Friday, March 28, 2008


Eric Weiner's The Geography of Bliss is worth reading. Weiner visits The Netherlands, Switzerland, Bhutan, Qatar, Iceland, Moldova, Thailand, Great Britain, India and a few places in the U.S. He is able to reflect on the happiness or unhappiness of the people he meets and muses over the links between wealth, happiness, culture, institutions, frienship, you name it. He proves that weighty themes can be addressed via clear and appealing prose. The book ends much too quickly and one wishes that Weiner could have kept on traveling, experiencing and writing about it.

For those who want more, Sue Halpern takes us through more of this stuff in the NY Review of Books.

Thursday, March 27, 2008

Help is on the way

The traffic congestion that comes with unpriced highway access is many economists' favorite example of a negative externality. The availability of electronic toll collection devices suggests that transactions costs are no longer a barrier -- and we now have a policy failure.

And it suggests a market opportunity. The WSJ's Walter Mossberg reports ("Dash's Car Navigator Gives Smart Directions, If Others Participate" gated, excerpted below) that there are new "smart" navigation devices on the market that can interact with other like devices in use on the system so that it can monitor real-time nearby congestion -- and plan/instruct accordingly. It works best, of course, if there are enough other users of the system. A new positive network externality to counter an old negative externality.

It almost makes the standard peak-load pricing prescription sound boring.
As smart as in-car navigation devices are, they could be
smarter. They could talk to each other via the Internet and share information on
how fast traffic is moving on the roads they have just traveled. And they could
also use the Internet to let you search for places of interest, get map updates,
or even receive new destinations wirelessly.

Starting this week, just such a smarter navigation box is
hitting the market. Called the Dash Express, this $400 product looks a lot like
units from better-known firms such as Garmin and Magellan. Like them, it uses
GPS satellite signals to locate your car on an easily seen map, and to route you
to destinations and places of interest, using both visual and spoken

But, unlike any other in-car navigation device I've seen, each
Dash Express, from a Silicon Valley start-up called Dash Navigation, becomes
part of a network, connected to the company via the Internet. Each device not
only receives and displays information, but transmits it as well, acting as a
"probe," as Dash calls it, to measure local traffic speeds. This information is
compiled by the company and then broadcast back to all other Dash units in your
area, almost instantly painting streets on your map with color codes to indicate
traffic speeds.

I've been testing a Dash Express in and around my home base of
Washington, D.C., and, while it isn't perfect, I like it a lot. If the company
sells enough units to create a solid network, Dash could radically improve
in-car navigation.

Monday, March 24, 2008

Discussing race

The we'll-always-have-Selma-Alabama folks want to have a "discussion about race" because they think that they have the advantage.

But as Peggy Orenstein writes in yesterday's NY Times "Mixed Messenger .. What it means to have a biracial candidate running for president", it's time to think before we talk.

... Most Americans watching Barack Obama’s campaign, even those who don’t
support him, appreciate the historic significance of an African-American
president. But for parents like me, Obama, as the first biracial candidate,
symbolizes something else too: the future of race in this country, the paradigm
and paradox of its simultaneous intransigence and disappearance.

It’s true that, over the past months, Obama has
increasingly positioned himself as a black man. That’s understandable: insisting
on being seen as biracial might alienate African-American leaders and voters who
have questioned his authenticity. White America, too, has a vested interest in
seeing him as black it’s certainly a more exciting, more romantic and more
concrete prospect than the “first biracial president.” Yet, even as he proves
his black cred, it may be the senator’s dual identity, and his struggles to come
to terms with it, that explain his crossover appeal and that have helped him to
both embrace and transcend race, winning over voters in Birmingham, Iowa, as
well as Birmingham, Ala.

Mixed-race marriages were
illegal in at least 16 states when Obama was born, though the taboo was
historically inconsistent — white men could marry Asian women in some places,
for instance, while marriages like mine, which go the other way, were forbidden.
Since 1967, when those laws were declared unconstitutional, the rate of
interracial marriage among all groups has skyrocketed. And those couples have
children. Of the seven million Americans who identified themselves as mixed-race
in the 2000 census (the first in which it was possible to do so), nearly half
were under the age of 18. Almost 5 percent of Californians now identify
themselves as mixed-race; by comparison, fewer than 7 percent are
African-American. Hawaii, Obama’s childhood home, is the most diverse state in
the Union: 21 percent of residents identified as “Hapa,” a Hawaiian word meaning
“half” that has gone from being a slur against mixed-race Asians to a point of
pride — and has increasingly been adopted by multiracials of all kinds on the

But the rise of multiracialism is not all
Kumbaya choruses and “postracial” identity. The
N.A.A.C.P. criticized the census change, fearing
that since so few in the black community are of fully African descent, mass
attrition to a mixed-race option could threaten political clout and Federal
financing. Mexican-Americans, a largely mixed-race group, fought to be
classified as white during the first half of the 20th century; during the second
half, they fought against it. ...

In this morning's LA Times, Gregory Rodriguez writes "A brilliant bad speech ... Obama's rhetoric entangled him in race in exactly the wrong way"

In some ways, Barack Obama's speech on race last week was as
brilliant as it was nuanced. But for all its rhetorical beuaty, it was also an
enormous step backward and, in the end, a rather self-serving call for more
discussion about racial grievance in a country that has already done too much
talking. ...

But the race hustlers have embraced the one-drop rule. A real discussion would follow Orenstein's lead. Tiger Woods is not African-American. In America, we have cultural and "racial" blends that are much more interesting than we find in most places. Tribalism is poison and mixing "race" and politics is toxic. Discussion indeed.

Saturday, March 22, 2008

Been there and done that

The Economist of March 15 has a nice essay on Economics and the rule of law ("Order in the jungle: The rule of law has become a big idea in economics. But is has had its difficulties").

Some might say that the "big idea" was never really absent from serious economic discourse. My 1964 copy of Alchian and Allen's Exchange and Production: Theory in Use, for example, mentions (p. 207):

"If the output decisions are made by an all-wise dictator who knows all of the production possibilities of each person, presumably efficiency can be achieved -- ignoring questions of how the dictator will get his orders enforced and how he will distribute the resulting product.

"But in the event of a succesful revolt against the dictator, is efficient allocation of productive resources possible? ... In such a private-property capitalist system, the new 'dictator' is the rule of law of private proerty if the government enforces that rule against all people ..."

And that brings us to the presidential campaign of 2008. For all of fawning over the smarts and education of candidates Clinton and Obama, where were they (and their advisors) when these basic ideas were discussed?

Many writers have heaped praise on "The Speech" by candidate Obama (for example David Brooks on last night's Jim Lehrer news and Peggy Noonan in this morning's WSJ) but the policy bits were pure New Deal-Great Society. We have been there and done that.

Wednesday, March 19, 2008

Fear and good sense

Alex Tabarrok has this interesting post on fear at Marginal Revolution -- which elabroates his recent NY Times op-ed.

What are assets worth at any moment? How do we assess their future? How do others assess their future? These are the everyday questions. When uncertainties pile up, and volatilities rise, these very tough questions become even more difficult. Fear and panic can kick in.

There is more. When and how often to revalue assets to market? Accountants offer businesses interesting arguments on all sides.

But the rule-of-thumb for households was always to ignore short-term fluctuations in their own net worth except, perhaps, small asset mix reallocations every six months. After all, it is "permanent income" that guides us, so why not similar notions of wealth valuation? The overhwelming number of householders are not unemployed, are not selling a home, are not traveling to Europe (or even buying a new import), are not Bear Stearns stockholders and do not work on Wall Street.

Yes, many do watch the TV news, pay for expensive gasoline, listen to politicians and are prone to hand-wringing.

I do not believe that they will ramp up the fear to the point where it can do real damage.

Friday, March 14, 2008

What a concept

In 2008, many serious politicians (and economists) like to explain why tax increases would be a good thing. They usually cite their belief that devoting more resources to infrastructure and education would be worthwhile. Others might suggest that this is naive (or even ignorant).

This is why it is useful to have Christina and David Romer chime in with serious work that shows that tax increases actually lower GDP.

Leave the resources where they are most productive. What a concept!

Tuesday, March 11, 2008


For reasons that make no sense to me, there are none of these in Los Angeles, but I found it in Eureka.

Wednesday, March 05, 2008

A little history always helps

This morning's WSJ cited new data on highway safety ("AAA Says Auto Accidents Cost $164.2 Billion a Year"). Scary.

Automobile crashes cost the U.S. $164.2 billion annually, or $1,051 per person, according to a report AAA plans to release today.

The automobile association says that even though drivers tend to focus more on how traffic congestion hurts productivity and makes travelers miserable, the actual cost of crashes totals more than twice the cost of congestion. The human toll is also more daunting: 42,642 people died in automobile crashes in 2006, which equates to about 117 deaths per day and almost five per hour. ...

But historic contex is always useful, as in Monday's WSJ "Deja Vu" column, Cynthia Crossen wrote about the U.S. history of auto safety ("Unsafe at Any Speed, With Any Driver On Any Kind of Road").

Every year, about 42,000 people die in automobile-related accidents in the U.S. In 1930, when there were about a tenth of the number of autos on the road, more than 31,000 people in the U.S. were killed by cars. "The automobile is here to slay," said one newspaper, its typo speaking volumes.

A typical headline in a regional newspaper of the early decades of the 20th century was "Twenty-One Persons Meet Death in Auto Accidents on Sunday" or "16 Killed, 31 Others Injured in Traffic Crashes" or "Accidents
Set New Record." Cars were one of the biggest public-health hazards of the era, but there was no easy cure because there were so many culprits -- careless drivers, absent-minded pedestrians, unsafe vehicles, poor roads, lack of traffic laws and, of course, drunkenness and speeding.

The first horseless carriages were relatively slow, broke down frequently and didn't hurt many more people than wagons and horses did. But as cars picked up speed, the number of accidents, and fatalities, began to climb steeply. Early cars had weak brakes, tires that blew out, headlights that glared, plate-glass windows that shattered, a high center of gravity that made them easy to flip (or "turn turtle," as they called it at the time), no seat belts and often soft roofs or no roofs at all.

And that was when the cars were new. After a few years of wear and tear, they were even more dangerous. A free inspection program of motor vehicles in New York State in 1927 found 39% of the 400,000 vehicles inspected had serious defects. ....

Saturday, March 01, 2008

Waiting for Change

All the talk of "helping people" is positively Orwellian when seen in light of the daily tragedy of condemning the poorest to the worst schools. It has been that way for a long time and is unlikely to change.

Below is an excerpt from "In L.A., his own wall of China ...Zhao Yan Feng left his hometown to teach Mandarin at Dorsey High. He learns that not all his students see language as a gift." from this morning's LA Times that points to a problem that is not susceptable to more money, higher teacher salaries and higher taxes.

The L.A. Unified School District purchased high-end payroll software last year but has not yet gotten the hang of making it work. Many of its staffers are slow learners. But the District's head goes on local PBS-TV once a week to brag that they are getting ever closer to issuing accurate paychecks on time. He recently boasted about getting the W-2's in the mail. That's is not pre-1989 Eastern Europe, it's South LA.

Zhao Yan Feng finally lost his cool minutes before the bell
sounded, signaling the end of fourth period.

For nearly two hours, his classroom had teetered on the edge
of anarchy. Students chatted on their cellphones. They put their feet on their
desks. Some had their heads down, sleeping. A clique of girls loudly debated
where best to shop for jeans.

"I need your cooperation," Zhao pleaded in a clumsy Chinese
accent. "If you don't want to learn this language or be in my class, just don't
interfere with others learning. I'm just a guest teacher."

It had been three weeks since Zhao (pronounced Jow), 27, left
his hometown in northern China to join a program that sent dozens of Chinese
teachers to school districts across the United States.

His two-year assignment: teach Mandarin at Dorsey High in
South Los Angeles, where test scores are well below the state and national
averages, two-thirds of the students live near the poverty line and most have
had scant exposure to Chinese culture.

"Why do I do this?" he said to the students, who were silent
for the first time. "Because I want to be your friend."

Two girls in the back of the classroom giggled at the remark.
Others stared at their desks. The bell rang, and the teenagers charged out of
the room -- except for a boy who was still asleep. Zhao tapped him on the
shoulder and told him to leave.

It was the end to another humiliating day.

"Two years," Zhao said. "Sometimes I don't know how I'll do

Before he left China for Los Angeles, Zhao, a university instructor, had
been optimistic. A partnership between the College Board in the U.S. and Hanban,
China's language council, had selected him and other teachers to bring Mandarin
to American students. ...