Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, February 19, 2005

Paul Martin: Mr. Dithers

The Economist has dubbed Paul Martin [Prime Minister of Canada], "Mr. Dithers" because he appears to vacillate so often on policy issues. They refer to "a fiscal cafeteria" because he seems to have handouts for so many different groups. The Trono Globe & Mail reports,

“Mr. Martin, a successful finance minister for almost a decade until 2002, cannot quite shake off the impression that Canada's top job is too big for him,” says the Economist in an article posted to its website Thursday and expected to be featured in next edition on Canadian news stands Monday.

“His faltering leadership has earned him the sobriquet of ‘Mr Dithers.' ”
I am unimpressed. Nowhere does the article mention that Martin leads a minority gubmnt. The result of minority gubmnts is often that, in order to maintain a fragile coalition, the party that is sort-of-in-power must kow-tow to MPs from other parties. In the early 1970s, Canada got some of its worst economic policies, with which we are still saddled, due to the brief unholy alliance between Trudeau's Liberals and David Lewis's NDP (socialists).

Now, however, the minorityLiberal gubmnt must deal with the Conservatives, the Bloc Quebecois (separatists), and the NDP (socialists). To some extent, the Liberals can play them off against each other, since they are extremely unlikely to form a coalition to defeat the gubmnt immediately. At the same time, however, the Liberals must in various ways appease each of the other parties. The result is the appearance of dithering and a fiscal cafeteria. But to stop at the appearance without examining the cause is really shallow analysis of the situation.

It might be understandable if a U.S. journalist, unfamiliar with the parliamentary system, had written that piece, but a Brit article should have been better.

Hockey: We Had to Bomb the Village to Save It

People from my generation will remember the subtitle of this posting as a quote from LBJ or General Westmoreland or somebody during the Vietnam era. We hooted with derision when it came out. And as James Taranto (last article at this link) points out, that is vaguely analogous to what has happened in the NHL.[h/t to JC]:

Hockey, for crying out loud, is another Vietnam!

I've been asked by several commenters to my last piece why I was so rough on NHL Commissioner, Gary Bettman. I have had to think long and hard about this, because I probably shot that last post off too quickly. I have finally realized several things about the lockout [I'm a slow learner, which is why I'm an academic instead of out there competing in the real world]:

  1. As Chris Bruce posted to the Econ-Law e-mail list, it seems clear the players underestimated either the losses of the owners or the strength of their convictions, probably the former. I can't say as I blame the players much here; owners in other sports have been known to overstate their alleged losses dramatically. But if, as Tom Luongo says in his superb piece on the lockout, the NHLPA refused to look at the books, it is time for the players to get a new leader. It is probably time, anyway, as I note later.
  2. I, personally, do not enjoy the game of chicken. I do not like watching it played, either. I don't know why I hold the owners more responsible than the players for playing it so publicly, but to my ear the tone of Bettman's releases was more of "We're gonna get you" than was Goodenow's.
  3. Too many people blaming the players do so out of jealousy: "They're making millions to play a game; they should just sign a deal and play," is the type of thing I've heard too often, and it is irritating, especially considering the wealth of the owners, too, and considering the incomes of other entertainers.
  4. As I have posted before, I don't much like hockey anymore. I hold the owners in general and Bettman in particular responsible for this. So does Brian Goff. So does Michael Farber at Sports Illustrated. Eric McErlain at the superb Off-Wing Opinion says some pretty similar things.
  5. In his defence, Bettman was quite possibly correct that the deal offered on Tuesday was the best offer the players will ever get. [digression: there are still some stories circulating that some owners and some players are trying to resurrect a deal and will meet on Saturday; other sources think it unlikely that a deal will be reached.] Tony Chapman of Capital C, which places a lot of sports advertising said on Sportsnet Thursday night that with this season canceled and the next one in doubt, advertising with the NHL has plummeted dramatically. His estimate is that even if the NHL begins play on time next season, the total revenues for the league will be no more than 2/3 of the revenues in the 2003-04 season. The implication is that the expected marginal revenue product of playing ability will be very low, compared with the players' expectations.
  6. The result of the previous point is that a LOT of money has been left on the table, not just from this year's playoffs, but from next season and into the future as well. When negotiators fail to take that money off the table, there is good reason to expect they haven't done their jobs. Also see this piece by Phil Miller, co-blogger at The Sports Economist.

This posting has become far too long. More on other points later.

Friday, February 18, 2005

Goosebumps: Shoes with Flatulence

How would you react if you had some shoes that farted every time you took a step? I realize I am different from most people in that I might keep them to wear on special, pompous occasions like this. On the whole, though, most people returned them, and so did the distributors.
"It very nearly put us out of business," said Bryan Thomas, an officer with Goosebumps Products Inc. of Longwood....

"They were whoopee cushions for the feet," Thomas said.

Oh, yes, customers complained, according to the suit. So did Goosebumps' biggest distributor.The company had to throw away at least 35,000 pairs...

The reason for the whoopee-cushion sound was, apparently, that the supplier of the glycerine used for the insoles supplied a thick, low-grade glycerine and watered it down instead of supplying a lighter, food-grade glycerine. The substitute glycerine-water mix tended to bubble-up and create the sounds.

Understandably, Goosebumps thinks that maybe it was not the least-cost bearer of this risk and is suing the supplier.
[thanks to JC for the link]

Parenthood Rights and Obligations

When I wrote in the past about using the marketplace to allocate parenthood rights to children to increase efficiency, a major concern I had was "what if adopting parents mistreat the adopted child?"

It didn't occur to me that adopting parents might literally treat an adopted child as if it were a consumer durable that they could trade in when a newer model came along. But that is exactly what seems to have happened with adopting parents in Ancaster, Ontario.

"They stole my childhood," said Alexandra Austin, who is now a single mother living in Bucharest. "They stole my future. They stole my life."
Austin was nine years old when heart surgeon Joseph Austin and his wife Silvana Marisa Di Giacomo convinced her mother to let them adopt the girl and take her to Canada, her lawsuit claims.

The couple, who at the time lived in Ancaster, Ont., already had four sons but wanted a daughter. All the paperwork was done and the Austins were legally her parents when they decided to send her back to Romania five months later, the suit says.

That was two days after they adopted a baby girl, Austin said at a news conference in Toronto Tuesday.

The adopting parents are now divorced, and neither lives in Canada any longer. The adoptee is nevertheless suing the parents, along with the Ontario and Canadian gubmnts, because when she was returned to Romania, her birth certificate had been changed to indicate she was Canadian, and so she was denied public education in Romania, and her widowed mother of seven could not afford to send her to private school.

Children are not pets you send off to the humane society when you no longer want them. Children are not soft forms of recreational vehicles, even though the model of consumer durables can be used to explain birth rates in many cases.

Parenthood rights to children entail some serious obligations as well. If the adopting parents wanted to send the adoptee back to her birth mother, they surely had an obligation to make major support payments, and I'm not all that keen on even providing for that eventuality.

I hope the statute of limitations does not apply.

Agricultural Subsidies Induce
Substitution in Production

The U.S. gubmnt is talking about reducing its subsidies for some agricultural products. The likely result will be that much of the land used for the most heavily subsidized crops will be shifted over to other crops. Cotton and rice are prime candidates.

The two crops that would suffer the most from subsidy reductions,
cotton and rice, are generally farmed by large combines whose managers say they are ready to change over to other crops, if the subsidy cuts are approved as part of Bush's budget.

Cotton and rice operations collected most of the $672 million paid out in California in 2003 in federal subsidies. Nationwide, federal farm subsidies accounted for $16.4 billion in payouts for all crops in 2003, the latest year for which full figures are available.Cutting subsidies on California cotton crops would hit hard this year, when the price per pound has dropped to 43 cents from 74 cents a year ago. But growers say they're prepared. One Tulare County cotton farmer said he'd simply switch over to pistachios or row crops such as green beans or black-eyed peas, if the cotton subsidy is

See here. I would add sugar to the list, but I wonder if Jeb would let his brother do that to the Florida sugar industry.
[h/t to BF]

Pharmaceuticals in India

Brian Ferguson writes about the perverse incentive effects of patent laws in India:
Re: the Econoclast's post on India, the Indian Pharmaceutical industry
is a particularly interesting case. India has a very large pharmaceutical
industry, especially in terms of number of firms, the country has a long history of high quality scientific research in general, and a lot of the so-called neglected diseases(the diseases associated particularly with poorer parts of the world) are found in India. Yet when the multinational pharmaceutical industry is being criticised for neglecting those diseases, the Indian industry is never mentioned, even though despite having the human and physical capital, and having the pool of patients right on its doorstep, the Indian pharmaceutical industry devotes its efforts to making knock-offs of rich-country drugs for treating rich-country conditions.

The reason it behaves as it does is a simple matter of incentives. India basically doesn't recognize pharmaceutical patents (its 1970 patent Act recognized process, but not product patents). This has two consequences: one is that it's profitable to make knock-off drugs because the Indian companies can free ride on the research of the multinationals, and so their only costs are production costs. That's a positive incentive to produce copycat drugs. The other consequence is a negative incentive - if an Indian drug company did do research into treatment for a neglected, third world disease, and did find a successful treatment for it, it would be unable to profit since all of its competitors would be able to free ride on its research. So despite having a large patient pool right there, there's no incentive to develop drugs for that group's health problems, and therefore no such research is done. that might change in the near future since India has finally signed onto TRIPS.

The multinational drug companies are criticized for not spending enough of their revenues on research, but the Indian industry only spends about 2% of its sales revenue on research, a much smaller fraction than the multinationals spend. Even the research done in government labs hasn't halped since those labs have been under instructions to develop methods by which Indian companies could produce substitutes for imported drugs, rather than doing basic research.
Critics of the patent-based drug industry should take a good look at the Indian case before they demand the elimination of patents. As Brian notes, India has recently signed onto TRIPS. Here are some details. And here are some more.

Thursday, February 17, 2005

Should Math Be Dropped from
University Curricula?

It sounds really unusual to me, but that is what is happening at some universities in the UK [thanks to BF for the pointer].

What if, even in the long run, students from these institutions get jobs that are just as good and earn lifetime incomes that, in a present value sense, are just as good as those earned by students at institutions offering math? In other words, what if these changes are in response to expectations of changing market signals? Will society be any worse off?

If I were a young math whiz, I'd applaud the lack of competition but deplore the drop in derived demand.

UPDATE: Both Sparky and Stephen have posted about this article, lamenting the decline in math training. I wrote what I did (above) because I wonder if it really matters all that much if some universities choose not to offer any math courses. If it does, then students won't want to attend those universities.

U.S. Social Security vs. Canada Pension Plan

The Canadian Pension Plan [CPP] has a reserve fund that is invested in the market, not in special gubmnt securities, as is the U.S. Social Security fund. Last year, this reserve fund earned a return of more than 5%.

The Canada Pension Plan earned 5.2 per cent on its investments in the third quarter, or about $3.9 billion, the CPP Investment Board said Friday. At the close of the quarter, the $77.2-billion CPP reserve fund consisted of $43.8 billion in publicly traded equities, private equities, real estate and infrastructure, and $33.4 billion in nominal fixed-income securities.

BrianF, who sent this link to me, writes,

Here's part of the difference between social security here and in the US. In the US the social security trust fund is invested exclusively in special government bonds, so all future pensions will have to be paid out of future tax revenue.
I am not entirely optimistic about the CPP investments. If/when the markets have some serious downturns, the reserve fund will dwindle, members of the CPP investment board will come under attack, and politicians will clamour for the use of general revenues to guarantee that pensioners receive payments they had come to expect. Brian's response to this concern is, in part:
The CPP's now invested in a mix of securities, which has a couple of
advantages. One is that there's a greater likelihood those funds which are being earmarked to support retirement incomes will actually be used to increase the capital stock, and therefore income. The other is that it gives low income retirees some share of capital income - the payroll tax funding mechanism, since the tax is probably entirely shifted back to labour, seems just to redistribute labour income. The US Social Security trust fund is, as I understand it, entirely in non-marketable federal government bonds. Of course, another reason the CPP's in better shape than Social Secturity, at least according to a couple of recent articles in the National Post, is because CPP benefits are much lower than Social Security ones.
To learn more about the CPP, click here.

My own preference is for a minimal gubmnt pension that by itself would allow a very spartan life. I think it is unconscionable not to provide people with the wherewithall to maintain a very basic lifestyle. Beyond that, we have plenty of inducements, encouraging us to plan and save more. In this sense, the Canadian Pension Plan (coupled with our Old-Age Security plan) is preferrable to the U.S. Social Security System.

I'm Glad I Didn't Bet Any Real Money

On Tuesday morning I wrote to Phil Miller, co-blogger at The Sports Economist, that I figured the odds were better than 50-50 that there would be hockey this season. Then I got so bold as to post both there and here that "My Bet Is Yes". Obviously, I was wrong, and one of my other co-bloggers, Brian Goff , provides an interesting analysis of the events. I strongly recommend his analysis, both there and in his academic publications [e.g., see here, here, and here].

It must be clear that I was not the only one who expected the lockout to end. My contacts tell me that the players in the NHL had been informed by the NHLPA to expect that an agreement would be reached. Many of them told the coaches where they were playing or working out that they expected they would be back at work soon. Some quit or gave notice at their temporary jobs. In other words, many people expected there would be a deal. We all misunderstood the goals and strategies of Gary Bettman and (some of) the owners.

I think there is a good chance of a gloomy future for the NHL over the next few years. Fans will be truly angry at someone, and will tend to stay away for quite some time. Television contracts will be in jeopardy, even for ESPN42 or where ever the games might have been shown. Some players will defect from the union, once the impasse is declared and replacement players are hired, and that will anger fans even more.

Meanwhile, several fragile franchises will declare bankruptcy, and the league will shrink.

I realize that in a bargaining situation, it is important to try to convince the other side you are so irrational that you are willing to sacrifice a great deal just to prove a point -- sometimes called "the rationality of irrationality". But the value of that strategy assumes repeated plays of the game, in a game theoretic situation; and quite honestly, I doubt if Bettman will get another chance to play the game.

Given his tone and his duplicitous public statements, I certainly hope not.

Wednesday, February 16, 2005

Life Imitates Monty Python

From the Trono Globe & Mail (third story down) [thanks to BF for the link]:

An indignant Israeli is suing a pet shop that he says sold him a dying parrot, reports the Ma'ariv newspaper. Itzik Simowitz of the southern city of Beersheba contends the shop cheated him because the Galerita-type cockatoo not only failed to utter a word when he got it home, but was also extremely ill. Mr. Simowitz adds that the shop owner assured him the parrot was not ill but merely needed time to adjust to its new environment.

If you think that story sounds familiar, here is a transcript of the original Monty Python Dead Parrot Sketch.

UPDATE: Ted Frank at is skeptical about the story but is unable to find any evidence that it is an urban legend. I ran it through Snopes and didn't find anything about it.

Posner and the Supreme Court

About 15 years ago, I was speaking with a mid-level minion of the American Bar Association. I had suspicions that he was somewhat left-of-centre in his views, but I asked anyway about what he thought Richard Posner's chances were of being appointed to the Supreme Court. His response was in line with what I expected (and I'm paraphasing from memory here):

Do you know anything about that guy? He's so right-wing, you wouldn't believe it! He even wants to sell babies!
That statement about the paper Posner wrote with Elizabeth Landes back in 1978 characterizes much of the opposition to Posner (I guess that means I will be excluded, too). Since then, Posner has gone on to write many other things that have ruffled people's feathers. But here, from a Washington Post Review of Posner's Book, Public Intellectuals, is a clear statement of the types of things that will be used against him, should his name come up for consideration:

"Economics," Posner has written, "wields the baton of my multidisciplinary orchestra." Looking at the world through a strictly economic lens, he writes with a refreshing, parsimonious intensity. He also, occasionally, produces outrageous conclusions, such as his contention in a 1999 article in the literary journal Raritan that the rule of law is an accidental and readily dispensable element of our legal ideology, and his argument in favor of buying and selling babies on the free market in lieu of government-regulated adoption. Add his advocacy of legal marijuana and LSD, and it is clear that Posner -- despite his obvious brilliance -- will never sit on the U.S. Supreme Court.
Amazing how so many people have such knee-jerk reactions rather than examine the arguments he makes. It's a loss for everyone.

Let's hope the Nobel Prize committee has more sense.

UPDATE: Here is Posner's very uncharitable review of Blink by Malcolm Gladwell, link courtesy of Newmark's Door. It is worth reading if (a) you are interested in very different review of Gladwell's book, or (b) you are interested in some of Posner's more scathing writing.

What IS Outsourcing?

Lou Dobbs ($subscription req'd) is as relentless as a dog with a bone, when it comes to his moral outrage about outsourcing. Here are some questions that cast a slightly different perspective on outsourcing:
  • Is Walmart outsourcing the manufacturing of things it sells?
    Or are foreign producers outsourcing the distribution and retailing of the things they manufacture?
  • Are auto manufacturers outsourcing the production of some auto parts to Canada?
    Or are Canadian auto parts manufactureres outsourcing the assembly of some of these parts to the U.S.?
  • Are North American firms outsourcing consumer help lines to the Philipines or India? Or are are these firms outsourcing administration and retailing to North American firms?

The point is that these are joint operations.

I know that half our students don't believe the theory of comparative advantage, no matter how or how well we might teach it. We don't need Lou Dobbs spreading misinformation about the gains from trade to make our jobs harder.

The Counter-factual.
Can It Be Applied to Religion?

One of the more useful techniques for studying history is the "counter-factual hypothesis". I was first introduced to this in one of Robert Fogel's economic history classes, where he addressed the question of how important railroads were in U.S. economic history by asking, "What would have happened had there been no railroads?"

I was reminded of this technique for studying the importance of historical events when I read the following on The Emirates Economist,

Just think of what Jesus could have achieved with tenure.
What an intriguing counter-factual.

My un-thought-out-arm-chaired hypothesis is that even if Jesus had hung around in the hills near the Qumran community or in Jerusalem or with the Essenes or with some similar sect and died of old age, or even if he hadn't ever been born, it wouldn't have mattered much. Something akin to a Christianity-type of monotheism would have continued to grow and evolve and then splinter anyway.

But it has been a long time (73 years) since I studied Church History and New Testament courses at Chicago Theological Seminary, and so I have no literary or historical evidence about which other mystic or other groups might have produced this result.

Some day maybe I'll post my "econometrics of God".

Tuesday, February 15, 2005

Absolutely Our Final, Final, Final, Final Offer
- - - - maybe

Around 6:30pm EST, the NHL's Gary Bettman sent the NHLPA a public FOAD letter slightly increasing the previous NHL offer to the players and saying, to the public, that if they didn't take it the next one would be lower.

''I know, as do you, that the `deal' we can make will only get worse for the players if we cancel the season - whatever damage we have suffered to date will pale in comparison to the damage from a cancelled season and we will certainly not be able to afford what is presently on the table,'' Bettman wrote.

What is with that guy? Even if he believes that nonsense, going public and using that tone is not likely to promote a negotiated settlement --- or was it his goal to get the players to reject the offer?

Will There Be Hockey?
My Bet Is Yes

Here is what I just posted at The Sports Economist:

Given that the owners have taken "linkage" of salary caps to revenues out of their offers, and given that players have accepted a salary cap, there is now plenty of wiggle room for both the owners and the players.I expect they will make a deal. But of course by the time I get this posted, who knows what might have happened. Here's a link to the news on TSN.

...[S]ources on the NHLPA side are suggesting the union will only
negotiate off the $52 million figure if the NHL presents a detailed, meaningful revenue sharing plan.

On the NHL side of the equation, sources are suggesting the league
isn't prepared to go much higher than the $40 million cap figure.

So it's a matter of trying to bridge a $12 million (per team) gap
with the clock runing towards the league's scheduled 1 p.m. (EST) announcement to cancel theseason.

And keep in mind, the owners haven't lost all that much so far. If they can salvage the play-offs, all 87 rounds or whatever, they stand to earn the bulk of their revenues for the season anyway. The only difference will be that qualifying for the playoffs will be more like a round-robin tournament.

What Do Gubmnts Do Best?

According to Rodney Hide, Member of Parliament in New Zealand, writing about the involvement of gubmnts in banking,
What possible comparative advantage does government have in business? Just one: Coercion. It can thump the money it needs out of taxpayers – no other business can do that.

Dontcha just love it when politicians say things like this!!!

Hillary Clinton Proposes to Harm Consumers

As the concern about the size of the U.S. trade deficits grows, politicians tend not to look at all their exports of U.S. gubmnt debt, preferring instead to blame foreigners in one way or another. Unannounced U.S. presidential candidate, Hillary Clinton, has co-sponsored a bill to restrict trade.

"I believe in trade," Mrs. Clinton insisted this week. "But I don't believe in the United States being the only country in the world that truly practises free trade." [right. Just ask Cdn farmers, lumberers, etc. about that!]

Mrs. Clinton pointed out that last year, for the first time, more cars were made in Ontario than Michigan -- the heart of the U.S. auto industry. She and the bill's co-sponsors, including North Dakota Senator Byron Dorgan, have demanded unspecified sanctions to curtail imports and get the deficit down.

The Globe and Mail article concludes with a series of quotes from previous U.S. political notables, all favouring trade barriers. The attacks on free trade are not going to go away easily.

  • "We are uncompromising in favour-of protection" 1888 REPUBLICAN PARTY PLATFORM
  • "You're going to hear a giant sucking sound of jobs being pulled out of this country" FORMER U.S. PRESIDENTIAL CANDIDATE ROSS PEROT IN 1992.
  • "All four presidents on Mr. Rushmore were protectionists" FORMER U.S. PRESIDENTIAL CANDIDATE PAT BUCHANAN IN 1994
  • "Give me a tariff and I will give you the greatest nation on Earth" ABRAHAM LINCOLN
  • "I see nothing wrong with helping American apple growers, cattlemen, steel producers and others to get some compensation for the harm done to them by countries " DEMOCRATIC SEN. ROBERT BYRD OF WEST VIRGINIA
Thanks to BF for the link.

Plagiarism in the UK
Where ignorance is an acceptable excuse?

A recent report in the UK says there are many phenomena at work to explain the rampant increase in plagiarism. Here are two that struck me:

  1. "Many studies show that the bulk of plagiarism can be attributed to students who do not understand academic requirements
  2. "It may be more common in very large classes. If these students enter programmes where the ‘rules of the game’ are unclear, they might continue to use tried and tested approaches and thereby, inadvertently, plagiarise. The number of students falling into this category will grow as student cohorts become more diverse due to widening participation, increasing numbers of international students and greater use of different teaching modes (eg distance learning, work-based learning)."

What a bunch of nonsense.

I have heard that first excuse several times -- "I didn't know I couldn't do that," and been dismayed that sometimes administrators have accepted this excuse and reduced the punishment. If people cannot understand the rules involving plagiarism, they should never have been admitted to, and deserve to be expelled from, university.

And to hypothesize that students plagiarize because they "continue to use tried and tested approaches and thereby, inadvertently, plagiarise" doesn't say much for what is being taught in secondary schools, does it?

But maybe there are some students from different cultures where educational institutions don't have such proscriptions against plagiarism; is it possible that such students find it difficult to adjust to the Anglo norms. I would want to be very careful about suggesting this, but if so, I would still want to hold them to the same standards as we hold all others to.

The assinine recommendations of this report will only create more bureaucracy:

Actions and Resources

  • Establish the culture and overall values, placing academic issues at the centre of the discussions and any changes
  • Appoint a named person responsible for ensuring the institution is dealing effectively with student plagiarism
  • Ensure policies and procedures are appropriate to the current situation
  • Require systems for keeping records of all incidences and what action has been taken; identify the person or people responsible for monitoring and reviewing data; identify how and where the resulting information will be discussed
  • Take steps to improve detection rates, including access to electronic detection tools
  • Create communication systems that allow consultation, discussion and dissemination of information

What a typical pile of drivel.

This report has been summarized by the BBC [thanks to BF fo the pointer].

Beer Bear
Bear Beer

Last August, a large truckful of Spanish-labeled Moosehead Beer disappeared, probably in New Brunswick, but authorities still don't know for sure. Here is followup story.

Wade Haines of the Fredericton area appeared before judge and jury on Tuesday [February 8th] as his trial opened on a charge of theft in connection with the disappearance of about 50,000 cans of Moosehead beer last August. Most of the beer, with its distinctive Spanish labelling, was never recovered, although a few stashes of the stolen suds turned up in different areas of the province. ...

Haines was driving the load from Fredericton to the Toronto area, from where it was to be shipped to Mexico.

The beer heist quickly became a celebrated crime story in New Brunswick and beyond, especially after cans of the missing beer started showing up in strange places.

At one point, police discovered a stash [of the beer] at a marijuana operation deep in the woods near Doaktown, N.B.

Bears had been at the brew and had consumed at least six cans.

The authorities knew bears had gotten into the beer because the teeth marks on the empties were unmistakeably made by bears.
[Thanks to BrianF for the pointer]

Monday, February 14, 2005

Really? Not in the Sections I Read

The Economist has nudity? I never noticed. But some study cited here by The Economist says it does:
In a newly fashionable effort to quantify claims about how power is transmitted through words and images, Yana van der Meulen Rodgers and JingYing Zhang, of the College of William & Mary in Virginia, have analysed The Economist's photographs. Their paper, “A Content Analysis of Sex Bias in International News Magazines”, asks, first, how often are women portrayed compared with men? Second, how often are men and women depicted in a sexual way? For answers, they looked at all the issues of five news magazines, including The Economist, in 2000, and the photographs in The Economist in even-numbered years from 1982 to 2000.

All the magazines studied contained an over-representation of women depicted in sexual ways. But The Economist, apparently, had more frontal nudity in its photographs than all the other magazines combined. When it came to “partial breast exposure”, it was at the top of the league.

[Thanks for the pointer to JC, who says, "Here we receive all magazines with a month lag. The pertinent parts of The Economist are blacked out. "]

Lloyd Cohen on The Hoppe Affair

For those who don't know about the Hoppe Affair, it involves a professor at UNLV who hypothesized that gays tend to save less. He was taken to task for having offered the hypothesis.

[Update: It is not at all clear that Hoppe is beyond reproach. See here and here. And follow the various links.]

Lloyd Cohen, who manages an e-mail list devoted to economic analysis of law, was e-interviewed by The Chronicle of Higher Education about the affair. Here is what he sent to them, quoted in full (with permission). It is well worth reading.

A reporter from the Chronicle of Higher Education asked me to answer a specific question about the Hoppe affair and to offer whatever views I might have on the question. I repeat below my email to him.

Where to begin?

First, let's begin by what for lack of a better term I will call the epistemic
question. As a general matter the Provost's distinction between "opinion" and
"objective fact" is empty and can--and is--only used for a deceitful and
pernicious purpose. If forced to choose between the two I would say that
everyone, including professors, only offers opinions and not objective facts.
Some opinions are virtually universally shared and thought to be supported by
incontrovertible evidence but opinions they remain. Noone I know, professors
included, as a general matter bothers to distinguish between the two for his
listener in the statements he offers. On the other hand many people will
distinguish between those opinions they hold strongly and those they hold
weakly. As that applies to the Hoppe case I would think that that is something
in his mind and in no other, and I would think it entirely inappropriate for the
Provost to insist that Professor Hoppe equivocate over the strength of his
conviction to suit the Provost's view as to the degree of conviction Professor Hoppe should have on the question.
I will guess that the strength of Professor Hoppe's opinion about the marginal
propensity to consume of homosexuals lies somewhere between his view that
Vladimir Putin is the President of Russia and whatever view he has on the
prospect for sustained liberal government in Iraq.
Does any of this really require someone to state it? I hardly think so. So this is all intellectually silly and politically ugly.

Second, this brings me to the response to your specific question. My answer is, no the principle of which you speak would not mean that classroom life would grind to a halt. If I lived under such a regime I would simply state orally and hand out a written memorialization on the first day of class each semester a statement to the effect that:

"Every statement I make in this class for the remainder of the semester
shall be understood to be my opinion and not as 'objective fact'. During the
course of the remainder of the semester I will not repeat this disclaimer
and distinction, nonetheless it remains in force. I will however endeavor to
distinguish from time to time: (1) the strength of conviction with which I
hold particular opinions; (2) the degree to which my opinions are shared by
others in the profession; and (3) the empirical evidence or theoretical
arguments that support my opinion."
That should cover it. Of course it is extraordinary silliness--a very dark silliness however. It is similar to the way in which Soviet geneticists had to begin each paper with a false paean to Lysenko.

Third, let me move on to the substance of Professor Hoppe's claim that
homosexuals tend to "plan," i.e., save, less than heterosexuals. This
seems to me to be: (1) not merely highly likely as a theoretical matter
but implied by rather straightforward economic theory; (2) supported by
empirical evidence; (3) not in the least invidious; and (4) a very useful
teaching illustration. The point I believe that Professor Hoppe was trying
to make is that our tendency to save rather than consume is a function of
the particular circumstances of our lives.

Specifcally, to the extent that we have affective relationships with others and are concerned with their financial well being, especially if they are financially dependent on us, we will be inclined to save more than were these conditions not to prevail. Thus because homosexuals tend not to bear and rear children they will tend to feel
less of a need to save and insure their lives. The distinction between homosexuals and heterosexuals is but one of many that I ( and I suspect Professor Hoppe) would pile on to capture the point of the relationship between our economic lives and our social, cultural, religious, sexual and other differences. There is a fascinating variety of ways in which this relationship presents itself. For example, I am inclined to tell my students that in those cultures where chastity and marital fidelity are more present more saving will occur because paternity is more certain. The various points being made by the examples are powerful and important: (1) it shows the relationship between the ordinary psychological, social, religious, and cultural aspects of life and their economic consequences; (2) it shows that the savings rate, something that is normally thought of as a function of narrow government "economic" policy,
e.g.., monetary policy is driven by more fundamental human drives, and that differences across communities in the savings rate is effected more by differences in their "non-economic" ways of life than other things.

As to the point that the broad tendency of the group does not apply to every
member, this is both true and trivial. It is mere silly political posturing and
bullying to insist that it has to be pointed out. It is as valid about differences in height as between differences in marginal propensity to consume between hetero- and homosexuals. Only the most lunatic of political apparatchiks would insist that the statement that men are taller than women needs to be qualified by the statement that "not all men are taller than all women." To insist on such things, especially selectively, is once more an exercise in political bullying and nothing more.

Note as well that there is nothing invidious in Professor Hoppe's hypothesis or observation that homosexuals save less. Saving more is not "better." It is, as a general matter, merely different. I am not being coy or flip in saying this. We save because we have a reason to save. To fail to save when you should may be foolish and immoral and to save when you should not may likewise be foolish and immoral.
Actually this tendency to see something invidious here is of intellectual interest. It shows one of the many pernicious effects of political rectitude. On issues such as homosexuality all discussion has been collapsed into the question "are you fer em or agin em?"

And if you have something to say that does not fall on that base and linear
dimension it is not heard, or viewed with suspicion. Surely there is more to be
said about homosexuality than that? For example, I offer you the proposition
that homosexuals tend to congregate on islands and peninsulas. Consider Manhattan, San Francisco, Fire Island, Key West, Cape Cod. It is interesting and one might be curious as to why. And like Professor Hoppe's observation/ hypothesis about the savings rate it does not constitute anything invidious.

The evil in all this is quite simple to state. Professor Hoppe is being persecuted for the crime of teaching economics--and as best as I can tell for teaching it well. Using captivating social illustrations is better--not worse--than teaching the subject with dry equations and diagrams. And he chose, I think, a very easily understood and
yet informative illustration.

Lloyd Cohen
George Mason University
School of Law

Germany: Others Must Appease Iran

According to the Associated Press, Germany is urging the U.S. to try to buy off Iran:
Germany appealed Saturday for the United States to join Europe in ending Iran's isolation, saying economic and security incentives were needed to persuade Tehran to abandon its nuclear ambitions.

In other words, the rest of the world should try to bribe Iran to abandon its nuclear weapons programme. But as BF, who sent this to me, says,
Isn't this the same as the deal Bill Clinton cut with North Korea?

Senator John McCain, who serves on the Senate Armed Forces Committee, gave a cautious response to the German suggestion of economic incentives for Tehran."You have to be careful you don't reward them for embarking on a path that is certainly destabilizing the whole region," the Arizona Republican told reporters at the conference.

After all, gubmnts (they're made up of people) respond to incentives.

What is the Difference between
Liberals and Conservatives?

Here is Richard Posner's characterization of the differences between liberals and conservatives:
[L]iberals think that the average person is good but dumb, conservatives that he or she is "bad" (in the sense of self-interested) but smart. Liberals trust the intellectual elite (because they are good) to guide the masses (because they cannot guide themselves); conservatives distrust the elite (because the elite are bad and therefore dangerous) and think the masses can guide themselves.

So in the social security debate, liberals oppose private accounts because they do not think the average person competent to manage money for retirement but think government can be trusted to manage it; conservatives support private accounts because they give the opposite of the liberals' answers to the goodness and competence questions.

This description of the differences between liberals and conservatives is very illuminating. One might argue that it also captures the differences between typical
  • economists and social workers
  • Chicago professors and Harvard professors

The entire posting is very informative.

Sunday, February 13, 2005

Serious Conflict of Interst

More on the oil-for-food scandal in the U.N.:
On February 3, the United Nations-authorized inquiry into the Oil-for-Food
scandal, led by former Federal Reserve Chairman Paul Volcker, issued its first
interim report. Volcker's most lurid finding so far is that Saddam Hussein, at
the behest of Oil-for-Food Programme Executive Director Benon Sevan, allocated
lucrative oil sales to a Panama-based company. This, concluded Volcker,
constituted "a grave and continuing conflict of interest" on Sevan's part and a
violation of the U.N. charter. Investigators are now pondering Volcker's
disclosure that Sevan's aunt, while living on a government pension in Cyprus,
sent Sevan a series of payments from 1999 through 2003 totaling $160,000. The
aunt then died in 2004 after falling down an elevator shaft, right around the
time the United Nations, after much stonewalling by U.N. Secretary-General Kofi
Annan and assorted protests of innocence from Sevan, agreed to launch an
official probe into Oil-for-Food....

The rest of the article is by pay subscription [thanks to BenS for the tip]. How long will it take for the rest of the world to see what happened and depose Kofi Annan?

Arthur Miller, Willy Loman,
and the Economics of Suicide

Arthur Miller, playwright of "Death of a Salesman", died on Thursday. One of the most intriguing characters I have ever studied in the theatre is the tragic hero of "Death of Salesman," Willy Loman.

As I approach the age at which my tenure will be revoked [aka mandatory retirement], I wonder that there aren't more people who commit suicide just prior to retirement. At my university, the life insurance policy pays hundreds of thousands of dollars to one's beneficiary if one dies before retirement; the benefit drops to only $15,ooo after retirement. If the expected incremental benefits of continuing to live are small, and the expected incremental costs [in the form of foregone life insurance benefits paid to one's beneficiaries] are large, I would expect more people to make a rational, charitable decision of early death.

There have been studies on the economics of suicide, most notably this one. There have been recent pieces on the benefits of having attempted suicide and failed or on the impact of gun-control legislation on the suicide method of choice.

But I have yet to see an academic piece linking the economics of altruism and the economics of suicide, and that puzzles me. As I asked my friend BenS when he retired,
"Don't you know your life insurance benefits have dropped to almost nothing? Why didn't you kill yourself before you retired? Don't you love your family?"
If you Google "economics of suicide"+loman, you get nothing.

We often hear of people sacrificing their lives for the sake of their spouses, children, grandchildren, or sometimes even strangers; one might reasonably expect that the economics of altruism could be extended to these situations. And yet I do not recall having heard or read of any cases (other than Willy Loman, in a way) in which persons killed themselves so their families would receive more, rather than less, insurance money. I presume it happens, but I am guessing it does not happen very often. I wonder why not. It makes me wonder about the nature of the constraints on our altruism. If people respond to incentives, what are the incentives at work in these decisions?

What would be the effect if the Chronicle of Higher Education were to publish something along these lines? What would be the effect if Larry Summers posed these questions? Are they legitimate fields for academic inquiry?

At the very least, I would expect some cop show to have this difference in life insurance benefits provide the motive for murder by one's beneficiaries.

Actor Patrick Cronin once told me that whenever he played Willy Loman, his partner would complain that he became quite suicidal himself.

Preparing for a Job Interview

Back in 1970 I had an on-campus job interview with General Electric. Everything was going quite well, I thought, until the interviewer asked, "I'm curious. Would you be willing to trim your hair and shave your beard to come to work for General Electric?"

I replied something like this:
"No...... In fact, I'm puzzled that a company advertising 'Progress is our most important product' would care if I have long hair and a beard. Furthermore, it seems to me that one of the early stars of General Electric was quite eccentric. I would think there would be no problem with my appearance."

I was wearing a suit and tie, but this was back in the days when anyone with long-hair and a beard was perceived as a drugged-out hippie. I didn't get the job. Actually, I never heard from them again. [I also have a lot less hair now.]

For those of you who might be actively looking for a job, here is some worthwhile advice: 25 tough interview questions originally published back in 1983.
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