Cobb Dug Less

Long engagement: a reason I'm proud to be a DC resident

2010-06-26T21:36:00.002-05:00

Article in Washington Post on a Long Engagement

This is just cool....

2010-06-24T19:00:00.000-05:00

Lightning in Chicago:

Sachs' pronouncement

2010-06-08T14:40:00.000-05:00

Article on Sachs' pronouncement of the death of Keynesianism. (Link to original within).

Fries

2010-06-05T21:11:00.001-05:00

How to make fries...I mean really make fries.

Mental Spew

2010-06-04T22:33:00.000-05:00

A good article on capitalism in Hollywood by Alex Tabarrok
A debate on the least Bohemian city. For most Bohemian, my vote would be Baltimore.
Interesting paper on the labor market in this current recession. Echoes some things I am currently working on.
Good post on some issues in Asia by Daniel over at Facts and other stubborn things. One thing to add...there are some flaws in the argument that the US situation is like Japan. The US banking system is far more solid (look how fast they have managed to return the TARP money). Japan's economy was under a dual decline of unemployment and consumer spending that helped magnify the issue (US spending has not suffered much since 2001). Government borrowing was 130 percent of GDP. I'm not downplaying the seriousness of US debt, but it is not in the same neighborhood.
Flyers tie it up!!

World Cup by economists

2010-06-04T09:03:00.000-05:00

Article on the incidence of economists predicting the World Cup. One note: it is troubling evidence of the ignorance of math that the author felt it necessary to add a disclaimer about the "snarls of math" referring to a simple linear equation.

Some more great music

2010-06-02T22:16:00.000-05:00

Found these channels on Youtube

NPR
WFUV
893 The Current
KEXP

Immigration policies

2010-06-01T08:28:00.001-05:00

A good example of how our immigration system is atrocious.

Great NHL commercials

2010-05-27T14:30:00.000-05:00

Great new NHL ad for the Stanley Cup Finals.

I also love this one with Crosby and Ovie and this series with the old coach.

Oh and this one from Boston is one of the best ever.

Things I was listening to in the early 90s

2010-05-26T22:07:00.000-05:00

Eric's Trip - Girlfriend

Kill Creek - Kelley's Dead

Hum - The Pod

Lowest of the Low - Bleed a Little While Tonight

Li Kwan - Point Zero

NoFX - Linoleum

Sisters of Mercy - Temple of Love

Putting in a claim

2010-05-25T16:03:00.000-05:00

I'm calling the first "Philly fans get Toews-ered" joke!

Stanley Cup Finals

2010-05-25T12:25:00.001-05:00

Mmmmmmmm.

Teen werewolves

2010-05-25T09:31:00.002-05:00

How's this for kids telling people they don't care what others think? I love it.

Star vs. planet

2010-05-25T08:39:00.002-05:00

Photos of a star engulfing a planet 300 times the size of Earth.

NFL vs American Needle Ruling

2010-05-24T22:36:00.001-05:00

The ramifications if the NFL won this, it would negatively affect every major US sport. Sorry baseball. Loved Drew Brees' open letter...he's a well written Super Bowl winner.

Bourdain meets Baltimore

2010-05-23T22:11:00.000-05:00

Anthony Bourdain has a testy history with Baltimore including disparaging remarks in his bestseller Kitchen Confidential as well as throwing it in with Buffalo and Detroit in his "Rust-Belt" episode of No Reservations.

I'm a big fan of Bourdain (and Ripert), but Bourdain and I disagree about Baltimore. He and Eric Ripert were in Baltimore this past weekend. Article here.

Information, Coordination, Calculation, and Libertarianism II

2010-05-23T20:41:00.000-05:00

Part II:

Here is the original posting from Facts and other stubborn things

I think I would like to perhaps clarify, partly for me, the logic between calculation, prices, and incentives. Daniel is correct in asserting that many people have a tendency to link these three but I would separate prices and calculation from incentives. As I stated in the post below, there are two aspects to the Socialist Calculation Debate (SCD). Let me start with calculation.

The calculation problem, in a parsimonious description, refers to the inability of a central planner to properly allocate resources to their most efficient and Rawlsian welfare maximizing use. This is the central tenet of Mises' 1920 monograph. He starts to lay out the reasoning for why a central planner cannot establish value.

In an exchange economy the objective exchange value of commodities enters as the unit of economic calculation. This entails a threefold advantage. In the first place, it renders it possible to base the calculation upon the valuations of all participants in trade. The subjective use value of each is not immediately comparable as a purely individual phenomenon with the subjective use value of other men. It only becomes so in exchange value, which arises out of the interplay of the subjective valuations of all who take part in exchange. But in that case calculation by exchange value furnishes a control over the appropriate employment of goods. Anyone who wishes to make calculations in regard to a complicated process of production will immediately notice whether he has worked more economically than others or not; if he finds, from reference to the exchange relations obtaining in the market, that he will not be able to produce profitably, this shows that others understand how to make a better use of the goods of higher order in question. Lastly, calculation by exchange value makes it possible to refer values back to a unit. For this purpose, since goods are mutually substitutable in accordance with the exchange relations obtaining in the market, any possible good can be chosen. In a monetary economy it is money that is so chosen.

Mises is writing strictly about the socialist system where there are no prices and therefore valuations are impossible. Therefore, the central planner will not know how to best allocate scarce resources. In particular, where and when to allocate capital such as building a new factory when supply and demand intersection is impossible to determine.

For me, the calculation problem ends there. I think that others try to say more about it than is really there. I believe that the Hayek extension of Mises' argument, the response to Lange, is really the brilliant point in the SCD. One that gets mixed up with the calculation problem.

Hayek uses the problem with establishing value to write about prices and their composition. He lays out an argument that develops Mises' calculation problem to describe exactly why prices are not calculable and in turn why market derived prices are impossible for a central planner to determine.

I cannot find the direct quotation, but Hayek uses the example of a tractor to show how no central planner could price a used tractor. To me, the point that a central planner cannot possibly price the tractor is far less important than the awesomeness of the information implicitly contained in a market derived price. I remember getting chills reading how a single price can communicate the mileage; the age of the tractor; the condition both overall and any particular attributes; the need for tractors in the location in which it is being sold; the value of the tractor to the owner and the buyer, simultaneously; and so on.

Hayek's essay is what convinced me that distortions to market derived prices must result in some loss of economic efficiency. My guess is that Daniel would agree with this, where we might disagree is how much efficiency loss is acceptable given some other set of objectives.

This is my reading of the SCD and I think that many people have a tendency to overlap and merge these arguments into a murky mess. What this has to do with incentives, I am not sure, but I do have some thoughts about it which I will discuss later. I think that what tends to happen is that in the overlap, the calculation problem=>a failure of central planning=>incentive problems as central planners misallocate resources. I do not agree that the last step follows the logical progression.

Telephone

2010-05-23T19:50:00.002-05:00

Really in-depth interview with Lady Gaga.

Stabilize the debt....

2010-05-21T14:43:00.001-05:00

if you dare!!!!!

http://crfb.org/stabilizethedebt/

Venter with a huge advance

2010-05-20T15:42:00.000-05:00

Venter creates life!

H/T: Marginal Revolution

Bon Iver - Skinny Love and Blindsided

2010-05-20T09:03:00.000-05:00

2 by Bon Iver from For Emma, Forever Ago

Skinny Love
Blindsided

One AM Radio - What You Gave Away

2010-05-20T08:58:00.000-05:00

One of my favorite songs...came up on Pandora today.

H/T: Jeff

Brian Burke doing good work

2010-05-19T13:46:00.000-05:00

From Puck Daddy:

Using his name, Burke is doing something many might not feel comfortable with, but knowing that only good will come out of his support for MyGSA.ca, he is helping to promote a message that Brendan may have ended up doing himself after he came out publicly last year.

Scary....

2010-05-19T13:39:00.002-05:00

This has got to be scary for a goalie...
H/T: Empty Netters

Number 1 picks

2010-05-19T09:12:00.001-05:00

From DC Sports Bog:

And find me another city that has a No. 1 overall pick on its MLB, NBA and NHL teams, all at the same time. Maybe our luck is starting to turn. You could build some sports fans around a core of Wall, Strasburg, Zimmerman, Ovechkin, Backstrom and Orakpo.

Interesting....given the draft lotteries, it would be very unlikely to have a city with #1 picks on its major teams.

Mexican faux pas

2010-05-19T09:09:00.000-05:00

I'm not sure that serving Mexican food, even if it is Rick Bayless cooking, at a state dinner for the President of Mexico is not a faux pas of some sort. It would be like going to Tokyo for omakase at Jiro and being served burgers and fries. Article here.

Sleigh Bells

2010-05-18T15:27:00.000-05:00

New music people are talking about...not bad. Sound like JUSTICE meets Fiery Furnaces.

Wage rigidities

2010-05-17T19:45:00.000-05:00

I am getting behind in my responses to Daniel about calculation etc., but he has a new post up on his blog Facts and other stubborn things on new Keynesian approaches to wages and employment.

I think we do see rigidities in the labor market wrt real wages. Let me suggest this is a problem with the makeup of the labor supply due to skill mismatches, immigration policies, shifts in the composition of firm birth and death, and other structural elements. I guess what I am saying is that the wage-supply-demand model is not very generalizable and this appears as wage rigidity when in fact it is much more a case of substitutability of labor inputs and the labor demand curve changing slope rather than shifts out or in.

Cool food blog you should read!

2010-05-17T19:40:00.000-05:00

My friend Meg has a blog from a really interesting perspective...she's a ex-pat from Maryland living in Helsinki.

What to do about failed cities

2010-05-17T10:03:00.000-05:00

These 2 articles are about the downslide of Detroit and more importantly, what can be done about it. The first is from the WSJ on efforts to raze empty houses. The second is an older post by Harvard Urban Economics professor Ed Glaeser.

Top restaurants this year

2010-05-16T21:41:00.000-05:00

Article on the state of the restaurant business and the San Pellegrino Top 100.

Pinhole cameras

2010-05-16T13:53:00.002-05:00

I have never made one but think pinhole cameras take really interesting pictures. Here's how to make and use a more complicated tri-film version.

Baltimore Free Store

2010-05-15T18:23:00.001-05:00

I like this concept and am glad someone is doing it. I am not sure how this is incompatible with capitalism though.

Guilty pleasure

2010-05-15T15:09:00.000-05:00

I have a guilty pleasure....infomercials. Here are 3 of my favorites and a compilation that was accompanied on the Woot blog with the following, hilarious description:

From dogs who stink up your couch to ketchup that dribbles all over your new tie, infomercials have chronicled a litany of "problems" most of us didn't know we had. In tribute to the actors who bring such overwrought panache to their roles as incompetent shlemiels, a YouTube auteur assembled clips from over 50 infomercials depicting all the awful things that can happen when you're not properly equipped. Now, where did I put that Adjust-A-Slice?

Magic Bullet
Better Marriage Blanket
Slap Chop

The compilation

Information, Coordination, Calculation, and Libertarianism I

2010-05-14T23:52:00.000-05:00

I have recently found a really great blog (by a former classmate of mine from grad school) called Facts and other stubborn things. Daniel posts really well thought out pieces on a variety of topics and his posts are well informed and very insightful. Check it out...link to the right------->

He has recently written quite a lot about libertarianism, the Socialist Calculation Debate (SCD), which is linked to on the right hand side of this blog, and its ramifications today. I started this when he had only 2 posts on this but he has been posting things faster than I can respond. So I will respond to each...apologies if my comments are addressed in later posts.

1. http://factsandotherstubbornthings.blogspot.com/2010/05/calculation-problems-vs-incentive.html

First, I'd just like to say that I was fortunate to read the Socialist Calculation Debate in depth with noted Austrian economist Howard Baetjer as an undergraduate in comparative economic systems. It was truly one of the cornerstone moments in my intellectual development and the impetus for a profound chnage in my political and overall world view.

I'd like to address some issues and perhaps clarify some points. Quotes from Daniel are in italics.

the "socialist calculation problem" has never really interested me that much. It just strikes me as so obvious...[the debate came after] my primary influence (Keynes) had made his impression on the discipline, and wrapped itself up before I was even born and with all the modern economists that I admire coming down against Lange and Lerner. Moreover, none of the economists in the interim that I admire - Phelps, Friedman, Hicks, Modigliani, Minsky, Coase, Williamson - really succumbed to the Lange-Lerner infatuation with socialism. I can certainly understand why someone who grew up during the Cold War could maintain an interest in this skirmish even into the twenty-first century, but it doesn't hold any particular interest for me, because it seems so eminently obvious and conclusively decided.

On a cursory reading the SCD is a fairly obvious critique ex post. Socialism clearly failed and history has shown that the failure of the Soviet Union was in a large part due to the problems in central planning of an economy. But I believe that to call it a calculation problem leads one away from the central point of Hayek's essays from 1945 and 1948. In my reading, I find that what is important is not that socialism failed, not that calculation could not be made, per se, not that resources could not be allocated properly, but that market derived prices are so important. The information in market prices is awesome and they are a wonderful example of spontaneous order. The most important, relevant point is that interference in the markets' ability to freely set prices, unencumbered, has to be the very highest priority.

I think Hayek's essays after the war had two points of relevance and he and Keynes were not just two great economists passing in the night as it were. First, historically, Hayek's writings must have been influenced by Keynes at this time. Hayek and Keynes' close relationship, particularly during the war (I love the mental picture of the two of them arguing economics while on fire duty together on the roof of Kings College at Cambridge), must have influenced Hayek's writings at this time. Second, I would argue that while although no one would call Keynes a socialist, he did take an approach that diverged from the classical liberals who dominated economics prior to the Great Depression and placed a heavier emphasis on reliance on government intervention. In some way perhaps, Hayek's essays served to try to influence Keynes to place the priority of market prices higher rather than sacrificing some of their robustness in the pursuit of full employment.

I agree wholeheartedly with Daniel that the framing of the efficient allocation argument has degenerated into a senseless disagreement because of confusion from both sides about calculation and incentives (if I am reading your term incentive problems correctly). Hayek was not writing about incentives in the SCD. The calculation problem exists even in the presence of the so-called benevolent dictator.

I do think that a large portion of the population does believe that government can allocate resources better than individuals. Not economists in general, but this is a widespread belief among a wide swath of the population; even the concept of scarce resources is difficult for many educated, thoughtful people.

Daniel asks 2 questions:
First, is a "market failure" a genuine market failure or is it, as Boettke says, an opportunity for arbitrage? If it's just an opportunity for arbitrage then "market failure" is a misnomer. If it is a genuine market failure, we then of course have to ask ourselves what the best solution is. In some cases a public solution will be appropriate, and in some cases a private solution will be appropriate.

Unlike Boettke, I differentiate between market failures and information problems. They are overlapping sets, but do not share all elements. Strictly speaking, I think the term market failure is misused as many problems are attributed to market failures, but no market is without distortions. I have no reason to believe that a truly free market won't arbitrage away market failures, but show me a free market. Information problems are another story. Information problems is one area in which I split with the Austrians. There is overwhelming evidence that information problems exist, even in the most transparent environments and, as the amount of information has exploded exponentially in the recent past, there is no way to sort through it all. At its most basic level, both buyers and sellers have the incentive to work in their own best interest, but it is much easier to hide information from each other now or mislead and both sides are usually at fault.

The second question is: [D]oes the admitted fallibility of the state preclude a public solution or doesn't it[?]

Given that the state is fallible, we should not expect a solution, simply a Pareto improvement at best. I would also suggest that any "solution" is an intervention subject to the risk of the Theory of the Second Best. I also invoke Bastiat here: "There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen." These ideas can be applied easily to the example of the carbon emissions Daniel gives. A negative externality exists, the lack of a market (because of no property rights) creates a public bad. This is not a market failure and not an area (sorry anarcho-capitalists) that property rights will fix (true for many externalities). What Daniel suggests is directly in line with my thinking about Pareto improvement. However, where we differ is how to deal with it. I am not entirely convinced that a small tax is better than doing nothing. A tax costs overall welfare, a tax on carbon emitters has enforcement costs, and a broadly applied tax has free rider problems. I would be in favor of tax cuts for carbon emitters and shift the burden of proof of reduction of carbon emissions to the companies if they want to take advantage of the tax cuts, vastly reducing enforcement costs.

More to come

Daft Punk XKCD

2010-05-14T12:42:00.001-05:00

This is awesome!

Gloomy outlook from John Judis

2010-05-13T20:35:00.000-05:00

An article on some of the reasons why the US isn't out of the woods wrt the crisis.

H/T: Coordination Problem

Facebook privacy

2010-05-13T13:38:00.001-05:00

A subject that keeps coming up...but this author takes the wrong approach. Don't like it? Delete your account. What could be more harmful to Facebook than it losing its market share and weakening its expected IPO?

Not to say it's not happening.

"How government support and less competition is fueling Wall Street’s revival"

2010-05-13T13:23:00.000-05:00

A good article on the banking sector response to the bailouts.

A good piece on the Greek crisis

2010-05-13T10:24:00.002-05:00

Here is a link to a pdf that summaries the Greek crisis in a neat, concise way.

Tyler Cowen Article

2010-05-12T23:41:00.000-05:00

A great article on Tyler Cowen...one of the most interesting economists and true renaissance man.

Just wow!

2010-05-12T22:34:00.001-05:00

Crosby's going home!!!!!!!!!!!!!!!!!!!!!

Paper on economic enlightenment

2010-05-12T20:36:00.002-05:00

Daniel Kuehn over at Facts and other stubborn things has a good piece on this paper from Econ Journal Watch.

Negative equity in the US housing market

2010-05-12T20:30:00.001-05:00

If you want to know why the real estate market is frozen...

http://calculatedriskimages.blogspot.com/2010/05/negative-equity-by-state-q1-2010.html

Taking a new tack

2010-05-12T20:28:00.001-05:00

This blog is going to be less opinion and more of a venue to post interesting things and some ramblings about sports. Sorry, but I am now in a position where I can't be controversial.

MR Fri, Jan 6 2006

2009-09-18T14:29:00.002-05:00

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??

2009-09-09T08:41:00.002-05:00

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

2009-09-04T13:03:00.002-05:00

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.

Weird Times

2008-09-25T11:17:00.001-05:00

We are certainly in some weird times when I'm agreeing with (some) of JK Galbraith's editorial in today's Washington Post.

Now that all five big investment banks -- Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley -- have disappeared or morphed into regular banks, a question arises.

Is this bailout still necessary?

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They're called "loans."

Stanley Cup

2008-06-04T21:57:00.002-05:00

Well I could care less about the Red Wings winning the Cup, but further proof that hockey is the best sport in the world...When asked about how he felt about winning, Chris Osgood said, "When you get older you enjoy watching others win it so I was playing for Dallas Drake." Only in hockey do you have players trying to win entirely for each other. It is the most team oriented game in the world and players are generally humble and selfless unlike most other professional athletes. When the best player in the world, Alex Ovechkin, says he doesn't care about individual success, he's not lying. The best sport in the world, period.

New blog

2008-03-30T13:50:00.001-05:00

So my friend Bogdan and I are starting a joint blog on economics...ideas we have, arguments we have etc. Should be a lot of fun. Check it out here.

Paradox?

2008-01-10T11:01:00.000-05:00

The Tata Nano...world's cheapest car. Environmentalists object that it will strain already overcrowded roads...

An observation...these same people object to building more roads.

Price Controls 2: Cuba

2007-11-12T22:39:00.001-05:00

More evidence that price controls are a public bad.

The Price, of Price Controls

2007-11-12T15:19:00.000-05:00

Still think price controls are good?

RIP Daniel Shaw

2007-11-10T08:48:00.000-05:00

I never met him but my friend Ron's little brother was killed in Iraq.

Virginia Tech

2007-04-20T10:32:00.000-05:00

This is a response I sent to the Washington Post regarding this opinion piece:

It is a tragedy what happened at VT and so as I opened the WP website and saw the title of this opinion piece, I knew that what I was about to read was horrible.

Little did I know it was not gory, but pure discrimination.

Preventable??? In what way exactly? Gun laws? Metal detectors? Giant magnets?? Anyone who had that sort of premeditation and intent would have found a way to get it done unless there was martial law.

But the truly despicable opinion of Mr. Chartrand's is the insinuation that the mentally ill need to be removed from society. A Brave New World eh, Mr. Chartrand?

First, you mention a screening program. Fine, now that they are screened and identified what do you propose? A scarlet letter so everyone knows to watch them for "warning signs?" Medical records are confidential and mental status is part of that record. Screening gives every opportunity to discriminate in enrollment practices as well as encouraging social discrimination. If anyone could exactly identify the VERY SMALL percentage of people who would be murderous, they'd be omniscient. This is NOT a realistic solution.

Second, it is not that schools have no liability in protecting their students, but they can only do so within the bounds of the law. Again, your screening idea runs into a legal roadblock. Making schools legally responsible just shifts the risk of a random attack from one individual to an institution which as we all know is a perfect straw man logical fallacy.

Third, it is much lass likely that an "alienated student reached for help" and was denied rather than that student never asked for help at all. I agree that people need to talk about it and if someone does ask for help, a good support mechanism is in place. But, the people doing crimes like at VT are not the ones asking for help generally. It is BECAUSE they cannot, that they turn to violence.

Finally, your closing sentence is outrageous. This is typical over-reactive backlash to a situation. Are you a sensationalist, Mr. Chartrand? A tabloid writer? If your intention was to spark fear and increase the probability of discrimination against those with mental illness, congratulations, mission accomplished. It is irresponsible of you to write such things. The sentiment you leave the reader with is exactly the kind of statement that will lead to discrimination, close the doors to discussion, and ultimately destroy the environment of support you claim to want to achieve. What your closing statement does, fans the flames of fear and can only leave the reader with the conclusion that you believe that anyone with a mental illness is capable of killing and that something should be done about this through screening and removal from society.

Catching up

2007-03-24T15:37:00.000-05:00

So I am utterly exhausted...I finished mid-terms today and I give myself a B-/C+ overall. I have tested the limits of my body and brain's ability to comprehend things when pushed to the edge. I actually had to ask myself the other day what the first derivative of Total Revenue with respect to quantity was! Bogdan made me take a break at that point.

I wish I had another 2 days to study for each of the exams. I missed some I should have gotten and we shall see how it all plays out. My strategy for the rest of the semester is to stay as far ahead of the game as possible.

I decided this is the hardest thing I have ever done. Cooking for 18 hours is a joke by comparison. I would rather pull a 100 hour week rather than go through what I've been through. Maybe I am just older and weaker. I guess a PhD shouldn't be easy to get.

I must say though...through some discussion over the past week or so I have realized that I enjoy economics. Even though I was thinking about it 18 hours a day, I still found time to read a few chapters of Hayek's Individualism and Economic Order and debate the robustness of the beta matrix in ordinary least squares regression under both binary independent and dependent variables. I really love it and even though my poor, sleep deprived brain was fried, I found enjoyment this morning when I figured out a proof on my exam.

Ok so some housekeeping (random thoughts):

1. So I love my Treo 700w. I think Palm has the opportunity to make something good even better when their next generation of phones come out. My suggestions:

a. Let the media player and other aps that use sound play over Bluetooth.
b. Make an option to disable the touchscreen in a call but press a specific button to allow
access.
c. Crashing IS a problem.
d. Can we do ANYTHING to allow IE to browse non-xtml pages faster
e. How about a flash player/pdf reader? (I want to watch MLB.tv and NHL Center Ice Net)
f. Better control over system memory.

2. Vouchers

This may surprise you, but I am against vouchers. It doesn't make schooling competitive. The argument reminds me an awful lot of Lange's (1936) revision of socialist calculation. Vouchers are still paid for by taxes, so for me, the discussion ends there.

3. A good piece on minimum wage over on Jeff Miron's blog. One of my favorite, clearest libertarian economists.

4. More later.

Appalling article of the day

2007-03-18T16:31:00.000-05:00

Shouldn't the finding of evidence of biological tendencies to homosexuality finally put the debate over "immoral" behavior to a rest?

Apparently not.

Religion keeps moving farther and farther from science and rationality. People ARE stupid:)

Iraq News

2007-03-18T09:53:00.000-05:00

Everyday I go to Yahoo to check my email and my fantasy sports teams. Every day for the past four years the top line on the news is "** U.S. Troops killed by roadside bomb."

What bothers me is how unremarkable that heading has become.

Democracy and Development

2007-03-17T10:35:00.000-05:00

The Econ blog on WSJ ran this discussion between Acemoglu and Glaeser. Interesting since I have been debating, both internally and with friends, whether democracy is necessarily a good thing. The end result, so far, is that I believe that although it may be good for capitalism, democracy may not be good for all people and we risk falling into the paternalism trap by wishing it upon all people. A friend of mine from the former Soviet Union recently hypothesized that democracy is bad for the Russian people because they have a cultural tradition of strong, autocratic leaders. Likewise, the Atlantic Monthly ran an article some years back stating much of the same idea.

Thanks for the pointer to Pete Boettke at The Austrian Economists.

Great satire about economics

2007-03-17T10:33:00.000-05:00

Life Among the Econ

Thanks to Marginal Revolution

From CSM

2007-03-16T09:59:00.000-05:00

Want world peace? Support free trade.

By Donald J. Boudreaux

FAIRFAX, VA. – Everyone knows that a key to the Democrats' big electoral win was their opposition to the Iraq war. But also, as the Wall Street Journal reported recently, "Democrats' stances against free trade helped build the party's success at the polls and could tip the balance on trade matters. The new dynamic could put a definitive end to the already troubled effort to reach a global agreement to reduce tariffs and open markets...."

Protectionists (of whatever party) believe that consumers who buy goods and services from foreigners cause domestic employment - and wages - to fall. Economists since before Adam Smith have shown that this belief is mistaken, largely because foreigners sell things to us only because they either want to buy things from us or invest in our economy.

These activities employ workers here at home and raise their wages. Mountains of empirical evidence show that protectionism is economically destructive. The facts also show that protectionism is inconsistent with a desire for peace - a desire admirably expressed by many Democrats during the recent campaigns.

Back in 1748, Baron de Montesquieu observed that "Peace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities."

If Mr. Montesquieu is correct that trade promotes peace, then protectionism - a retreat from open trade - raises the chances of war.

Plenty of empirical evidence confirms the wisdom of Montesquieu's insight: Trade does indeed promote peace.

During the past 30 years, Solomon Polachek, an economist at the State University of New York at Binghamton, has researched the relationship between trade and peace. In his most recent paper on the topic, he and co-author Carlos Seiglie of Rutgers University review the massive amount of research on trade, war, and peace.

They find that "the overwhelming evidence indicates that trade reduces conflict." Likewise for foreign investment. The greater the amounts that foreigners invest in the United States, or the more that Americans invest abroad, the lower is the likelihood of war between America and those countries with which it has investment relationships.

Professors Polachek and Seiglie conclude that, "The policy implication of our finding is that further international cooperation in reducing barriers to both trade and capital flows can promote a more peaceful world."

Columbia University political scientist Erik Gartzke reaches a similar but more general conclusion: Peace is fostered by economic freedom. Economic freedom certainly includes, but is broader than, the freedom of ordinary people to trade internationally. It includes also low and transparent rates of taxation, the easy ability of entrepreneurs to start new businesses, the lightness of regulations on labor, product, and credit markets, ready access to sound money, and other factors that encourage the allocation of resources by markets rather than by government officials.

Professor Gartzke ranks countries on an economic-freedom index from 1 to 10, with 1 being very unfree and 10 being very free. He then examines military conflicts from 1816 through 2000. His findings are powerful: Countries that rank lowest on an economic-freedom index - with scores of 2 or less - are 14 times more likely to be involved in military conflicts than are countries whose people enjoy significant economic freedom (that is, countries with scores of 8 or higher).

Also important, the findings of Polachek and Gartzke improve our understanding of the long-recognized reluctance of democratic nations to wage war against one another. These scholars argue that the so-called democratic peace is really the capitalist peace.

Democratic institutions are heavily concentrated in countries that also have strong protections for private property rights, openness to foreign commerce, and other features broadly consistent with capitalism. That's why the observation that any two democracies are quite unlikely to go to war against each other might reflect the consequences of capitalism more than democracy.

And that's just what the data show. Polachek and Seiglie find that openness to trade is much more effective at encouraging peace than is democracy per se. Similarly, Gartzke discovered that, "When measures of both economic freedom and democracy are included in a statistical study, economic freedom is about 50 times more effective than democracy in diminishing violent conflict."

These findings make sense. By promoting prosperity, economic freedom gives ordinary people a large stake in peace.

This prosperity is threatened during wartime. War almost always gives government more control over resources and imposes the burdens of higher taxes, higher inflation, and other disruptions of the everyday commercial relationships that support prosperity.

When commerce reaches across political borders, the peace-promoting effects of economic freedom intensify. Why? It's bad for the bottom line to shoot your customers or your suppliers, so the more you trade with foreigners the less likely you are to seek, or even to tolerate, harm to these foreigners.

Senators-elect Sherrod Brown (D) of Ohio and Jim Webb (D) of Virginia probably don't realize it, but by endorsing trade protection, they actually work against the long-run prospects for peace that they so fervently desire.

• Donald J. Boudreaux is chairman of the economics department at George Mason University.

China moving forward

2007-03-16T09:43:00.000-05:00

China took a step forward today towards what I consider to be the most important agent of free market economy. Now if South America and African states could make this change as well...

Ironic

2007-03-15T20:09:00.000-05:00

Isn't it ironic that UPS's new commercial uses The Postal Service as their soundtrack?

http://www.youtube.com/watch?v=WpTWU7vwNtY

Who next?

2007-03-12T09:33:00.000-05:00

From the Journal...

Protectionists Never Learn

By RUSSELL ROBERTS
March 12, 2007; Page A15

I'm thinking of a country. America's trade deficit with this country just reached an all-time high. This country holds more U.S. Treasuries than any other foreign country. It's one of the world's largest economies. And the name of that country is?

Japan.

Japan? Yes. Remember when Japan was a big threat to the American economy? You have to go back to the late 1980s. Back then, every politician in the mood for pandering to economic ignorance could scare a bunch of folks with worries about how the Japanese were stealing our jobs. How our trade deficit with Japan was going to destroy the American economy. How the Japanese economy was soon going to pass America's. How the Japanese auto industry was part of a sinister strategy to destroy our core competencies.

Job thief

You'd think Japan would still make good political fodder. The story of the baseball off-season is the Red Sox spending $100 million to bring Daisuke Matsuzaka from Japan to the United States. Dice-K, as he's known, is the ultimate import. He takes away a job from an American pitcher. And the Japanese baseball teams discriminate against American players with strict quotas. But even though America's trade deficit with Japan just hit that all-time high, no one uses Dice-K as a symbol of unfair Japanese trade policy.

Why not? Instead, it's China all the time. We're told that China cheats on its currency, stealing America's manufacturing capacity and destroying American jobs. China's holdings of U.S Treasuries threaten our sovereignty, according to Hillary Clinton, even though Japanese holdings are almost twice as big.

Why isn't Japan just as scary as China? One answer is that Matsuzaka smiles too much. He's only scary if you're 60 feet 6 inches away from him, trying to hit his famous gyroball with a wooden stick in your hand. And unlike other imports, it's easy to see how he doesn't just help his relatives in Japan with all that money he's getting from the Red Sox. He helps the Red Sox. Trade makes both parties to the trade better off.

But still. Why isn't Japan scary?

One answer is that the doom-and-gloomers already tried, but nothing happened. They told us that Japan was going to destroy our economy. They told us we needed a plan to cope with brilliant Japanese economic strategies. But then the Japanese economy hiccupped and played Rip Van Winkle for a decade, while America kept growing.

The real reason Japan isn't scary is because it wasn't and isn't a threat to our standard of living. Trade makes both parties better off, remember? But when Japan slumps and the U.S. surges, it's too hard to fool people with bad economics.

So when the sky didn't fall, a new candidate had to be found. Mexico and Nafta fit the bill. Not Canada, even though Canada was part of Nafta. Evidently, politicians and some voters find Mexicans more scary than Canadians. So it was Mexico. When that great "sucking sound" was never heard, a new sinister foreign nation had to be found. And so it's the turn of the Chinese.

Yes, China holds a lot of our bonds. But Japan holds more. Yes, we run a big trade deficit with China. But that lets us buy lots of inexpensive stuff instead of having to make it for ourselves. Yes, there are more than a billion Chinese. I guess that means they can take all of our jobs four times! But our economy keeps growing. We have more jobs than ever before. And contrary to popular belief, the American standard of living and the American middle class are thriving.

We were told that at a minimum China (and India with its own billion-strong population) would take all our high-tech jobs. But the high-tech sector bounced back from its downturn (a downturn that had nothing to do with outsourcing) and is growing again, partly because we can get some of the simplest database and programming tasks done so cheaply by Indians and Chinese.

So why can politicians still make China scary? Why didn't Americans learn from the previous sky-is-falling episodes? The simple answer is that if you don't understand economics, you might be convinced by a politician who says that trade with China is bad for America.

The next time you find yourself losing sleep over China, remember that you were worried about Japan and Mexico and everything turned out OK. Then ask yourself if America would be a richer country if China cut itself off from the rest of the world.

Mr. Roberts is professor of economics at George Mason University and a research fellow at Stanford's Hoover Institution.

Restaurants-econ

2007-03-11T22:18:00.000-05:00

Just had a great dinner/conversation with a good friend. We went to Jaleo, Jose Andres' place in Gallery Place. It was my 4th or 5th time and is one of my favorites in DC.

One of the things we were discussing was the restaurant business. I know Tyler Cowen was talking about a paper on the restaurant business at one point, but I had a thought. The restaurant industry is as close to perfect competition as it gets. There are many small firms, price takers, none of whom can individually affect the market. There is fairly free entry and exit from the market. People obviously have preferences, but there is always a substitute. Information is fairly easy to obtain regarding prices etc. Trading costs are low. Food profits are nearly zero, especially in fine dining restaurants. We know that the supply curve is maximized because of the high failure rate.

I will write a paper on it at some point.

2007 NCAA Bracket thoughts

2007-03-11T21:56:00.000-05:00

Midwest

*Arizona-Purdue is interest...kind of surprised AZ wasn't ranked higher, but Purdue is going to wreck the finesse of the Wildcats

*Butler a 5?? They beat Tennessee and Gonzaga early in the year but very up and down since...losing to Wright St in the conference championship...they will probably lose to Maryland.

*The UNLV-GT rankings are switched...GT should romp.

*TAMU could upset Wisconsin...you heard it here first

West

*UK got an 8???? They shouldn't even be in the tournament.

*VA Tech should surprise...should be ranked higher.

*IU and the Zag's seeds are switched

East

*UT should be ranked higher.

* Don't see many upsets in this bracket...BC is vulnerable if they don't show up...Really bored by this region

South

*I really like A&M.

*Memphis is overrated...they played nobody non-conference and CUSA sucks.

*Nevada-Creighton is a good matchup...should be a fun game

Sweet 16

FL, MD, Ore, GT, Kansas, VA Tech, Duke, UCLA, UNC, Texas, Vandy, Gtown, OSU, VA, A&M, Nevada

Elite 8

FL, Ore, Kansas, UCLA, TX, Gtown, OSU, A&M

Final Four

FL, TX, Kansas, A&M

National Chanpion

Kansas

From the Buffalo News

2007-03-08T09:27:00.000-05:00

I wrote about this a while ago...this is the follow-up. FYI, Sister Karen was my 5th grade math teacher.

FROM SISTER KAREN’S JOURNAL: “I forgive you for what you have done and I will always watch over you.”
Sister Karen predicted her murder 16 years ago, forgave her killer
Letter in journal read aloud inside courtroom by sister of anti-violence nun as Lynch gets maximum prison term
By Maki Becker
Updated: 03/08/07 7:59 AM

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Fifteen years before Sister Karen Klimczak was strangled by an ex-convict on Good Friday, the Buffalo nun wrote a letter of forgiveness to her killer.

She apparently had a premonition, perhaps during her prayers or a dream just before Holy Week in 1991, that her life would one day be taken violently.

Wednesday, as Craig M. Lynch — convicted in December of her murder — was about to be sentenced to 25 years to life behind bars, Sister Karen’s sister and fellow nun, Sister Jean Klimczak, read the letter aloud to a packed, hushed courtroom.

“ ‘Dear Brother, I don’t know what the circumstances are that will lead you to hurt me or destroy my physical body,’ ” Sister Jean read.

She found the letter while going through Sister Karen’s peach-colored journal in which the slain nun had neatly handwritten the letter. Her reading was made all the more gripping because of her striking resemblance to her dead sister.

“ ‘No, I don’t want it to happen,’ ” she read softly. “ ‘I would much rather enjoy the beauties of this earth, experience the laughter, the fears and the tears of those I love so deeply!’ ”

Sister Jean continued: “ ‘. . . Now my life has changed and you, my brother, were the instrument of that change. I forgive you for what you have done and I will always watch over you, help you in whatever way I can. . . . Continue living always mindful of His Presence, His Love and His Joy as sources of life itself — then my life will have been worth being changed through you.’ ”

Sister Karen’s words drew tears Wednesday morning from those in the courtroom — many of them nuns wearing T-shirts bearing the words “I Leave Peaceprints” that had been designed by the late nun.

But her letter of forgiveness did not sway Deputy District Attorney Frank A. Sedita III from asking Erie County Judge Sheila A. DiTullio to impose the maximum sentence — 25 years to life in prison.

“There’s been talk of forgiveness,” Sedita said. “But, judge, forgiveness is for God. Sentencing is for court.”

He pointed out the almost unbelievable nature of the murder.

“How can you imagine a crime more heinous than killing a nun on Good Friday and then stashing her body into a shallow grave on Easter Sunday?” Sedita asked.

Sister Karen’s murder came as a horrible shock to her friends, colleagues and many in Buffalo who knew her as the fiery and tireless nun who had devoted her life to peace and worked closely with criminals and victims of crimes alike.

She was famous for the giant dove-shaped sign in front of her halfway house on which she logged the number of days between homicides in Buffalo and for being the force behind popular lawn signs that read: “Nonviolence begins with me” and “I Leave Peaceprints.”

On April 14 — Good Friday — authorities say Lynch, who had been released to Sister Karen’s halfway house from prison just nine days earlier, sneaked into her room to steal her cell phone to sell for drugs. Lynch later told police that he was high on crack cocaine at the time and wanted to buy more.

But Sister Karen walked in on him, and Lynch strangled her and struck her, killing the nun.

The murder took place just a floor above where her friend the Rev. A. Joseph Bissonette was beaten to death during a robbery in 1987 and for whom the halfway house was renamed.

Lynch ditched some of Sister Karen’s clothing in a dumpster, then hid her body behind his mother’s garage.

Then on Easter Sunday, as a massive search was under way for Sister Karen, he moved her body again — this time into a shallow grave in a shack behind a vacant house across the street from his mother’s home.

The next day, he confessed to police what he had done and showed them where he had buried Sister Karen.

Wednesday, Lynch, 37, casually dressed in a white T-shirt, looked ashamed and, at times, distraught.

Tears often welled in his eyes, and he wiped at his mouth with his cuffed hands as he grew emotional. He managed a weak smile as he noticed his mother and other family members in the courtroom.

Lynch stood silently as the judge asked him if he wanted to make a statement to Sister Karen’s family and friends.

“Would you like to apologize?” DiTullio asked Lynch.

He hung his head and breathed heavily.

Sister Karen’s friend Sister Roz Rosolowski, a chaplain at Attica Correctional Facility, whispered audibly: “Say it!”

Lynch eventually began to talk.

“We didn’t have to go through this,” he said repeatedly, apparently referring to the trial process.

Lynch had confessed numerous times to the killing, although he and his attorney have consistently blamed his crack addiction for his actions.

The defense attorney, David R. Addelman, explained to the judge that Lynch was remorseful for putting Sister Karen’s family through the trial and that he was genuinely sorry for having killed the nun.

“Would you like to say that?” DiTullio prodded Lynch.

After a long and uncomfortable pause, he spoke.

“Of course, I’m sorry,” Lynch said, his chest heaving. “Words can’t describe how I feel.”

Addelman asked DiTullio to consider sentencing Lynch to 15 years to life in prison, pointing out his 15-year addiction to crack as well as the fact that a jury that convicted him of second- degree murder, robbery and burglary acquitted him of any intent to commit the crimes.

DiTullio then told Lynch and the courtroom that she acknowledged the seriousness of drug addiction.

But she also emphasized the gravity of what Lynch had done — and the remarkable life he had erased through his actions.

“You killed an exceptional person, to put it mildly,” DiTullio said.

The judge talked of Sister Karen’s devotion to her work at the halfway house and how she often gave up spending holidays with her family to spend with the parolees she lovingly referred to as “my guys.”

“You, Mr. Lynch, let Sister Karen down,” DiTullio said. “I know deep down in your heart you know that.”

She then sentenced him to the maximum: 25 years to life.

As Lynch was led away, he looked back sadly several times toward his mother and toward Sister Jean.

Then, Sister Jean got up to hug her siblings and embraced Lynch’s mother, as she had done many times before since the murder. She also made sure to thank the Buffalo police detectives who solved the case.

“Because of you, we could celebrate Karen’s life,” she told Detective Sgt. James Lonergan as she gripped his hand.

Before leaving, Sister Jean told reporters that she felt as if her sister was speaking through her as she read the words from her journal to the courtroom.

“I experienced her spirit in reading her words,” she said.

She also said she was not disappointed in Lynch’s clumsy apology.

“Karen would accept whatever people were able to say without any expectations,” she told The Buffalo News. “We do our best.”

Lynch’s cousin Judith, who attended the sentencing, said she believes that her cousin is truly remorseful and that his punishment is just.

“It’s real sad what happened to the nun,” she told The News. “I understand that he was on drugs, but that’s no excuse for what he did. I feel very sad for the family.”

She said her family members have been deeply moved by the love and forgiveness Sister Karen’s family have shown to them and to Craig.

“They really did reach out to us,” Judith Lynch said.

Maggie McAloon, chairwoman of the “peaceprint” nonviolence committee at Bissonette House, who also came to the sentencing, said she and others are now preparing a commemorative Mass for Sister Karen on April 14 in SS. Columba & Brigid Catholic Church.

But she also said Sister Karen’s life is being memorialized in many other ways.

After popularizing the “nonviolence” lawn signs, Sister Karen had come up with the doveshaped “peaceprints” logo.

She had printed several thousand lawn signs with the new motto and, at the time of her death, was trying to figure out how best to get them to the public.

They were given out at her funeral, which thousands attended.

Since then, McAloon said, 15,000 of the lawn signs have been printed and given away, with versions of the signs now on display as far away as Brazil and the Palestinian territories, and “I just ordered 2,000 more.”

http://buffalonews.com/101/story/27978.html

A Piece on LVM

2007-03-05T23:05:00.001-05:00

Standup Economist

2007-03-05T22:56:00.000-05:00

23x+43y'

2007-03-05T22:41:00.000-05:00

2 scary occurrences that make me sure I have been doing too much math:

1. I was trying to say a mathematical formula and I couldn't say it in words and had to write it in mathematical notation....not that I didn't know how to say it in words...I just forgot the words.

2. I was looking at the RPI rankings and I sorted them by win-loss record over the past 10 games. I was scanning them looking for Maryland for about 5 minutes and couldn't find it. When I looked for their RPI ranking, (10) btw, I found it in 2 seconds.

Education

2007-02-18T19:50:00.000-05:00

So I wanted to respond to this post by a friend of mine and decided that what I had to say was too long for comments.

This blog entry actually overlaps part of a conversation we had at a Super Bowl party a few weeks ago, but I'd like to gel what I am saying.

Some background:

I was designated as gifted at a very early age. It was determined that I was not "emotionally mature" enough to be skipped ahead and like my friend, I found myself isolated into special sections. The only classes I ended up in with my classmates was art and gym at the Catholic elementary school. I was in separate classes for language arts, math, and I never took phonics because I read when I was 2 1/2. I went there until 5th grade when I transferred to a 5-12 prep school. All of a sudden school became hard.

By 6th grade I experienced much of what Jackie mentions in the first paragraph of her blog. I don't think it was a low view of my own abilities, but the problem was that I had never learned how to work. Up until then I had never been pushed and never had to work hard; school had been easy for me. My last year in Catholic school was punctuated by my teacher throwing my desk across the room because I was not paying attention. Learning how to work is really, in my opinion, the most important thing to someone to whom everything is easy. This was at the heart of my underperformance in the following years.

By the time I graduated high school, I had taken a few APs and had good SAT scores, but below average grades. My transcript had smart-lazy written all over it. In true ironic fashion, the classes I did worst in were math (see the end). My math tutor, Mrs. Gerstle was the only thing standing between me and failure in math and thankfully she was a large woman. She made me sit in one place and concentrate. I credit the time I spent with her in laying the groundwork for my later development.

Unlike Jackie, I don't completely discount what the separate classes did for me. Although I have my complaints about them, had I been left in regular class, I would be in jail right now. As it was, it's a miracle I am not. I attribute my felonious bearing more to my personality and Jackie's outcome to hers.

In my opinion, the "profound boredom" she experienced was a failure of the school system to adequately handle gifted and talented kids. In many ways the schools are trained and prepared to respond to G & T kids with less effort and resources than special education and troubled children. I too felt as if "they didn't know what to do with me." The most important time to develop these skills is in the first 5 years of learning. In my case, by the time 6th grade rolled around, I had been negatively conditioned and it was too late.

There were two other factors that kept me from incarceration. Unlike Jackie, I was afforded the advantage of having very encouraging parents. My mother, in particular, was a teacher in a school for the gifted and knew how to encourage me and foster my intellectual growth. To me it was expected to be an intellectual. We didn't have a tv in the house or a radio in the car to foster debate. My parents both have PhDs. The other factor, and one Jackie and I have discussed, is that I went to prep school. Despite my grades, I got into good colleges with scholarships mostly based on my test scores and the weight of my school's name.

The reality is that prep schools like this make a difference and give children more options. However much we hope to achieve a meritocracy, Harvard, Yale, and Stanford's doors are open wider to prep school kids. And although I appreciate my undergraduate and graduate educations, thus far, top ten schools have much higher standards and much better training. I'm not kidding myself when I see that top ten programs do in a semester what we take 3 semesters to do.

A sidenote: I was expelled from my first college after my 1st semester and didn't begin school again until I was 27. I spent time homeless and drug addicted in between, oh, and became an award winning executive chef. One of the most important influences on me returning to education was the fact I went to this school. Out of my small group of friends in high school, only 2 of us don't have a PhD or an MD and I'm working on mine. Being around people like this made getting a college education important.

So to answer Jackie's final questions:

And what to do with a smart kid?

Put them into as challenging an environment as you can as early as possible.

Isolate them or surround them only with other smart kids, praise them or treat them as if nothing about them was special?

Isolation is bad, but so is surrounding them with only other smart kids. Make school be about other smart kids and foster a healthy social life outside of school with all types of kids.

Send them to regular schools so they get normal social activity, or send them to magnet or private schools so that their potential gets fully realized?

See above. I never hung out with kids from school. I think you also learn certain social skills being in a private school environment. Although much of the world doesn't live that way, I believe that it is important to be able to comport oneself in any social situation with ease. Being comfortable when invited to your boss' mansion is an important skill. People don't like to be around people who are uncomfortable.

Encourage them to see themselves as special or superior, or keep their intelligence an open secret so that other kids still want to play with them?

Treat them as if it is totally normal to be reading at at 8th grade level in 3rd grade, as if it it the most natural thing to read Dante at 13, and all 10 year olds want to debate the electoral college.

Raising kids is the most daunting thing in the world. The important thing is not to dwell on what you think might be a mistake, because you never know what might happen and how your "mistake" might have influenced your children in a positive, meaningful way. I only hope my kids are as great as Jackie's....I have a fear my kids will be jocks and cheerleaders and hate learning.

So the final punchline is that I am working on a PhD in economics, doing graduate level mathematics on a daily basis.

Back to life

2006-12-21T22:16:00.000-05:00

Well I completed my first semester, and although I can't say I am surprised, I am awed by the amount of work a PhD program entails. I could study 12 hours a day and not have enough time.

That being said, I love it. I am really excited to be learning so much and feel as if I am finally learning a subject to a expert level. That is very gratifying. Learning for the sake of learning. I also like the challenge. This is so difficult that I really enjoy small successes. Who knew I would end up doing so much math. My high school math teachers would never believe it. My high school math tutor would be amazed. I credit her patience and her teaching skills for teaching me to appreciate math.

Wow I did something

2006-09-28T23:49:00.000-05:00

Snuck out to see Massive Attack tonight. Found a ticket for cheap on Craigslist. They were amazing! What a great show.

We're almost there

2006-09-23T10:44:00.000-05:00

This is pretty cool. But now we need one that doesn't need the internet.

Federal Budget Mess

2006-09-21T00:18:00.000-05:00

This graph is Fascinating!! Click on View the Graph.

Thanks to Frederic Sautet

Chavez vs. the UN

2006-09-20T11:39:00.000-05:00

In his speech to the UN, Venezuelan president Hugo Chavez called the UN "antidemocratic". It reminds me of the old adage "takes one to know one".

One other quick thought: What is the U.S. so afraid of letting Venezuela sit on the Security Council?? How about trying some dialogue instead of shutting people it doesn't like out of the conversation?

How economists see the world

2006-09-14T18:02:00.000-05:00

Watch this.

CPI

2006-09-07T09:27:00.000-05:00

From Russell Roberts

"Again, I challenge the pessimists, the doom-and-gloomers who accept the wage data as indicating that for 30 years, the average American has made no progress. Either our economic system is broken or are data collection system is broken. There is dramatic evidence that the data collection system is unable to cope with the speed of change in the US economy. Why do you believe instead that it is the economic system that is broken? Where is your evidence?"

Peace through trade

2006-08-05T08:41:00.000-05:00

This article from the BBC talks about how trade brought peace to Europe, yet there is no mention of those who champion these ideas, namely the Austrians.

Sorry for the pause

2006-07-04T09:10:00.000-05:00

So I am confused...why did ABC use Tom Petty for the NBA finals and NBC use Nelly for Wimbledon???

Damn You Casey

2006-05-14T21:23:00.000-05:00

Your Political Profile:

Overall: 55% Conservative, 45% Liberal

Social Issues: 25% Conservative, 75% Liberal

Personal Responsibility: 50% Conservative, 50% Liberal

Fiscal Issues: 75% Conservative, 25% Liberal

Ethics: 50% Conservative, 50% Liberal

Defense and Crime: 75% Conservative, 25% Liberal

How Liberal Or Conservative Are You?

Thesis II

2006-05-12T15:19:00.000-05:00

Successfully defended my thesis. I will write more later...now I am going to sleep.

I'm not usually into this...

2006-05-10T13:19:00.000-05:00

I am curious:

Listen to this and then comment of what it makes you think of.

Really listen to it...sit down close your eyes and listen to it from beginning to end.

For me it was a time in my life that I loved. It makes me think of Eric and Kathy in NYC, of Sara, of smoky nights at the Ottobar, of hanging out with Pete at the Grind...my late 20s was such a great time in my life. I am happy to have such good memories.

Wow

2006-05-10T12:10:00.000-05:00

Thesis is done...defense on Friday.

Mike

2006-05-09T12:00:00.000-05:00

Mike died.

He was as much of Fells Point as anything else. We had some really interesting conversations. He seemed like he was getting much worse the past year or two but I am not sure we could do much for him. I will miss him and hope he has found peace.

Shaving, Sabres, Tim Russert

2006-05-06T15:13:00.000-05:00

In homage to playoff hockey I am not shaving until my exams are over. I am graduating May 25 and in order to combat senioritis I decided not to shave until I am done. In part this was also done as a measure of solidarity with the Buffalo Sabres as they try to bring home the Stanley Cup; not shaving until elimination a tradtion as old as the NHL.

Tim Russert brought out a Sabres jersey on Meet the Press last week, but sadly did not even put it on. Come on Tim! What kind of real fan are you???

The Sabres, improbably, wiped the Senators in Ottawa last night in a shootout 7-6. Connolly scored with 10 seconds left to tie it and Drury scored 18 seconds into overtime to win it! Amazing. Go Sabres!!!

Bald Eagle Cam

2006-05-04T07:28:00.000-05:00

http://www.infotecbusinesssystems.com/wildlife/

Beautiful

2006-05-01T16:39:00.000-05:00

My favorite city in the world

Democracy: Is it good?

2006-05-01T11:56:00.000-05:00

Bryan Caplan, George Mason professor of economics, has a new book coming out. The book addresses voter irrationality in democracies. I give you a quote:

“Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one's government is not necessarily to secure freedom” -FA Hayek

Let me know what you think about this excerpt.

Gas Prices

2006-04-30T18:04:00.000-05:00

Found this over on Jeffery Miron's blog.

Galbraith

2006-04-30T08:53:00.000-05:00

John Kenneth Galbraith passed away. I have not read much of his work, but you can't move in economics circles and not have heard his name.

Wall Street Journal article here.
Washington Post article here.
NYT article here .

France leads the way in economic education

2006-04-28T08:51:00.000-05:00

What a great idea! This type of game should be offered by every country. I think it is telling that one of the most socially democratic states in the world was the one to come up with this.

I have, for some time, been trying to enlighten people that in order to spend more you have to either increase the pie or cut from somewhere else. For instance, W cut taxes and raised spending. It doesn't take a genius to see how that fails to work out. Likewise, those who push for national healthcare don't have a way to fund it (other than taxing the rich).

Ladies and Gentlemen...

2006-04-26T10:28:00.000-05:00

I give you Glenn Hubbard, Dean of Columbia Business School!

(click on the Dean Dean Baby link at the bottom)

Some interesting stuff

2006-04-22T21:51:00.000-05:00

Courtesy Marginal Revolution...

This is great...someone should examine the behavior behind these transactions.

I'm not sure what this says about this country...see for yourself.

I haven't read it yet, but this seems like a very interesting study. I will comment later.

Nigeria rising

2006-04-22T09:27:00.000-05:00

Nigeria has paid off its Paris Club debt and will undoubtably pay off its World Bank debt in the next few years. This is very exciting as it will give us a chance to see whether debt is a truly limiting factor. Nigeria is an anomaly however because it holds great oil wealth and has produced some sustainable growth despite large debts. I shall watch the proceedings with great interest. I only hope President Obasanjo does not rewrite the constitution to run for a 3rd term. The consequences can only be bad.

Sister Karen

2006-04-22T09:07:00.000-05:00

I think she was my fifth grade math teacher at Mt. St. Joseph's. I am having a hard time remembering exactly what capacity she held. I remember that she was one of the teachers who wouldn't let you get away with messing around. She may not have touched my life much, but she certainly touched a few others.

I guess I am jaded by living in a city with hundreds of murders a year, so when the Buffalo News reports 50 or so murders is a problem, I have a hard time believing it. But, every one of those is sad and senseless and Sister Karen's passing even more so.

What an extraordinary woman she was. The rest of us can only hope someone has something half as nice to say about us when we are gone.

I had no idea...

2006-04-21T12:47:00.000-05:00

I am so deprived, living with such a technologically deficient toilet!!!

Good morning

2006-04-19T06:19:00.000-05:00

A funny list for all you plus 30s.

Good show on mental illness

2006-04-18T18:14:00.000-05:00

I have been fortunate to have done a lot of work with the National Alliance on Mental Illness over the past few years. They do some of the most important advocacy work in the world. Yesterday, there was a really great show on Fresh Air on mental illness. I have included a link here. It was on a subject I have thought about a lot: society's drive to protect privacy and personal choice in medical matters has driven us to a point where those with mental illness cannot get help because they do not believe they are ill. So they end up in jail etc. Listen to it...you'll learn how hard it is for familes of those with mental illness.