpose which is called "Self-defense"....
Question:I work at an exchange office but they also make me sell lottery. Is it permitted to sell lottery in this case?
Answer:Selling lottery cards is not permissible. Yes, it is permissible to take the property with the intention to contribute in a charitable project such as building a mosque or a bridge not with the intention of earning profit or a prize.
Now, this makes me question whether participation in the US green card lottery is acceptable. After all, Brad DeLong and Tyler Cowen agree that increased immigration is superior to strengthening the welfare state in making the poor better off, but being eligible to emigrate to the US does not imply one deserves the benefits of emigration. Or perhaps moving to the U.S. from one of the many Islamic dictatorships that participate in the diversity lottery should be considered "self-defense".
Hat tip: Marc Cooper
4/12/2004 01:59:43 PM
A micro rebellion
There is much debate in the USA and elsewhere over how we should provide healthcare. The debate among serious politicians and policy experts seems largely to be centered around insurance reform and how much money to subsidize it with (not whether or not to subsidize, only how much). No one, that I have heard, has suggesting abandoning the insurance/ subsidy model entirely. The invisible hand however, works in mysterious ways. People have a lot to say, but words of cheap. When you vote with your feet, that's really saying something. Without any political support it seems that some doctors have decided to completely abandon the Insurance & Subsidy scheme altogether. ...When O'Brien leaves the exam room, he writes a check for $50 and he's done -- no forms, no ID numbers, no copayments. ..."It's a terrible indictment of the collapsing health care system," said Arthur Caplan, chairman of the medical ethics department at the University of Pennsylvania Medical School. "Insurance and managed care were supposed to streamline -- instead what they've done is add so much paperwork and bureaucracy they're driving some doctors out." ..."There is a great intrusion by third parties into the patient-physician relationship," Nelson said. "We can understand their frustration." ... [he] sees fewer patients now. His whole office would probably fit inside his old waiting room. But he says the freedom is worth it." Accounts receivable is zero. It's a great feeling," Cherewatenko said. "I feel like I'm a real doctor again." I think this is a wonderful story. Granted, there are people in this country who cannot even afford this basic care, and I would not be opposed to helping them, but it is apparent that the insurance and subsidy system is not necessary for a large part of our country. Firstly, $75/ month for catastrophic insurance? Almost anyone can afford that (this should be apparent from cellphone and cable TV penetration in even poor markets). Secondly, look at the costs it imposes. Between collection costs and lost cash flow the price of a simple doctor's visit goes up more than 50%. By lowering the price (and tossing the middle man) far greater amounts of value make their way to the patient. And really, shouldn't these debates be about the patients? Read the whole thing, as they say. It's a heart warming story about an all cash transaction. PS - I sent this story along to Vinod, and he blogged about it as well.
4/12/2004 01:39:50 PM
More Econo-Sports Blogging
BY
Ian
Not to close the walls of the echo chamber in around here, but Bob's post below on sports got me musing again, and I figured that since Kevin was kind (foolish?) enough to give me room to ramble, I'll take the opportunity to do just that.
4/12/2004 11:46:25 AM
The Price of Prescription Drugs
In the NYT, Robert Pear notes that Medicare will soon publish the prices it pays for prescription drugs:
The data will be available late this month on a government Web site, Medicare.gov. The site will list the prices charged for various dosages of specific drugs at retail pharmacies in or near a given ZIP code. If a brand-name drug has generic equivalents, their prices will be displayed as well.
Medicare officials said the Web site would also show prices for competing brand-name drugs used to treat the same condition. Thus, a person shopping for Lipitor could see the prices for other cholesterol-lowering agents like Zocor and Crestor.
This is fantastic news for me and other analysts interested in health economics.
However, I won't predict how much drug consumers will use the service--as this entirely depends on how easy the interface is to navigate, and whether real savings for users can be had by switching drug plans and/or pharmacies. The article cites a consumer advocate who says she's worried about information overload, but she might also be worried about the competition from the federal government in the consumer protection racket.
4/12/2004 10:46:51 AM
I really am a communist
BY
Bob
If you thought the post below showed me for what I am, basically a communist because of my dislike of the NFL, then you will only get that reaffirmed in this one. A lot of T&B readers probably read AndrewSullivan.com where he recently came out of the closet as a non-driver, I will admit to sharing this part of Andrew's lifestyle. Last December, my car died, this was not unanticipated as I made preparations for it in advance, namely moving close to campus and the village here in Claremont so that a car became unnecessary. It is a lifestyle that isn't for everybody, but suits me fine since I like to walk and want to keep my fixed costs down. I have lived in San Francisco, Chicago and Amsterdam without a car(I had one in SF, but kept it at my brother's place on the peninsula) and, in fact, prefer the city lifestyle over suburbia(my actual preference is city or rural, but not in between). It is within this context that I find the recent run up in gas prices quite amusing. Of course, real prices are below what they were 25 years ago when we had the oil embargo playing havoc in the economy. I have seen some people make comments that Saudis are limiting supply so as to defeat Bush. This isn't entirely implausible and I think there may be some truth in that. This would be quite foolish on their part since higher prices will only attract greater investment in the energy field. It is in their interest to keep energy prices high enough to make money, but low enough to keep competitors from entering the market. Even if this was true, it is only a small part of the puzzle, the real reason for the rise in prices is the lack of investment over a significant period of time. The politics of the rise in gas prices is funniest part. We have a group of people complaining about high gas prices while being the same sort that complain about Wal-Mart's Always Low Prices. So which is it, are high prices good or bad? Prices are a signaling mechanism for the value we place on goods. It need not be high enough for the provider to cover costs nor low enough for the poorest to be able to consume. This holds true even for monopolies or in the case of refineries in California, oligopoly. Today, I read this: WASHINGTON -- California's two senators are protesting Shell Oil's planned closure of a Southern California refinery that provides 2 percent of the state's gasoline, arguing the shutdown could send record-high gas prices even higher.Why would Shell close down a refinery during a run up in gas prices. Senator Boxer's ignorance aside, Shell has had a rough go of late. Could they be trying to manipulate the market? Sure, but highly unlikely given the current environment and this state's Attorney General Bill Lockyer's threatening people with prison rape. This is perhaps the best explanation: A Shell spokesman denied Boxer's accusation. The company plans to close the 72-year-old refinery at the end of September because crude oil supplies in the San Joaquin Valley are drying up, and the refinery has not been profitable in two of the last three years, said spokesman Cameron Smyth. It would be nice if once in a while some of the senators actually advocated sound policy advice instead threats of investigations. Politics is such a turn off for me now because they don't seem to want to ask the question of why did the situation come to this. If Boxer or Feinstein were actually interested in low prices, which appearantly is good for gas but not a jar of pickles at Wal-Mart, they would ask how do we lower barriers for new entrants into the market, but instead we get conspiracy theories. These price spikes are a signal that either there is a need for investment or perhaps some sort of inefficiency in the regulatory scheme. If Shell is closing a plant, it would appear that the former may not be the case. Of course, this may just be an expensive plant to operate with local supplies unable to keep it adequately running with investment needed closer to the ports in L.A. and the Bay Area. The latter and the most likely cause of the spikes is the regulatory burden our environmental laws have placed on the producers. These seasonal changes to fuel mixtures are a killer, they have, in effect, turned a commodity into a specialized good. My guess is that these spike would not be as pronounced if say California or the west coast had 1 gas mixture, while it wouldn't minimize pollution, it would at least create certainty which would probably go over well in an election year. As you can guess, I really don't care that much, gas prices have no effect on my lifestyle. In fact, I think a 50 cent gas tax, better yet, make it a buck, would be very appropriate. We could build lots of trains with that money. Yeah, I know it is costly with the benefits accruing to a few people and property owners, but I'm not paying for it. Edit: I added some stuff to explain a little better what I meant.
4/10/2004 07:59:11 PM
Socialism and Sports
BY
Bob
As a fan of the team with the current MVO, Most Valuable Owner, I am looking forward to this baseball season. Art Moreno, owner of the Anaheim Angels, has changed the sports dynamics in SoCal. What's odd about my enthusiasm for baseball is that I haven't played the game since I was 11. My sports focus turned to football during high school(for those of you familiar with national high school sports, I went to Mater Dei) and later during college when I received a scholarship to play for Northwestern and later Montana State. I didn't see the playing field at NU and left after two years, in fact, they asked me to leave as I didn't attend a single class for two quarters save an occasional test(I wanted to leave, but my mom bribed me into staying the second year). At Montana State, I started my junior year, but not the senior, by that time, my interest in football had waned. I had no desire in playing the game my final season of eligibility and it showed in my performance. Today, I couldn't care less for the game of football with the exception of an occasional college game. The NFL is an uninteresting spectacle with a bunch of freaks running around hitting each other. To top it all off, it is socialistic: America's game That sums it all up nicely for me. The drug testing in the NFL is a joke, why even bother at all? It is easy to get around, I took steroids during my years at NU and was tested, but never had a positive result. Was it a miracle? Come to think of it, every drug test I took because of either the NCAA or the University was when there was some sort of banned substance in my blood stream. I have no regrets for taking them, it was a means to make up for a physical deficiency. For some reason, I have never been able to bench press much, steroids helped me fill that gap. If people were so worried about the negative health affects of steroids, they would first look at what is going to kill more football players than these drugs ever will, namely the extra weight we lug around(I am guilty of this). How about a weight limit? If you think I'm a cummunist now, wait till I post what I have in common with Andrew Sullivan.
4/10/2004 01:07:13 AM
Always Low Prices
While researching the less than 10 posts I've done on Wal-Mart, I've come across tremendous anger directed at the company. I've also noted a highly organized and pseudo-"grass-roots" resistance movement fueled by ideology, disgust, and fear.
To better track my reading of WM, I've created a blog--Always Low Prices, devoted to the controversy surrounding the world's largest corporation.
Always Low Prices is open and is actively looking for cobloggers. There are no editorial restrictions or requirements to blog at ALP, save decency and my personal liability, and the desire to post at least monthly.
4/9/2004 02:54:44 PM
Linking Externalities?
BY
Ian
Pardon the long absences. The process of finding someone to pay me for meaningful work has precluded some of my more ejoyable activities, such as posting here...
4/7/2004 02:57:46 PM
No Wal-Mart for Inglewood, CA
Social Democracy in Action: The LA Times reports that 7,049 voters told 4,575 others that they may not work or shop at a Wal-Mart supercenter near their homes. The 61% to 39% margin came from about a 11,624/40,000=29% participation rate. In the runup to the vote, the usual suspects took advantage of the press coverage, and a few extremist activists used now-standard tactics:
The campaign for and against the measure was intense, and city officials called Tuesday's turnout "robust." Throughout the campaign, opposing sides held street fairs, gave away food and offered free rides to the polls.
In the days leading up to the election, competition for votes became an open scuffle, with each side trying to crash the other's publicity events. At a Vote No rally last week, protesters rushed a lone man who was holding a sign that lauded the project as "Good News for Inglewood." Protesters tried to use their signs to hide him from news cameras. The Rev. Jesse Jackson and Rep. Maxine Waters (D-Los Angeles) joined the opposition effort Monday.
Most small business owners rightfully fear competition from WM; some see the political process as a chance to lock-in their customers:
But the longtime owners of Randy's Doughnuts, Larry and Ron Weintraub, both opposed the superstore.
Ron said that although he doesn't live in Inglewood, a business he once owned in Texas went under when Wal-Mart came to town.
"I'm sure it's going to hurt small business," he said.
Of course, there are at least two ways of looking at WM's failed attempt to "create its own city". One, pushed by the Times and others, is that WM, out of greed, wants to create it's own city to skirt standard business regulations. The other is that WM seeks an exemption because its clear that without it, an uncooperative city council will stall and perhaps never issue the required permits, even if WM were to comply with all local laws as they exist now.
Note: See Bob's important post for far more detailed background information on Inglewood and WM.
4/7/2004 12:27:35 PM
Low-Cost Airlines Top Rankings
The AP is reporting the recently released airline rankings, performed by researchers at the Aviation Institute at the University of Nebraska at Omaha. The top 5? jetBlue, Alaska Airlines, Southwest, America West, and US Air:
The study's authors say the report showed why low-fare airlines are gobbling up market share from traditional network carriers: They're on time more, they bump fewer passengers, they mishandle less baggage and they generate fewer complaints.
The report "adds further evidence to the emerging performance gap between the legacy carriers and the no-frills network carriers," said Brent Bowen, director of the University of Nebraska's aviation institute and a co-author of the study.
JetBlue had the second-best on-time performance, arriving punctually 86 percent of the time in 2003, the first year that the airline carried enough passengers to be ranked. So few JetBlue passengers were bumped that they did not register in the statistics used by researchers....
Dean Headley, the other co-author and an associate professor of marketing at Wichita State University, said most of the low-cost carriers were above the industry average on four performance indicators last year. Most of the traditional airlines were below the industry average, he said.
Full report, and eariler annual reports, available here.
Hat Tip: Drudge
4/6/2004 08:11:06 AM
Why Russia is not a Normal Country
I should point out here (as I did elsewhere) to a fine rebuttal to Shleifer and Treisman by Matthew Maly, arguing that Russia is not a normal country:
Shleifer and Treisman have got to be kidding when they compare Russian oligarchs with Korean ones. Thieves do not produce anything: they steal. The Russian oligarchs did not produce an LG Flat Screen or a Daewoo automobile. We are talking a different set of skills and attitudes here. In the US, Bill Gates has a lot of influence in computing. In Russia, the Minister of Communications has comparable influence in computing. But there is subtle difference between the two. Bill wrote the code, and then he did it again, and again, and again - and each time it was better. Leonid Reiman is just a friend of Putin's - that is all he is...
Now, Russians look like humans, act like humans, and, on occasion, write mighty good poetry. And so the question that is being asked in Russia, time and again is: "If they look so much like humans why don't we turn them into humans?" "And how to do that?" "Easy: just give them the rights. They get the rights - then they acquire private property - it would protect and expand the rights - and they would then be human."
But the Russian rulers never did take this advice....
And that is why Russia's huge problems: public health, AIDS, drug abuse, Chechnya, the whole Caucasus issue - are not being solved, and cannot be solved. As far as the economy, the whole business climate, though improving, has been greatly damaged by the fact that the "captains of industry" are not self-made men, but former bureaucrats, bandits, or influence peddlers. Since there are no self-made men, but clans, the decision-making process is complicated and the decision is always politically, rather than economically, motivated. Indeed, the price of apples on a peasant market is politically, rather than economically motivated: there is always an Azeri guy who tells you what your price should be.
Mrs. Brancato tells me that the "Azeri guy" means a member of a specific class of Azerbaijani--or any "foreigner" type in Russia--who, because he was politically connected, was one of the dominant influence peddlers on every local trading market. Later on the Azeri's disappeared from public view, and Russians manned the stalls... but we all know who really runs the show.
Sometimes there's a lot more to "market prices" than supply and demand.
4/6/2004 07:21:39 AM
What's in a Name?
A "swamp" with a "monument" is renamed a "park", and tourism doubles the next season.
Locals in Gadsden, SC, who exemplify the rural poor, have yet to profit from the influx:
Nearly half the area's residents are unemployed and 40 percent live below the poverty line, according to the 2000 census. The surrounding area has a predominantly African-American population, with about a third of the households earning just $10,000 a year.
UPDATE: An anonymous commenter writes, "Note that the renaming occurred in November 2003 and your data are from 2000 -- so it's a bit early to tell whether they "have yet to profit from the influx". True, I thought the article did enough to demonstrate that people using the swamp avoid the town--"the trickle-down effect has so far been minimal"--while demonstrating that neighboring Columiba, SC is getting a benefit--"recreational outfitters in Columbia are feeling a jump in business."
Gadsden has less than 25K people, so labor market data are not readily available for it. However, the data are available for Columbia, SC. Unfortunately, the unemployment rate is so variable, that no conclusions can be made. Hence, in this case, I'll trust the businessman's intuition more than the data:
4/5/2004 04:49:20 PM
Greetings from Sunny Maldives
Let me briefly mention where I come from. The Maldives comprises some 1200 coral islands in the Indian Ocean in a north-south chain 820 km long and up to 130km wide. Only some 200 islands are inhabited. Population is approximately 270,000 with about a quarter living in the capital Male. The economy is based mainly on tourism and fisheries. Every now and then I will blog about the Maldives.
My interests are institutional economics, public sector economics, and general economic literacy. I would like T&B to become the most interesting economics blog around (I think right now this place is taken by Marginal Revolution, the Idea Shop and EconLog). Some of the posts coming up are listed below:
1. Financial Programming and the IMF
4/5/2004 08:27:11 AM
More Wal-Mart
BY
Bob
In Inglewood, CA, Wal-Mart went directly to the initiative process rather than first trying to get city approval to build a supercenter store (This a continuation of Kevin's post here with a link to reason's article here) . The citizens of the city vote on Tuesday. The situation is similar to the events described in the Chicago article posted by Kevin. Inglewood is a largely African-American community right underneath the final approach to LAX. It is home to Los Angeles landmarks such as the now Lakerless Forum and Hollywood Park, but is economicaly depressed. Walmart arrival would bring needed jobs to a community where there are few prospects. On a side note, there is something of a myth to the lack of jobs in South Cental L.A. This part of the county is actually crawling with small manufacturers, but the labor force has been supplanted with immigrants from south of the border. I know of one of these companies where this is a fact and the only occassional African-American works in the office. Wal-Mart, being a large corporation, would be unable to practice such discrimination, let alone hire illegals. On a more upbeat note, here is a nice story on Magic Johnson's and other athlete's investment in inner cities. One interesting graph, Magic Johnson, for example, tried to develop the same Crenshaw property now being developed by Keyshawn Johnson in the Marlton Square project. The property, formerly known as Santa Barbara Plaza, steadily declined over the past 25 years, and occasional public-sector attempts to revitalize it stumbled at the start. Edit: I saw this piece on Drudge which makes it look like Wal-Mart may have overreached and left the whole process open to legal action. I googled to look for the actual proposition, but no luck(I really didn't look that hard, it's 3:30 am and I've got stuff due).
4/4/2004 09:34:25 PM
Is Pork Necessarily Bad
BY
Bob
Yesterday, while perusing National Review's The Corner I noticed entry this entry:
This reminded me of some comments made during one of the Tuesday Talks we have here at CGU. Lee Alston of University of Colorado was in town giving a presentation on the institutional aspects of the Brazilian government. One attribute that Lee found to be of benefit to good governance was the strong presidency of the country. It was during this part of the discussion our own Tom Borcherding chimed in, to paraphrase, why do people make such a fuss about pork spending? Pork is cheap compared to a lot of other stuff law makers want to spend money on. Lee agreed and said that the pork spending wasn't very expensive and an effective club to yield for the Brazilian President. Others in the audience concurred, to which, I must say to have been a little dumbfounded. Wasn't the evils of pork one of the things that had a broad consensus in this country, after all, the T.V. news regularly exposes such extravagance? If you think about it, pork really isn't that expensive compared to the recent additions of the prescription drug benefit, various agriculture subsidies plus the continuation of various entitlements, all of which is extremely difficult ot kill. This would be especially true in a place like Brazil which needs to get the country's pension system under control. Why not simply allow law makers to spend a little pork on their constituents rather than create/allow uncontrollable entitlement spending. The first two items above both equate to the per year spending in the highway bill, but we need to spend money maintaining our roads and highways. How much of the bill is actually pork, that is, the amount unnecessary for upkeep? I don't know the answer, my guess would be not a lot. The media will probably give Bush some credit for fighting pork because that's the only government spending they typically report negatively on. However, in the larger picture, Bush is fighting the wrong battle in a war he already lost.
4/4/2004 04:57:39 AM
Another Battle over Wal-Mart
At Gaper's Block, Ramsin Canon has an extended diatribe against WM in Chicago. I have added fiery comments demanding real-world justification for statements like, "there is quite an argument to be made that in fact the presence of the retailer would eventually be detrimental to a neighborhood's economic vitality," and "It is a virus. It is dangerous."
I'm willing to listen to arguments that we must fight WM until it dies; I just want WM antagonists to use WM's actual record to prove it.
Hat Tip: Paul of Phonezilla commenting at O'Donnellweb's, found via Businesspundit. Got it?
4/2/2004 03:33:35 PM
Acceptable Verbs
The WaPo has an interesting story about the secrecy of the Bureau of Labor Statistics before each month's employment numbers are released. I was amazed at the tortured agony and blood spilled in preparation of each document:
What is an acceptable verb? "Declined," Nardone said. "Rose. Grew." What about dropped? "We've used dropped," he said. Shed? "Shed we use." Bled? "No." Plunged? "No." Nose-dived? "No. The thing we're trying to avoid is being judgmental. . . . If you use nose-dived, or bled, or soared, or skyrocketed, then you're not just providing direction, there's some judgment of the direction."
Slumped?
"No, I think we would really stay away from that one."
The President's Council of Economic Advisors gets a copy a day early; the CEA prepares an early summary edition for the President, Treasury Secretary, and Fed Chairman.
UPDATE: Kikuchiyo notes an odd sentence fragment in the latest release.
4/2/2004 11:40:29 AM
Total Nonfarm Employment Rises a Lot
You might have read that employment rose in March, and that this job growth is the strongest it has been since Bush started.
Can we trust this number? Short answer: Yes, just don't take it literally.
Total nonfarm payroll employment is generated the establishment survey, which has far more accuracy than the household survey (which I have discussed earlier), but it does not have pinpoint accuracy. The 300K positive change was 4.5 times larger than the standard error of 67,693, so there is no question that the change in employment was large and positive. That is, unless you believe that Bush has placed his cronies to manipulate the data so he looks good for the election. But there's little difference between a change of 308,000 and one of 300,000. I understand that the BLS will report data with such alleged precision as a matter of duty, but the only justifiable reason I can see for the press to report it is so they're not accused by foolish partisans of manipulation. However, I'd love to see what reporters would have done if the BLS had reported an increase 308,167. Would they have rounded off?
Btw, the full release of employment data is called The Employment Situation, which to me sounds like a Tom Clancy novel. Please let me know if you have any idea how it got this name.
4/2/2004 10:25:21 AM
Vegetarian Fast Food
From Swissinfo comes news of an expanding vegetarian fast food outlet, Tibits:
At a first glance, Tibits could be mistaken for copying the latest fast food trends, where sandwiches, soup, coffee or fresh juice are offered in cosy yet fashionable settings.
But the chain’s main ingredient and key to success is a large buffet of 30 different hot and cold vegetarian dishes, including everything from Tex-Mex to Indian curries, with a dash of old fashion Swiss cooking thrown in as well....
Added to the mix is a witty advertising campaign comprised of images of vegetables posing as fast food icons.
String beans instead of McDonald’s fries, a carrot imitating a hot dog and a banana with a takeaway handle cut out of its peel....
Much of the concept, including the food, was first successfully implemented at Zurich’s popular Hiltl restaurant, which was Europe’s first vegetarian eatery when it opened its doors in 1898.
This sounds like a good choice for those looking for a quick bite and self-service; it gets OK reviews. In addition to their Zurich, Bern and, Winterthur locations, they're opening up in Basel and in London. They've received many inquiries from US parties as well...
4/1/2004 01:45:59 PM
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