Monday, November 28, 2005


We all want to look beyond stereotypes but, at the same time, privately (secretly) wonder about what truths they may contain. There are lawyer jokes but there are many lawyers who are among our finest spirits. The same can be said of economists and many others.

If economists tend not to be among the most popular figures on university campuses, does some of the credit go to any of their peculiarities? William B. Walstad and Sam Allgood present "Views of Teaching and Research and Other Disciplines" in the May 2005 Papers and Proceedings of the 170th meeting of the American Economics Assoc.

Based on a large survey of university faculty, the authors report:
"The survey evidence shows that many economics professors at research universities have a low regard for teaching and high regard for research ... " And, "... it is surprising that physical and biological scientists are not nearly as extreme in their views of the teaching and research trade-offs as are economics professors."

I hope that there is a study in the works somewhere that takes a crack at explaining some of the peculiarities of the economists.

Sunday, November 27, 2005

Substitutes in the eye of the perceiver

A few years ago (I am not sure when) Prof. Ed Mills wrote (I am not sure where) that the internet was the way we would share unambiguous messages but that ambiguous messages (he cited a seminar as an example) would best be exchanged the old fashioned way.

This seemed reasonable. Harry Richardson and I wrote (somewhere) that the market would sort all of this out. That was also reasonable.

In the Nov 28 Forbes, David Gelernter writes "Who Needs a College Campus ... A new free market in higher education will turn the academy on its head." (Sorry, link to the article not available.) He also notes that the "world's top universities will exist forever. They sell tradition and mystique, which are always in demand. But outside the top tier, more and more students will discover that electronic courses offer education with less fun, less atmosphere, less political nonsense -- and a lot more choice and less cost."

Then there is the world depicted by Tom Wolfe in I Am Charlotte Simmons. Wolfe has taken some heat from some who think his rendering of modern undergraduate life was over the top.

Distance-learning technology will only get better and Gelernter's vision will surely offer a combination of price and quality that appeals to a growing segment. But it is all about how good or how bad the substitute is perceived to be -- and by how many.

In the interim, increasing affluence will continue to expand the demand for a lengthened adolescence. Undergrad life, as it is marketed and packaged today, is the market's finely tuned response. My guess is that the resulting mix of hedonism and credentialing and learning will continue to beguile large numbers of families -- who will continue to pick up the large tab for what they deem is the vastly preferred substitute.

Wednesday, November 23, 2005

Peace and prosperity

We have almost gotten used to what follows in the wake oil price spikes: silly politics, weird conspiracy theories and the mystery of what happens at the other end -- in the likes of Russia, Venezuela and the middle-Eastern states that rake in petrodollars by the billions.

For the most part, real economic progress has not been detected in these countries. The Economist of Nov. 12 examined the question again ("Recycling Petrodollars") with a moderately upbeat piece that suggests this time, with more experience, wiser investments will take place. Perhaps not, however, because it appears that most of the windfall revenues will continue to be directed by government (politicized) agencies.

This is why Charles Wolf's suggestion re Iraqi oil in today's WSJ is so refreshing. In "Shareholders Don't Shoot Each Other", the author argues that, "Privatizing Iraq's oil assets, and vesting all citizens with shares can provide incentive for every Iraqi -- including Sunnis, the insurgency's core -- to view commerce as a better path than violence. Ownership would provide 28 million citizens with a prospective increase in per-capita income of about $5,800, substantially raising their present income."

Iraqis could privatize their government oil monopoly -- and become traders and investors --and take a shot at peace and prosperity -- and leave their neighbors behind.

Wolf does not mention that the Iraqis had better do so quickly before their politics matures -- and prevents this sort of enlightened approach.

Sunday, November 20, 2005


The smart set put down those they label "popularizers". Or mere popularizers. This is silly for several reasons. Many people can be clear and smart at the same time. Tom Sowell is a prominent example but the list is long. And in a world of comparative advantage, there are many niches to be populated. And the many popularizers laugh all the way to the bank. And many of them (almost by definition) greatly enrich our lives.

Two that I have recently encountered (whose works are known to many readers) are Bill Bryson and Nassim Nicholas Taleb.

For holiday nonfiction book givers, Bryson's A Short History of Nearly Everything and Taleb's Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets are something(s) to consider.

Wednesday, November 16, 2005

Thinking big

On Monday, the WSJ ran the following:

"The Shame of the Cites: French Unrest Finds A Home in Projects ... France's public-housing projects, known as 'cites,' are an experiment in utopian urban planning gone badly wrong. Inspired by the famed modernist architect Le Corbusier ... a new generation of planners dreamed up communities that were supposed to be perfectly functional 'machines for living.' Hundreds of these projects sprang up across France. The structures were immense slabs of concrete up to 20 stories high and hundreds of yards long, each housing as many as 1,500 people. ..."

Today's WSJ reports on projects closer to home: "New Buildings Help People Fight Flab ... Designs Encourage Climbing Stairs and Lots of Walking; Cheeky Signs on the Elevator ... In July 2007 when students at Virginia Commonwealth University attend classes in a re-designed business-school building, they'll face a new hurdle: a staircase. Most of the 3,000 students now at the Richmond, Va., business school take elevators to reach classrooms. But in the new structure, the elevators will be especially slow-moving. They will also be tucked away at the rear, while the atrium will feature a prominent set of stairs ..."

Visit Berkeley, CA, or many other enlightened places and experience traffic-calming, a series of designs and impediments put in place to make driving onerous and, it is hoped, less frequent. Whereas transportation planning was once about improving access, this version targets the opposite.

There are, then, two problems. Not only is social engineering suspect, but it is also apparently irresistable to many designers. The challenge of building facilities that perform their intended functions is apparently not lofty enough.

Sunday, November 13, 2005

Really getting people out of their cars

"Get people out of their cars" has been the rallying cry for greens, Luddites and many planners and politicians.

The WSJ's Stephen Moore summed it up in his recent "War Against the Car", some of which is repeated here.

"A few years ago, I made a presentation to my second-grader's social studies class, asking the kids what was the worst invention in history. I was shocked when a number of them answered 'the car.' When I asked why, they replied that cars destroy the environment. Distressed by the Green indoctrination already visited upon seven-year-olds, I was at least reassured in knowing that once these youngsters got their drivers' licenses, their attitudes would change.

"It's one thing for second-graders to hold such childish notions, but quite another for presumably educated adults to argue that automobiles are economically and environmentally unsustainable "axles of evil." But with higher gas prices, as well as Malthusian-sounding warnings about catastrophic global warming and the planet running out of oil, the tirade has taken on a new plausibility. Maybe Al Gore had it right all along when he warned that the car and the combustible engine are 'a mortal threat . . . more deadly than any military enemy.'"

The problem is that the critics have no clue on how to "get people out of their cars" because they cannot fathom the fact that most people prefer personal over group travel. The predictable result is that they have wasted billions of other people's money on transit systems, HOV lanes and land use schemes that have no positive effect. Bad theory leads to bad policy.

Looking forward is usually a better plan than looking backward. Reason's Ted Balaker has just published a study of telecommuting in US cities and shows that it does get people out of their cars -- at least moreso than transit.

And it does not rely on politicians, pork and transfers. And this is just the beginning.

And enlightened opinion wants the internet to be run by the United Nations.

Friday, November 11, 2005

Not bowling alone

Robert Putnam's Bowling Alone was almost a blockbuster (by academic standards) and the author made the cover of People mag and was courted by both of the Clinton's. To the left, there is something exhilarating about the pessimistic view of modern America.

But are we bowling alone? Cell phone use is everywhere; the most casual observer can see how obsessive we are about being and staying connected. The joke in California is that when one next takes the Department of Motor Vehicle's multiple choice license renewal exam, the answer to the question about who has the right of way is: The one speaking on his/her cell phone.

The 1990/2001 NPTS/NHTS trends on travel that I had mentioned earlier show that social and recreational person-trips (their category) were up 30% -- while worktrips increased 23% and population grew by 16%.

We are increasingly connected. And our interactions, physical and other, are complements.

Wednesday, November 09, 2005

Balanced and unbalanced

City and regional planners invoke the vague idea of "jobs-housing balance" as being a way that they can plan land uses and land use arrangements to reduce commuting.

It's a dumb idea on many levels. One being, "balance" at what scale (the zip code, the city, the region)? Another problem is that many of us are just too specialized in our occupational choices to be subject to this type of top-down planning. Also, many of us are busy weighing trade-offs against the long commute -- cheaper housing and better schools, being just two of many examples.

A recent report from Jason Bram at the NY Fed looks at New York metro area commuting patterns from 1980-2000. And guess what? Many people are now willing to travel longer distances to work.

Social engineering is, indeed, very hard work. And it appears to be getting harder all the time.

Sunday, November 06, 2005

Vote early, vote often

Is it possible for an economist to be thrilled at the sight of first-time voters, whether in Iraq of Cambodia or any of the other places where people can now vote, forming long lines to vote (even braving life and limb)? Rational ignorance is a powerful argument and declining voter turnout as affluence raises opportunity costs are well known and well documented.

In "Why Vote?", Freakonomists Stephen J. Dubner and Steven D. Levitt discuss how Swiss voter turnout actually decreased when mail-in voting made the act cheaper. There is self-interest at stake, write the authors, "but not necessarily the same self-interest as indicated by our actual ballot choice. For all the talk of how people 'vote their pocketbooks,' the Swiss study suggests that we may be driven to vote less by a financial incentive than a social one. It may be that the most valuable payoff of voting is simply being seen at the polling place by your friends and co-workers."

Saturday, November 05, 2005


The current issue of The Freeman includes John Semmens' "Wal-Mart is Good for the Economy". It seems that many people need reminding of the simple fact that, absent force, fraud or significant external costs, profitable enterprises are that way for good reasons -- they serve people best.

But success and progress also have powerful enemies -- even in what lazy observers still refer to the "laissez-faire" U.S.

Are there externalities? Sure. Everywhere. Are they significantly (net) positive or (net) negative? Only the conceivably negative are grist for popular discourse.

"Pecuniary externality" effects on wages or market prices are not a market failure.

Politicians may want to see every government program as a jobs program -- and they may want to see private enterprises in that light too but that is not economics.

Along these lines is the accusation that Wal-Mart's compensation packages push many employees to rely on public health programs. All things considered, employees and employers find each other and agree to terms in light of all of their available options.

Those who fret most about all of this are often the same people who routinely condemn the poorest to go to the worst (government) schools -- and thereby must bear much of the blame when poor people have few good options.

Friday, November 04, 2005

Nothing but bad news

Here is one blogger's report (Newmark's Door) of the good news on U.S. productivity growth.

The old media (today's LA Times, for example) has a very different take: "Third-quarter data beat expectations, but the fact that wages trail inflation may be making workers uneasy. ... U.S. workers in recent years have been pressed to produce more, although often for modest wage increases ... ."

In truth, these data are more impressive that the recent GDP results. Did the Bush tax cuts do more good than harm? It is beginning to look that way.

Some of the evidence is the convoluted economic reporting cited above.

Wednesday, November 02, 2005

Last seen violating the Law of Demand

If you use first-class U.S. mail, keep those 2-cent stamps handy because the 37-cent stamp will soon be history. The thirty-nine cent rate is coming your way.

Everyone knows that these rates go up as demand for snail-mail goes down because the Law of Demand is no match for a political jobs program (with labor unions and all).

The U.S. Statistical Abstract is all you need to compare the 23-year growth (1980-2003) record of the U.S. population (28%), U.S. per capita real GDP (58%) and and U.S. Postal Service expenses (well over 200% in nominal dollars but close to 200% in real terms). And being the USPS, they get special tax and permitting treatment, etc.

This is all regular-as-a-drumbeat news. But calling attention is all that we can do.