MR Fri, Jan 6 2006

So I have an enormous collection of blog posts that I have saved over the years that I wanted to comment on. I am going to try to go through them whenever possible. Here is the first from Marginal Revolution, one of my all time favorites.

Tyler Cowen writes:

What does a recipe maximize?
By Tyler Cowen on Food and Drink
Brad DeLong's daring but unsound cinnamon gambit led me to wonder what a recipe is intended to do. I see at least two possibilities:
1. A food recipe is designed to put you on the highest indifference curve possible, taking into account market prices and constraints.
2. A food recipe is designed to taste as good as possible, ignoring market prices and constraints. Bring on the caviar.
Cookbooks by famous chefs are more likely to fall into #2. The chef makes money not just from the cookbook but also from TV appearances, endorsements, and other ancillary products and activities. You might resent having spent so much on the saffron, but if it tasted good you will praise and value the chef. Few people will visit the restaurant of a man who shows you how to find cheaper potatoes.
Knowing this, how should you adjust recipes? It depends on the quality/price gradient. You could cut back on the most expensive ingredients, cut back on all ingredients, or perhaps add more spices and buy a quality of meat lower than suggested. At the very least you should cut back on your labor input and take shortcuts. This is in fact what most home cooks do, relative to the recipes they use. You don't really peel all those boiled almonds, do you? Don't feel guilty, just ponder the first-order conditions, smile, and gulp it down.
If you have a not-very-clearly-branded cookbook, you might be better off following the instructions to the letter. They are hoping to make money from happy book buying cooks, not ancillary food products. If the recipe is old enough, it is hard to predict the direction in which relative prices have changed, but at the very least wages have probably gone up. So you are back to making adjustments and taking some extra shortcuts to stay on your highest possible indifference curve.
If the recipe is from a supermarket, cut back on the high-margin items. Use more canned goods and less expensive cheese, relative to what is suggested. (Hey, what about blog recipes?)
Lunchtime Pho with Alex contributed to these ideas; I enjoyed the food but I believe the restaurant followed #1. I spent $6.45. Comments are open.

In my opinion, I am not sure that the two possibilities Tyler suggests are the only possibilities for recipes in cookbooks. However, a chef is certainly constrained by market prices, but I don't believe that putting the customer on the highest indifference curve possible is enough. Chefs are driven in part by ego, and the idea of someone achieving satisfaction derived from perceived value is inconsequential to the chef. I offer a third restaurant applicable option: A recipe is intended to taste as good as possible given market constraints.

What is it you are asking for??

A progressive friend of mine posted this on his Facebook today:

This is insanity. Mr. Friedman can't get what he wants in the political arena, so he starts longing for an autocracy of the "enlightened"? No. We should never sacrifice our freedom for expediency. A country populated by free people, even unseated from its seat as the reigning world superpower, is superior in every way to a country populated by prisoners of an autocratic state. This op-ed piece stinks of elitism with a seeping undertone of fascism.

Accompanied by this article. I'm no fan of Friedman, but I am a fan of consistency. The problem for me is that it is precisely freedom that lends itself to expediency. The problem is that progressives talk about freedom but don't really want it. Freedom to fail, freedom to make bad decisions...freedom is not something we can pick and choose from. Either we have it or we don't.

My friend also criticizes the "autocracy of the enlightened". Isn't that what progressives want? "You're too stupid to understand this mortgage." "You are a victim of predatory lending because you don't have an education in finance." "You couldn't possibly understand this health care insurance rider." "You don't have the foresight to plan for your retirement." "You don't have time to compare prices on your utilities." "Let government do all this for you."

Do you want freedom or not???

Healthcare debate

So people are getting heated up about the whole healthcare debate. The sad thing is how much bad information there is out there and how each side is using scare tactics and lies to prove their points. Recently, a Facebook status line went up that said, "

no one should die because they cannot afford health care, and no one should go broke because they get sick. If you agree, please post this as your status for the rest of today.

This piece of propaganda is so full of misinformation. First, every hospital is required to care for anyone regardless of ability to pay. Therefore, how can you say people die because they cannot afford healthcare? Secondly, if you cannot afford heathcare we have systems to pay for you: Medicaid and Medicare. If you are still dying, then there must be a problem with Medicaid and/or Medicare. Finally, preventing people from going broke if they get sick is a appeal to emotion that is fraught with problems. If I get sick, should I be paid my full salary? It is not the cost of care alone, it is these costs plus the lost wages. So who is going to pay my salary when I get sick? If we did that we would bankrupt every company in the US.

Today, I watched this video:


What a terrible argument! First, using the post office as an example of well run government institutions is a bad idea. Second, the problem with insurance companies are not their profits. It is the government endorsed monopolies that drive costs up. If the market structure were more competitive there would be less money for political campaigns, not to mention the oversight that is this is the case, then it means that government run health insurance would still be subject to political pressures from the rich and corporations such as drug companies. Third, the idea that only the rich can invest is just nonsense. Anyone with a 401k is probably invested in some insurance companies. That's why retirement savings for many plummeted when AIG went down. Fourth, any economist will tell you that if the market were more competitive, that just denying claims would not result in higher profits and that given a choice, people would switch from one provider to another, making denying claims less profitable. Fifth, even the writers of this didn't believe it when they said that the government would spend a higher percentage of tax revenues on healthcare rather than administrative costs. "Probably much more." Ever hear of government waste? Sixth, the Medicare argument is a terrible one to make. There is some debate, but you have to look beyond just the dollars in and dollars out or you are missing the picture. Seventh, the problem with comparison to private free market insurance is that we don't have that now and any comparison of our current state to free market insurance is simply incorrect. Also, police, fire and water treatment are run by localities and states, not at the federal level. So a blanket statement about how well they are run is comparing apples and oranges. Eighth, people do buy fire insurance. This is a horrible straw man argument that only can serve to inspire panic, and, money from your paycheck DOES go to pay the fire company!!! Again, people, this is NOT free!!! I mean it is so funny how the narrator even says, "free for everyone, paid for by our tax dollars." How can you miss this disconnect?!?!

So anyway, one of my main problems is the fact that all of these seem to suggest, if not outright state, that these things are free. Nothing is free!! There is a cost to providing all government services but no one wants to talk about just how that will happen. Medicare and Medicaid are so expensive they are nearly bankrupting the states and the federal government! I would guess that no one who is advocating for this universal healthcare would like to be on Medicaid. Guess what people...Medicaid denys your claims too!!

The first step in heath care reform has to be to lower costs. One of the most effective ways to do this is by throwing a little antitrust legislation at the insurance companies. Let's start with that and go from there.