Joke of the Day

My favorite story about government meddling. Ever.

Blockquoting X

In Exchange and Production, Alchian and Allen have this interesting paragraph (among many others, of course):

A most common instance of interspecific resources is marriage: Two people become interspecific to each other and to their offspring. Although such arrangements are not central to economic analysis, they indicate that interspecificity of resources can also apply to people; and although people do not own each other, what might appear to be unusual or otherwise inexplicably restrictive contracts or arrangements may be the means of restricting potentially exploitative behavior (173).

Economists are so romantic.

Blockquoting X

Today's X is George Stigler. The quote comes from his 1961 paper, The Economics of Information which I will be presenting in Econ 811 tomorrow.

Ignorance is like sub-zero weather: by a sufficient expenditure its effects upon people can be kept within tolerable or even comfortable bounds, but it would be wholly uneconomic entirely to eliminate all its effects. And, just as an analysis of man’s shelter and apparel would be somewhat incomplete if cold weather is ignored, so also our understanding of economic life will be incomplete if we do not systematically take account of the cold winds of ignorance.

It is certainly worth reading the whole article.

POW Camp

At Cafe Hayek, the conversation between Roberts and Munger turns to POW camps. I am sure most of you have heard the account before. It comes from R.A. Radford's 1945 Economica article, "The Economic Organization of a P.O.W. Camp." But I want to zero in on one line from Munger:

Stories circulated of a padre who started off round the camp with a tin of cheese and five cigarettes and returned to his bed with a complete parcel in addition to his original cheese and cigarettes; the market was not yet perfect.

The first time I heard this story, I was taking Comparative Economic Systems. The objective in the course was to evaluate the market on a variety of levels (efficiency, morality, etc). I found it interesting, though, that my professor noted the existence of the padre as an indication that markets might not be fair. His logic: if one person can end up with what he had to start with PLUS more in a barter economy, he must be cheating people (since nothing is produced in a barter economy).

What's the problem with his argument? The POWs are not in a pure barter economy. The Padre is producing information! He is an entrepreneur. He finds price discrepancies and takes advantage of them. But, at the same time, he reveals the information once known only to him, a roaming maverick, to the rest of the camp. How is this unfair?

Very Funny Blog

I recently discovered a blog called Twisted DNA. It is incredibly funny and very well written. Among other things, the blog author has nailed the most/least respected things in the US:


You should also read his review of The Dark Knight and his Application for Sukdeep Groceries.

[HT: Kavi]

From the Inbox

Of course, you could replace "democrat" with "politician" without sacrificing accuracy.

[HT: Aaron]

From the Inbox

[HT: Ray]

RSS Feeds

Libby's post at Technagora got me thinking a bit about blogging. Ironically, linking to it is precisely what she suggests bloggers should NOT do. But I disagree to some extent and left the following comment:

Guilty.

I know what you mean. And I am certainly guilty. I like to think there are two types of blogs: original and popularizers. Tyler Cowen, for example, is an original thinker. But he writes a lot of stuff that I could care less about. So a popularizer might scan through all of Cowen’s posts (and all of McArdle’s and Healy’s and etc…) and then pass on the most interesting. So someone with little time can come to the blog of a popularizer and get the good stuff without sifting through the rest. And popularizers will specialize in different subsets of Cowen/McArdle/etc. It is not always so distinct, but you get the point.

I would say I am a popularizer at present. I would like to be more original. But if I only posted original posts they would be few and far between. And that is not a good strategy for blog success. So I link a lot and write original posts when I find time.[...]

As for the RSS feed, I think you should decide whether you want a feed of popularizers (and if so, which ones since similar popularizers overlap) or original thinkers. Too much overlap will result in a clogged reader.

What does my RSS reader look like?

Division of Labour, The Austrian Economists, Cafe Hayek, Marginal Revolution, EconLog, Organizations and Markets. And I am thinking about adding Heroes of Capitalism which is arguably the most interesting blog I read.

Signaling, Cheap Talk, and Relationships

How does one signal to the opposite sex that they are a good catch? Think about it. Assume (for simplicity) that there are two types of guys: winners and losers (Let's not define these two terms yet...). Assume also that girls prefer winners to losers. What's the best strategy for a guy?

Winners: Tell girls you are a winner.
Losers: Tell girls you are a winner.

And there is the conundrum: simply stating which category you fall into is not an effective signal. Why? Because it is cheap. If it were expensive for losers to claim winner status, the signal would work. But it isn't.

So what are nice guys to do? For more, check out the comments. And feel free to add to my ideas (as they are clearly incomplete).

Do You Know John McCain?

Reason.tv has posted what is easily my favorite negative campaign ad. Check it out:

Presidential Debates

If you are anything like me, you don't have time to watch political debates. You have too many important things to do: work, classes, polishing yard gnomes, etc. Fortunately, the fine folks at Reason have condensed the debate from earlier this month into a short 1 minute overview. This makes it possible to hear all the b@llsh!t these two clowns threw around without sacrificing the time to hear them shuffle said sh!t back and forth (over and over again) ad nauseam.
So enjoy.

We are in the Midst of a Global Recession

...in the telling of jokes and anecdotes.

At lease that is Kirby Ferguson's claim. The culprit: Punchline Piracy. Fortunately, he offers several ways to combat this growing threat to laughter.



HIs videos on Progress Bars and Lists are also pretty good.

Voting Race

Howard Stern sent Sal into Harlem to see if race is a major factor in the upcoming election:

[Question:] And if he wins, would you have any problem with Sarah Palin being vice president?
[Answer:] No, I wouldn't. Not at all.

But the he, in this question, was NOT John McCain...

Sal first asked if the person supports Obama. Then he confirms that he also supports "Obama's" policies; in actuality, he reads off McCain's policies. The interviewee affirms the fake Obama policies. Then Sal goes so far as to ask if the interviewee has a problem with Obama's running mate, Sarah Palin. And the (unbelievable?) response is quoted above. Incredibly funny. Listen to the whole clip.

[HT: Bryan Caplan]

More on Voting/Not Voting

A couple links:

102 year old to vote for first time

John Stossel (and GMU's Bryan Caplan) questions voter drives

As for me, I am still considering whether to request an absentee ballot (and which joker to vote for if I do!). Feel free to persuade me (either way) with your comments.

Don't Vote 2008

Seriously. The makers of the original PSA had to expect an edit like this. And in my opinion, it makes it a lot better.

Econ PhD

Are you considering a PhD in economics? Here is what you can look forward to: I just had the most incredible 4h45m of sleep; but now I am wide awake because my body is just not use to sleeping much longer than that (and certainly not at that level of quality!).

I had my first Micro exam last night. Old exams are online so I knew what to expect. The difficulty was finishing the six questions in 90 minutes. I ended with a whopping two minutes to spare. You literally had to write your answers without thinking; you just had to know it. But after a solid week of studying (and weeks of reading and re-reading chapters) I felt like I had a strong command over the material. Let's hope Dr. Williams agrees.

Today's Lesson

I pulled into a gas station today where the price of regular unleaded was posted at $3.48. The sign on the pump read as follows: Only Premium. Two blocks away I bought gas for $3.56. They seemed to have plenty to go around. Why? Because prices work!

That most individuals are astonished when a single station (or even a handful) undervalues gas at a given point in time and, as a result, sells out too quickly points to how well the price mechanism works: we are so accustomed to entrepreneurial accuracy that miscalculation seems inconceivable.

Government Solutions

In traditional economics, market failures are corrected by government intervention. Pigouvian taxes, for example, can set things right. Fortunately, Public Choice has pointed out how ridiculous this position is: politicians are not disinterested do-gooders.

Nonetheless, citizens still seek government intervention to solve the so-called evils of the market. And government officials respond, though not necessarily how we would like. Consider the bailout bill that passed in the house. The Tax Foundation points out all of the "extras" included in this pass-or-perish* piece of legislation:

Energy Related Targeted Tax Credits and Changes
Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine renewables.
Sec. 103. Energy credit.
Sec. 104. Energy credit for small wind property.
Sec. 105. Energy credit for geothermal heat pump systems.
Sec. 106. Credit for residential energy efficient property.
Sec. 107. New clean renewable energy bonds.
Sec. 108. Credit for steel industry fuel.
Sec. 109. Special rule to implement FERC and State electric restructuring policy.
Sec. 111. Expansion and modification of advanced coal project investment credit.
Sec. 112. Expansion and modification of coal gasification investment credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung Disability Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain coal producers and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Certain income and gains relating to industrial source carbon dioxide treated as qualifying income for publicly traded partnerships.
Sec. 117. Carbon audit of the tax code.
Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide an incentive for United States production.
Sec. 204. Extension and modification of alternative fuel credit.
Sec. 205. Credit for new qualified plug-in electric drive motor vehicles.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and advanced insulation.
Sec. 207. Alternative fuel vehicle refueling property credit.
Sec. 208. Certain income and gains relating to alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.
Sec. 209. Extension and modification of election to expense certain refineries.
Sec. 210. Extension of suspension of taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.
Sec. 211. Transportation fringe benefit to bicycle commuters.
Sec. 301. Qualified energy conservation bonds.
Sec. 302. Credit for nonbusiness energy property.
Sec. 303. Energy efficient commercial buildings deduction.
Sec. 304. New energy efficient home credit.
Sec. 305. Modifications of energy efficient appliance credit for appliances produced after 2007.
Other Tax Credits and Changes
Sec. 101. Extension of alternative minimum tax relief for nonrefundable personal credits.
Sec. 102. Extension of increased alternative minimum tax exemption amount.
Sec. 103. Increase of AMT refundable credit amount for individuals with longterm unused credits for prior year minimum tax liability, etc.
Sec. 201. Deduction for State and local sales taxes.
Sec. 202. Deduction of qualified tuition and related expenses.
Sec. 203. Deduction for certain expenses of elementary and secondary school teachers.
Sec. 204. Additional standard deduction for real property taxes for nonitemizers.
Sec. 205. Tax-free distributions from individual retirement plans for charitable purposes.
Sec. 206. Treatment of certain dividends of regulated investment companies.
Sec. 207. Stock in RIC for purposes of determining estates of nonresidents not citizens.
Sec. 208. Qualified investment entities.
Sec. 301. Extension and modification of research credit.
Sec. 302. New markets tax credit.
Sec. 303. Subpart F exception for active financing income.
Sec. 304. Extension of look-thru rule for related controlled foreign corporations.
Sec. 305. Extension of 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements; 15-year straight-line cost recovery for certain improvements to retail space.
Sec. 306. Modification of tax treatment of certain payments to controlling exempt organizations.
Sec. 307. Basis adjustment to stock of S corporations making charitable contributions of property.
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.
Sec. 309. Extension of economic development credit for American Samoa.
Sec. 310. Extension of mine rescue team training credit.
Sec. 311. Extension of election to expense advanced mine safety equipment.
Sec. 312. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
Sec. 313. Qualified zone academy bonds.
Sec. 314. Indian employment credit.
Sec. 315. Accelerated depreciation for business property on Indian reservations.
Sec. 316. Railroad track maintenance.
Sec. 317. Seven-year cost recovery period for motorsports racing track facility.
Sec. 318. Expensing of environmental remediation costs.
Sec. 319. Extension of work opportunity tax credit for Hurricane Katrina employees.
Sec. 320. Extension of increased rehabilitation credit for structures in the Gulf Opportunity Zone.
Sec. 321. Enhanced deduction for qualified computer contributions.
Sec. 322. Tax incentives for investment in the District of Columbia.
Sec. 323. Enhanced charitable deductions for contributions of food inventory.
Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory.
Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds.
Sec. 401. Permanent authority for undercover operations.
Sec. 402. Permanent authority for disclosure of information relating to terrorist activities.
Sec. 501. $8,500 income threshold used to calculate refundable portion of child tax credit.
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children.
Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation.
Sec. 505. Certain farming business machinery and equipment treated as 5-year property.
Sec. 506. Modification of penalty on understatement of taxpayer's liability by tax return preparer.
Sec. 512. Mental health parity.
Sec. 601. Secure rural schools and community self-determination program.
Sec. 602. Transfer to abandoned mine reclamation fund.
Sec. 702. Temporary tax relief for areas damaged by 2008 Midwestern severe storms, tornados, and flooding.
Sec. 703. Reporting requirements relating to disaster relief contributions.
Sec. 704. Temporary tax-exempt bond financing and low-income housing tax relief for areas damaged by Hurricane Ike.
Sec. 706. Losses attributable to federally declared disasters.
Sec. 707. Expensing of Qualified Disaster Expenses.
Sec. 708. Net operating losses attributable to federally declared disasters.
Sec. 709. Waiver of certain mortgage revenue bond requirements following federally declared disasters.
Sec. 710. Special depreciation allowance for qualified disaster property.
Sec. 711. Increased expensing for qualified disaster assistance property.
Sec. 712. Coordination with Heartland disaster relief.
Sec. 801. Nonqualified deferred compensation from certain tax indifferent parties.

And we are suppose to believe that all this is to solve the financial problem? Hah!


*While not a reality, pass-or-perish is used to illustrate how politicians present certain situations.

In Print (sort of)

Today the real-world economics review (formerly post-autistic economics review) published a piece by Hall, Lawson, and Luther. And not just any Luther, but this Luther!

This is my first academic publication. Hopefully many, many more will follow.

Strange Ideas

George Carlin on prostitution (Disclaimer: if you are too stupid to realize a video presented as "George Carlin on prostitution" probably contains crude language, I am not sure the disclaimer is going to do much good...):