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, November 19, 2005

The Recruiter's Pitch:
How to Lie As If You Believe It

I've been on the recruiting committee many times, off and on, over the 58 years that I have taught at The University of Western Ontario. Our initial interviews with candidates are typically held during large conventions in early January. There are several truths about those initial interviews that I wish to share with all of you.
  1. When the recruiter starts telling you about the university and the city after only 10 or 15 minutes, it is usually because they don't want to know any more about you. You will not be short-listed.
  2. Recruiters are not going to tell you the bad things about their university and city. And during the initial interview, it is not wise to ask about them.

Here is a lengthy excerpt from a hilarious posting by Anonymous Lawyer about recruiting in legal profession. It sounds just like what goes on in economics.

I can do the whole pitch with half my brain figuring out how to manipulate associates into doing my dry cleaning. Our mentoring program is the best in its class. Our lecture series has won awards. We’ll teach you everything you need to know. You won’t be flying solo. We have a culture of collaboration. We have a commitment to cooperation. We have an open-door policy. You advance at your own pace. We give you as much responsibility as you can handle. There is no face time. You set your own hours. We treat you like the professional you are. We work hard, but we play hard.

It’s all about the people. We have great people. The people here are like nowhere else. You’ll do good work everywhere, but it’s the people that make the difference. You will love the people here.

We’re a leading full-service international law firm with a proven track record for meeting the needs of our clients. Our clients come first. They rely on us for top-notch service. You won’t find a place with more interesting cases or more challenging work. Our clients are on the front pages of newspapers worldwide. Our work is unparalleled. Our practice is global. Our commitment to excellence is clear. Across all of our practice groups, what ties the firm together is our pursuit of excellence. We’re on the cutting-edge. We serve our clients domestically, and around the world. We have a strong presence in all of the major financial centers. Leaders in business count on us. Our success speaks for itself. Our list of awards is substantial and impressive.

We place a premium on collegiality. We strive to maintain an informal working atmosphere. We are committed to diversity. We treat each other with dignity and respect. We know what really matters in life. Our benefit package is state of the industry. We provide cars home if you’re working late. We provide meals. We provide coffee. We provide a brand-new laptop. Our information technology services are top-notch. Our word processing center is open twenty-four hours a day. Our client services department is there to meet your every need. Our support staff is magnificent.

The atmosphere of small firm combined with the resources of a large firm. The congeniality of a small firm combined with the diversity of a large firm. The one-on-one contact you find in a small firm combined with the kinds of cases you can only get at a large firm. It’s the best of both worlds. It’s the best of all worlds. It’s the best, according to a recent survey. It’s never been better. We’re growing at an unbelievable pace. We have a five-year plan. We have a ten-year plan. Our finances are strong. Our client base is stronger than it’s ever been. Our partnership is among the strongest in the industry. We just bought another floor in the building. The views are amazing. The artwork is unbelievable. The bathrooms are sparkling. We’re in the best part of the city. There’s so much to see. There are so many things to do. There are so many ways to relax.

The people make all the difference. You’ve never seen such a collection of people. I’m constantly amazed by the people here. The people here are unbelievable. We strive to find the best and the brightest people we can. Our people are truly special. It sounds like a cliché, but I promise, you will love the people here, you really will.

Friday, November 18, 2005

Obestatin: A Hormonal Appetite Suppresant?

There is preliminary experimental evidence that obestatin [cute name for the hormone, eh?] seems to reduce the appetites of rats.[h/t to Jack]

Scientists have discovered a biological brake for a hunger hormone: a competing hormone that seems to counter the urge to eat.

The substance, named obestatin, has been tested just in laboratory rats so far. But if it pans out, the discovery of the dueling hormones could lead not only to a new appetite suppressant, but also help unravel the complex ways that the body regulates weight.

... [N]ormal-weight rats injected with obestatin cut their food intake in half, leading to a 20 percent drop in weight over eight days.

That is not a big weight loss, but these were not fat rats; they would have gotten sick had they lost too much. So Hsueh's next step is to test whether obestatin suppresses appetite and leads to more weight loss in obese rats.

Obestatin also slowed the emptying of rodents' stomachs and the movement of food through the intestines, important steps in countering ghrelin's hunger-inducing effects.

The stomach does not work alone, but is part of a complex gut-brain network where hormones and other substances in the stomach and intestines signal the brain about fullness or hunger.

The research is very preliminary, and at this point, the relative effectiveness of horomonal appetite suppression, in comparison with the implications from other psychological and economic determinants of being overweight is open to question.

First France;
Are Alberta and BC Next?

From the Ottawa Citizen ($ req'd)[thanks to Jack for the pointer]:
Senior French conservative politicians said yesterday that polygamy may have been a factor in the wave of riots that swept the country over the past three weeks.

Bernard Accoyer, leader of the Union for a Popular Majority (UMP) in the National Assembly lower house of parliament, said on French radio that children from large polygamous families had problems integrating into mainstream society.

Gérard Larcher, the Employment Minister, told the British newspaper the Financial Times that such families sometimes lead to anti-social behaviour by youths who lack a father figure and make employers reluctant to hire them.

... “There is clearly a problem with the integration of immigrants and, more importantly, their children,” Mr. Accoyer told RTL radio. “In order for us to be able to integrate them, there must not be more of them than our capacity to integrate them. That’s the issue. It’s like polygamy … It’s certainly one of the causes [of the riots], though not the only one.”

He said polygamy led to “an inability to provide an education as it is needed in an organized, normative society like in Europe and notably France.”
From time-to-time there have stories of polygamous communities in Alberta and British Columbia. Are the young males in these communities equally likely to riot? I doubt it. I expect the real reasons for the riots in France lie elsewhere.

Thursday, November 17, 2005

Encephalitis lethargica and Avian Flu?
Post Hoc, Ergo Propter Hoc?

Oliver Sacks and Joel Vilensky in the NYTimes (reg. req'd):

The influenza pandemic of 1918 was followed by another epidemic. The disease was encephalitis lethargica, or the "sleepy sickness," and like influenza it spread through most of the world. Its symptoms were extraordinarily varied - most commonly there was lethargy, but sometimes there was insomnia, and even frenzy; sometimes there were paralyses, sometimes mental disorders.

... The relationship of encephalitis lethargica to the 1918 influenza epidemic is unclear, but we can no longer afford to remain ignorant about it. Economo saw similarities between encephalitis lethargica and a neurological disease - the "nona" - which broke out in Italy just after that country's influenza epidemic of 1889 to 1890. Later research has indeed suggested a recurring association, since the time of Hippocrates, between influenza epidemics and encephalitis-like diseases. In 1982 it was shown that irregularly spaced waves of influenza-pneumonia deaths in Seattle during the early 20th century epidemic were followed approximately one year later by corresponding waves of encephalitis fatalities.
Even though Sacks and Vilensky have a clear vested interest in funding the research, examining whether there is a causal link or merely a temporal link between the two epidemics seems like a worthwhile project.

For more on post hoc, ergo propter hoc, see this Wikipedia entry.

Housing Prices:
Slow-Down or Implosion?

I have been suggesting for five or six months (see here and here) that

  • if the US housing market is over-heated,
  • and if housing prices are about to decline in some sense, then
  • we are more likely to see a slow-down in their rate of increase, and
  • possibly a decline in housing prices in some markets, but not
  • a big, flat-out bubble bursting.

Recently, Buttonwood, from The Economist, came to the party, albeit somewhat after others arrived, and with a different outlook.

Buttonwood ... is struck by how precarious America’s housing market is beginning to feel. It has been powering along mightily for the past four years on super-low interest rates and ever-higher house prices. Homeowners have borrowed against their paper wealth and spent it, fuelling economic growth. But none of that now looks likely to continue at remotely the same pace.
After much interesting discussion with which I agree, Buttonwood concludes,

In any event, the housing market reacts to monetary tightening after a lag of one to two years, it seems, so the temptation will be to overshoot. In which case the Fedsters will bring down house prices and the economy itself not with a whimper but a bang.
Whether you agree with Buttonwood or with me, one thing is clear: Ben Bernanke has his work cut out for himself. On one hand he doesn't want to over-stimulate the economy to offset the problems that will likely arise as the housing market cools off; on the other hand, he will not want the lack of stimulation to lead to a recession. From the NYTimes (reg. req'd):
"The contrast between the 1970's and today is very marked," Mr. Bernanke said. "Back then, we had high inflation expectations." He added that the Fed might have waited too long and then overreacted to higher oil prices, helping push the economy into recession.

Today, by contrast, "inflationary expectations remain well anchored" and the Fed could respond gently as long as those expectations remained low, he said.

Mr. Bernanke did not imply that he would stop the Fed's policy of gradually raising short-term interest rates from their low point last year. The Fed has raised overnight rates on loans between banks 12 times since June 2004, to 4 percent from 1 percent, and Mr. Bernanke said nothing to dissuade investors from their view that he would probably nudge rates slightly higher at least once or twice in his first few months in office.

For more on the difficulties facing Bernanke, see Tyler Cowen's piece at Marginal Revolution

It's Snowing

It is snowing where I live. And to tell the stupid, honest truth, I am excited about it.

I always get excited at the year's first real snowfall, but this year I am even more excited because I recently got a pair of Neos Navigator overboots, [Update: the model I have is called the "Stabil-icer" and it is quite noisy on hard surfaces] like these (only with metal studs in the soles), and I can't wait to try them out.

The neat thing about these boots is that they fit over your shoes, but they're much easier to put on and take off than any other overboots ever made.

Wednesday, November 16, 2005

A Wal-Mart Summer;
a Report from a Biz Skool Student

In the November issue of Chicago Business Online, Alison Nickum has Part Two of her series [Part One of the series is here] about being a summer intern at Wal-Mart headquarters.

In this installment, she
  • explains the precision involved with unloading a truck at a typical Wal-Mart store.
  • describes the intricate pricing mechanism at the Wal-Mart cafeteria [e.g. if you want flavoured creamer or a larger cup, the price is a bit higher because the costs are a bit higher]. Another good example of marginal-cost pricing, assuming the transaction costs are low! In fact I would guess that a major contribution from Wal-Mart has been its relentless push to reduce transaction costs.
  • describes the "Rule of Ten" -- whenever you are within 10 feet of someone, smile and greet them; if they are customers, ask if you can help them.
  • explains the "Sundown Rule": respond to any inquiry or request or message before sundown of the day you receive it. You may not be able to deal with it effectively in one day, but let people know you have received it and what your plans are.

No wonder I like shopping at Wal-Mart.
Again, let me say it's too bad the blog, Always Low Prices is shutting down.

Are the French Riots Just Another Step in Some Process?

Quite possibly they are. The important question is, "What is the process of which they are just another step?"

If it is a process resulting from labour restrictions and discrimination, then policies that promote economic freedom will help to reduce the nature and severity of the problems.

If it is a process of islamification, religious freedom must be both fiercely defended and severely restrained. This apparent contradiction comes from our Judeo-Christian-common-law background which says people must be free to practice their religion, but they may not impose it on others. And when the Judeo-Christian-common-law tradition clashes with Sharia Law and Islamic imperialsim, I will support those gubmnts which support the Judeo-Christian-common-law tradition.

The clash between the two has been underway for quite some time, as Melanie Phillips points out, quoting an article by Olivier Guitta back in 2003:

This extremist indoctrination also extends to French schools, where non-Muslim teachers are subject to daily insults and racist remarks.

... during a high school History lesson regarding the Crusades, a Muslim student yelled: 'Anyway, the Arabs are going to kill the Christians and the Jews.' The teacher then asked him, 'When?' and the child replied, 'I do not know. It was not mentioned on the imam’s tape.'

Many Muslim defendants refuse to be tried by Jewish judges, and some municipal pools have different hours for women and men to accommodate the Muslim population. A number of supermarkets carrying non-Halaal products (food not permitted by the Koran), have been vandalized by Muslims and then surrendered to this violent blackmail by taking the products off their shelves. This is what France has become.

Islamists have the clear goal of transforming France into the first Islamist regime of the West. Their master plan is clearly formulated and being implemented every day.
For more, see this additional piece by Melanie Phillips.
Also see this:

Tuesday, November 15, 2005

Atlantic Blog is Back

After being away from blogging for more than two months, the always-interesting Bill Sjostrom is writing and posting again at Atlantic Blog.

Many of us have missed his postings; his return to the blogosphere is welcome news for everyone.

Five questions non-Muslims would like answered

The title of this posting is the title of an editorial in the LA Times by Dennis Prager [h/t to BenS and JP]. Here are the questions. Please see the original for elucidation.

  1. Why are you so quiet?
    Since the first Israelis were targeted for death by Muslim terrorists blowing themselves up in the name of your religion and Palestinian nationalism, I have been praying to see Muslim demonstrations against these atrocities. Last week's protests in Jordan against the bombings, while welcome, were a rarity. What I have seen more often is mainstream Muslim spokesmen implicitly defending this terror on the grounds that Israel occupies Palestinian lands. We see torture and murder in the name of Allah, but we see no anti-torture and anti-murder demonstrations in the name of Allah....
  2. Why are none of the Palestinian terrorists Christian?
    If Israeli occupation is the reason for Muslim terror in Israel, why do no Christian Palestinians engage in terror? They are just as nationalistic and just as occupied as Muslim Palestinians. ...
  3. Why is only one of the 47 Muslim-majority countries a free country?
    According to Freedom House, a Washington-based group that promotes democracy, of the world's 47 Muslim countries, only Mali is free. ...
  4. Why are so many atrocities committed and threatened by Muslims in the name of Islam? ...
  5. Why do countries governed by religious Muslims persecute other religions?
    No church or synagogue is allowed in Saudi Arabia. The Taliban destroyed some of the greatest sculptures of the ancient world because they were Buddhist. Sudan's Islamic regime has murdered great numbers of Christians. ...
Update: be sure to read the comments, which include a set of answers from an anonymous reader.

The End of "Always Low Prices"

Kevin Brancato has announced that his blog, Always Low Prices, will cease operations by the end of this calendar year. The blog, along with (mostly) Kevin's insightful writings, has been a terrific addition to the blogosphere. That Kevin kept current on so many different Wal-Mart issues was a miracle. And his writing about Wal-Mart was always clear and penetrating.

I posted a few things on that blog from time-to-time, and I spoke with Kevin on the telephone several times, in addition to our numerous e-mail exchanges over the past year or so. He has boundless energy, and so I am certain his continued participation at Truck and Barter will be valued. But a good, market-oriented, empirical, and long-run approach to Wal-Mart questions will be much harder to find now that he has decided to give up the ALP blog.

However, everything already posted at the "Always Low Prices" blog will kept in the archives at Truck and Barter.

Monday, November 14, 2005

The 3 Rs: Rent, (w)Reck, and Return

Over the weekend, I wrote about having been in a big-box electronics store. I was in Future Shop because I was looking for a digital voice recorder to use for recording and podcasting my lectures. The salesman tried to be helpful, but I had some questions he couldn't answer.

He suggested I try their 3-R programme. When I asked what that was, he said,

"Rent, (w)Reck, and Return. At least that's what we call it here at the store. We have a 30-day, no questions-asked, full refund/return policy.

He didn't know how many people use this policy to "rent" a wide-screen HDTV for major events, like the superbowl; I would be surprised if at least some people don't.

It was a handy policy for me (I didn't like the format of the recorder I tried*), but if I knew what I wanted, I might prefer to pay a lower price at an establishment that had lower costs.

Is possible to pay a lower price at a store that does not have such a generous (and costly) return policy? If not, why not?

*The Panasonic US050 is a superb recorder. I tried out by recording a two-hour show I was in, carrying the recorder in my shirt pocket. The automatic volume control worked well and the sensitivity of the microphone was ideal. The problem was that it records in a proprietary format which most people don't have and hence would not be very useful for podcasting lectures; or that file must be converted to a .wav file, which is humongous (about 230 megs for a 2-hour lecture). Next, I'm going to try an Olympus, which records it files in .wma format, which is about half the size of MP3 files.

The Tragedy of First Nations

The evolution of relations between North American aboriginal people and the Canadian gubmnts at all levels has been tragic. The result of centuries of interaction has been that people with aboriginal status learn that the gubmnt is responsible for everything that goes wrong and the that gubmnt will (promise to) fix it. This is tragic for several reasons.

  1. It is not always clear what level of gubmnt is responsible, as with the poor water quality in Kashechewan. The feds were blaming the Province of Ontario, and the Province was blaming the feds, and both are liberal gubmnts, so both blamed former tory gubmnts.
  2. More tragically, the lesson, reinforced over the years, is that gubmnts are responsible for anything that goes wrong on a reserve.

If I, in my present cultural mindset, had lived in Kashechewan, I would have moved long ago or organized something locally to clean up the water. I would not have relied on gubmnt provision of bottled water for nearly a decade.

But that is in my present mindset. I have not been taught through the generations that the gubmnt has a responsibility to look after things if I just wait; I have not had dependency ingrained in me . . . . though heaven knows present gubmnts seem to be trying to creat such an impression.

At least as tragic was the response [$, h/t to Jack]. Gubmnts, afraid of not reacting swiftly enough, over-reacted:

For decades, governments have been content to waste hundreds of millions of dollars on bogus solutions to the water crisis on reserves. No level of government has been prepared to make the legal and operational changes required to ensure the safety of water. Kashechewan represents the nadir of waste and incompetence. Out of it, however, may flow a model that can be used to deliver safe water to reserves and other isolated communities across Canada.

The Kashechewan water crisis gave politicians — federal, provincial and aboriginal — the opportunity to spend other people’s money with abandon.

... No one seems to know or care how much the evacuation cost.

While the costs are murky, one thing is crystal clear: The tainted water did not justify the evacuation. Of the roughly 700 health assessments completed by the middle of last week, not one found an illness related to E. coli. [emphasis added].

Meanwhile, the federal government is incurring another set of equally unnecessary costs. Not to be outdone by the drama of the province-led evacuation, the federal government called in the Canadian Forces, asking them to bring to Kashechewan a 10-tonne reverse osmosis water purification unit — a unit capable of treating water contaminated by nuclear, biological or chemical warfare agents.

Although the water purifier requires a crew of three engineers or technicians, the Canadian Forces sent a detachment of 11 engineers and other military personnel to operate it, three two-person liaison teams and 30 Rangers to provide a “presence” in the community.

There was only one problem: The forces and their purification equipment arrived on the scene 13 days after Kashechewan’s own system had begun producing safe water. INAC knew the E. coli problem had been solved. Upon learning of the water contamination, INAC had summoned to Kashechewan Northern Waterworks Inc., a small water treatment firm based in Red Lake, Ont. It had taken a company technician just six hours to repair the malfunctioning chlorination system. The E. coli had disappeared faster than you can say “competent operator.”[emphasis added].

The lesson seems to be that we will not hold political leaders on reserves responsible for making decisisions. The gubmnt further will overreact, extremely inefficiently, once someone alleges the problem is the result of gubmnt inaction.

This chain of dependency must be broken if people living on reserves are to break out of the patterns that have destroyed too many lives on the reserves. Well-meaning, caring individuals must help the transition, but we can no longer have an entire segment of our population treated as if they are incapable of making choices and looking after themselves.

Sunday, November 13, 2005

More Socionomological Scatology

My friend, BenS, is remodeling a bathroom. In the process, he has (literally) looked into hundreds of different toilets.

For negative recommendations, he points to this one.

But for real class, he now suggests the Toto Neorest pictured here.

Even if you are not in the market, check out the features listed at that site.

The Ideal Business Model:
on-line pornography

from former student, Paul Kedrosky:
I think that a valuable startup exercise would be to do a wholesale survey of all emerging technology in the promotion, selling, and distribution of online porn, and then ask yourself which of those technologies and/or approaches could show up first and most compellingly in broader markets. When you think you’ve got it kinda figured out, launch a company around it for non-porn markets.
If the artsy subjects can dress up porn and shroud it in some academic garb, why not the biz skools, too? See this (reg. req'd for the full article):

At Wesleyan University, "grade inflation" has taken on a whole new meaning: One student earned an "A" — for filming another student masturbating.

In his seminar "Pornography: Writing of Prostitutes," Professor Hope Weissman requires students to create their own pornography project, either video, essay or live project. "I don't put any constraints on it," said Weissman. "It's supposed to be: 'Just create your own work of pornography.' "

Wesleyan University is not alone. UC-Berkeley, New York University, UC-Santa Cruz, UMass-Amherst, Chapman University and Northwestern University have all developed "porn curricula." At Arizona State University, a "Sexuality in the Media" course requires students to watch porn flicks such as "Deep Throat."

What should be on the reading list if I were to propose a course on "The economics of pornography"?
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