Saturday, December 31, 2011


The WSJ's Rachel Bachman ("Enough Already With the Little Guy ... Why College Football's Power Conferences Should Ditch the Smaller Ones; the $2000 Question") explains why San Diego State is joining the Big East conf and why the colleges balked at the idea of throwing a $2,000 crumb to atheletes.  It's the money and it's shameless exploitation by colleges. There are now more than thirty college football bowl games.  More than half of the NCAA's Tier I-A schools play in a bowl game.  The games are on TV and for most of them the stands, while not empty, are sparsely populated.  Bachman explains that the way the gravy is spread, there is money for the poorer programs if they can attach themeselves to a rich conference.  Some of the poorer schools even end up pouring (diverting) money into their football programs, once they join high-rent conferences.

The NY Times' Joe Nocera ("The College Sports Cartel") is less kind.
In fact, the N.C.A.A.’s real role is to oversee the collusion of university athletic departments, whose goal is to maximize revenue and suppress the wages of its captive labor force, a k a the players. Rarely, however, will the cartel nature of the N.C.A.A. be so nakedly on display as at this year’s convention.
The convention nixed the idea of offering athletes an extra $2,000 stipend.  They also rejected four-year scholarships in favor of two-year, further sticking it to the players and also revealing the real game being played.  Bachman reports that the schools already losing money had the most votes.  This supports her idea to get the little guys out of the top tier.   But that is unlikely.  Consider that Nocera ends this way:
... it certainly would be worthwhile to see someone challenge its cartel behavior in court. The inevitable rollback of the $2,000 stipend and the four-year scholarship would be an awfully good place to start.
Good luck to Bachman and Nocera.  The more schools in the cartel, the more alumni cheering their bowl-bound programs, the less likely that Congress or the Department of Justice will lift a finger.  Yes, they take stands against "monopolies", but they also count votes.


The Jan 1 NY Times shows where some of the college football money goes.  I have no problem with star coaches getting what the market will bear, but the colleges' treatment of their players is show to be all the more shabby.


And here is the knockout delivered also by Joe Nocera

Thursday, December 29, 2011

Muddling through

Megan McArdle argues that most people do not save enough.  We hear that a lot and it's probably true. It is also true that many of us are less than perfect in forecasting our future wants, capabilities, successes and failures.  Nevertheless, sage advice cannot hurt.

James Surowiecki writes about the return of lay-away.  When borrowers and lenders were optimistic, credit cards were easily available and widely used.  But mood swings and business cycles have pushed many the other way.  Now many borrowers as well as lenders have opted to trade for big-ticket items via commitments to save rather than commitments to re-pay loans. 

But I wish the author had avoided "... our economic system is set up to encourage overspending."  Who "set up" the "system"?  As a rule, whenever "the system" gets mentioned, I wonder where the story is headed.

It makes sense to recognize that in a world of semi-myopic savers, borrowers and middlemen we will muddle along -- and necessarily wander from the "best" path.

Wednesday, December 28, 2011

What it takes

Over at Urban Demographics, they link to The Atlantic's photo essay on Landscape Absurdism: Las Vegas.  Quite a few planners (and many others) love this stuff.  It plays to the idea that there are "chaotic" and "wasteful" land use patterns, especially in sunbelt suburbs and perhaps most especially in Las Vegas.

We know now that there was suburban over-building, not just in Vegas, but in most places and this had very little to do with lax lands use planning practice.  In fact, there is evidence that the most controlled places experienced the biggest house price bubbles.

How do we know "waste" when we see it?  From the air?  There is no way that visual inspection can tell us about "better" or "worse" land use arrangements.  Richard Peiser showed some years ago that it is possible to build inter-temporal models which indicate that "leapfrog" development can be economically efficient, leaving important space for later infill development.

Besides "waste" is always a complex idea -- and almost never what it is suggested to indicate.  Is washing my shirt the 25th time and wearing it again more wasteful than replacing it? 

When it comes to land use patterns, the acid test is is simply whether the urbanized area grows or not.  Does it attract labor and capital in ways that they can make a go of it?  Las Vegas did very well in the years 1960-2000 (years for which we have data), its urbanized area exceeded large-urbanized area growth by a factor of almost twenty.

Labor and capital go where they expect to be productive.  This includes opportunities to interact with a variety of other nearby activities -- at a price that makes it all possible.  This involves the spatial arrangement of activities and is much too big a problem to be solved by bird's-eye visual inspections of land use patterns, followed by prescriptions for more compact development.  Rather, it takes flexible land use markets.  That's the best we have.


Ed Glaeser seems to be saying "let a thousand flowers bloom."  There is no one density or arrangement that works best.

Monday, December 26, 2011

Some good news from 2011

End-of-year stock-taking and list-making are all around.  I pay too much attention to political events and these tend to be uninspiring.  On top of that, the end of the year is not a great vantage point.  Several years hence, we may find that the leaders we had in 2011 and their political ploys weren't so awful.  Perhaps.

In my view, America's three greatest policy errors are (1) letting teachers' unions and their allies continue to be influential; we inflict the worst schools and teachers on the poorest kids; (2) our drug laws criminalize behaviors that have their worst ancillary effects when driven underground; we get crowded prisons, an overwrought criminal justice system and we make people in other countries (mainly to our south) pay an unconscienable price; (3) our immigration laws make no economic sense, here or abroad; a more open policy would be win-win.

In 2011, #1 and #2 entered popular discourse way beyond the standard outlets and venues.  Waiting for 'Superman' (actually 2010, but DVD in 2011) went a long way to popularizing the case for reform of the public schools.  Ken Burns' PBS series Prohibition went some of the way towards doing the same for drug policy.  Each of these went where policy wonks and policy wonkish stuff does not go.  I am guessing that movement towards more elightened policy discussions on these two fronts began with these releases in 2011.

Now if we could only get some enlightened group fund a similarly creative visual re immigration policy.  We have enough in the way of studies and "white papers".  There has to be something for the people who watch the Presidential debates and who get their news via the late night comedy shows.


Re Topic #3, read this.  (H/T Marginal Revolution)

Friday, December 23, 2011

Dark history

I greatly enjoyed Erik Larson's In the Garden of Beasts.  There are hundreds of reader reviews at the Amazon site and I agree with most of them.  World War II and the rise of Hitler's Nazis is a long, complex and difficult story.  But seen through the eyes of U.S. Ambassador to Germany William E. Dodd and his family (mainly his adventurous daughter), there is lots that is interesting.

It evokes the old question: How could the land of Beethoven and Goethe let itself be seduced by a gang of murderous and thuggish crazies?

Larson mentions this (page 56): "Beneath the surface, however, Germany had undergone a rapid and sweeping revolution that reached deep into the fabric of daily life.  It had occurred quietly and largely out of easy view.  At its core was a government campaign called Gleichschaltung -- meaning 'Coordination' -- to bring citizens, government ministries, universities and cultural and social instiutions in line with National Socialist beliefs and attitudes." 

Timur Kuran has written about preference falsification and we see sycophancy mix with terror and appeals to nationalism, tribalism, and the like in most autocratic states.  Some cite "forcible coordination." 

I liked this movie treatment of the phenomenon in Nazi Germany.  If the population is amenable, the "forcible" aspect is minor.  Larsen's story gets going before the Night of the Long Knives.


"Coordination" is too bland.  "Gleich" means "even" or "same" or "equal".  "Schaltung" means "shift" or even "gear change".  This may be even more sinister than "preference falsification."

Wednesday, December 21, 2011

Secular theocracy?

The state religions of the 20th century were heinous and the current tributes to the recently deceased Kim Jong-il evoke all over again the creepiness of state-as-religion.

Closer to home, we have Christmas and political correctness.  The PC screen filters faith-based assertions.  Some pass and some do not.  What are actually faith-based assertions re the merits of "alternative energy" (and a hundred other programs) are taken seriously by those who insist on their own secularist credentials.  

Is this the modern American civic religion?  Have we moved in the direction of a Secular Theocracy?  David Theroux argues that we have in Part I of this essay.  It is worth reading.


On a related theme, I liked Ross Douthat's tribute to Christopher Hitchens.

Monday, December 19, 2011


Last week, Burton Malkiel reviewed Emanual Derman's Models Behaving Badly (which I have not yet read) in the WSJ (Physics Envy: Creating financial models involving human behavior is like forcing 'the ugly stepsister's foot into Cinderella's pretty glass slipper.')  Malkiel revisits the arguments over why economics is not physics and why misplaced scientism can lead to misunderstandings and errors.  Physicists work with particles that do not experience mood swings.  Mood swings are tough.

Malkiel knows well that market forces are such that entrepreneurial types are hard at work trying to correct prices, but that prices are mostly "wrong".  We are mostly out of equilibrium.  The on-going error correction derby is all we have, but it is very nice to have around.

In yesterday's NY Times Magazine, Adam Davidson wrote about economic indicators (Indicators are supposed to help us predict a recovery or a double dip. But what can nail-polish sales really explain anout the recovery?)   This is a little bit like the fountain of youth.  This is not about theorists, but about pundits and punters.  The Malkiel essay suggests that the theorists (and pundits) are likely to remain frustrated, but the error correction derby suggests that the search for indicators will never stop.  If nail-polish sales predict anything, they will only do so just once.

Is all this why we chuckle at this economist joke (via Craig Newmark)?

Saturday, December 17, 2011

Bill or Rights week

It is Bill of Rights week.  A good time to link to the WSJ's "Federal Police Ranks Swell to Enforce A Widening Array of Criminal Laws."  As there are ever more regs, there are ever more guys with badges and guns.  It's inevitable that bad things will happen and the report documents a few of them.

Bill Frezza in Forbes writes about "Watching The Wheels Coming Off the Green Machine."  This does not quite measure up to violating the due process rights of citizens, but forcibly taking their money and channeling it to cronies in the name of "sustainability" and "jobs" also illustrates how we have trashed the Bill of Rights (see 10th amendment).

Personal freedoms as well as economic freedoms have been lost.  There is very little difference.  It is the same slippery slope.

Thursday, December 15, 2011

Breaking the logjam

I mentioned some of the writers who have investigated the success of the West in my Monday post.  The importance of culture and institutions shows up in each one of their studies.  But public choice economics points to obstacles such as the likelihood of predation and we see crony capitalism all around us.  Paul Romer has taken up the challenge of trying to break this logjam by elaborating his Charter Cities idea.  He has also devoted considerable energy promoting the idea in order to bring it to fruition.

The Economist (December 10) describes the current state of Romer's quest in "City building: Hong Kong in Honduras -- An ambitious development project aims to pull a Central American country out of its economic misery.  Can it work?"

The piece describes an effort to develop a Charter City in Honduras.  This involves setting up an international "transparency commission" charged with establishing something like a Nightwatchman State and a credible barrier to normal political predation.  If that works (a very tall order), nature will take its course and labor and capital will move in.  No five-year plan required.

If it works, there could be imitators.  It could be quite thrilling.  There is nothing like tangible small steps towards a better world.  The bonus is a test of the power of ideas, free institutions and free markets.

Wednesday, December 14, 2011

Does zoning matter?

Houston is the only major U.S. city without zoning.  Does it matter?  Some year ago, Bernard Siegan argued that it does not.  He compared Dallas (with conventional zoning) to Houston, attempting a kind of "twins" study and found few appreciable differences.

Where there is no conventional zoning, there is still an understandable demand for property rules.  Developers find ways to supply them.  Where there is zoning, it is often shaped by development pressures.  

I have not seen the Siegan comparison revisited, but Wendell Cox has been the keeper of urbanized area (UZA) population data from 1950-2000, so I looked there.  To be sure, UZAs are bigger than cities, but they are functional (not political) boundaries that are adjusted every ten years (2010 data not yet available).  And in each case, there are UZA jurisdictions beyond the core city; in 2000, the city of Houston was 51% of the UZA, for Dallas it was 29%.

In the attached, I looked at just the UZAs with more than 3-million pop in 2000.  The data include square miles, so population densities can be studied.  I have blogged many times that large-area densities are averages that include large variances so am always concerned when inferences are made about small-area attributes such as ease of mingling and networking.  But that is not the point of this post.

In the spreadsheet, look at the five Sunbelt UZAs with a 2000 population above 3-million, the relevant comparison group for Houston and Dallas. It appears that (1) Dallas and Houston have more in common with each other than with the other Sunbelt UZAs; (2) Dallas was more dense in 1950, but has ever since been less dense (more "sprawling"?) than Houston; (3) their density differences have gotten smaller; (4) in 2000 they had about the SAME density.  2946 pop/sq-mi vs 2951 pop/sq-mi are well within any margin of measurement error.

Monday, December 12, 2011


Many people have seen Niall Ferguson's "Six Killer Apps of Prosperity" talk at the TED blog site.  I greatly enjoyed his book Civilization: The West and the Rest, which elaborates.  It's a great topic and many people, inlcuding Joyce Appleby, Gregory Clark, Hernando deSoto, Francis Fukuyama, Deepak LalDavid Landes, and Deirdre McCloskey (and many others) have had their say. 
One of Ferguson's Killer Apps is "Consumption".  He starts with clothing.  The industrial revolution made cotton garments cheaper and more affordable for large numbers of people around the world.  The author points us to the 1909 photo collection by Albert Kahn showing the variety of garb worn in 50 countries around the world and noting that this variety was soon to end as more and more people could afford what they really wanted, Western dress. The invention of the Singer sewing machine speeded it all up.

It's then a hop-skip-and-jump to blue jeans which the communists could never get right and by which Ferguson highlights that system's great weakness:  it could not meet consumer demand.  Sputniks, yes; levis, no. In fact, jeans were officialy scorned, but that did not help.  When James Dean, John Wayne, Marilyn Monroe and others acted and appeared in jeans it was really all over for party-line efforts to villify them.

Ferguson has many stories like this.  Historians will surely challenge some of them, but I found the book fascinating.


Mario Rizzo posts this amazing Venn diagram showing the overlap between the Federal government and Goldman Sachs.  No comment necessary.

Saturday, December 10, 2011

Laugh or cry? has fun with LA's rail transit.  "17 miles in just 78 minutes."  If it is laugh or cry, laughing is better. Today's LA Times refers to LA MTA's problems with federal auditors.

David Levinson has a bunch of links and commentators chiming in on the question of whether transportation in the U.S. is "overpriced".  In quotes because it's a tricky question.  It evokes some kind of cost-plus accounting.  But that relies on accounting assumptions, including how to allocate sunk costs and what residuals or subsidies we can or should assume.  But are costs incurred too high?  How could they not be in the land of politics, regulations, subsidies and monopolies?

Are consumer electronics "overpriced"?  It's a silly question because steeply declining prices along with amazing quality improvements have been breathtaking.  Competition and minimal regulation are the source of the magic. 

We seemingly have one foot in that world and the other foot in the world that the clip visits.  What a life.

Thursday, December 08, 2011

Love or money?

The sports news in LA today is that the Angels have signed Albert Pujols for a reported $331 million. 

The Dodgers, on the other hand, have been in the news because the team is for sale.  Former owners Frank and Jamie McCourt seemingly made a hash of running the team and developed their own domestic problems along the way.  So the team (including parts thereof, including telecast rights) is on the market. 

Times columnist Carl Erskine likes the Green Bay Packers model and suggests that the Dodgers become community owned as a non-profit with stocholders who are OK with no prospect of dvidends or stock appreciation ("Best owner for the Dodgers would be you and me").  The Green Bay team is even able to sell new meaningless shares.  Erskine ends his column this way:
So, while fat cats circle our beloved Dodgers here on the coast, back in the heartland, shares of Packers stock are doing fly patterns off the shelves. It's as if the front office is printing its own currency, for the shares offer no dividend or appreciation, really nothing much more than bragging rights.
Love or money?  Many people like love.  But would there ever be enough love in LA to pay Pujols-scale money?  I was ready to dismiss Erskine's idea as pretty silly -- until I recalled that the Dodgers have an additional fan base 3,000 miles away in Brooklyn, New York.  There might be enough love in LA if it were complemented by Brooklyn love.  In fact, the whole might be greater than the sum of the parts.  Love is like that.

Tuesday, December 06, 2011

Business as usual in California

Here is California Governor Jerry Brown proposing to put a tax hike (mainly on "the rich") on the California ballot.  Here is the California high-speed rail authority admitting that HSR will cost $98.5 billion (for starters and a couple hundred percent over their previous estimate).  And here is the same Gov. Brown endorsing the project.  These three events are apparently not inconsistent. 

I expect that some have even convinced themselves that this is all "good policy"; they may also have concluded it is good politics -- and they may have scrambled the two.  Costs are "benefits" because politicians want to be seen "creating jobs".  If there is a green spin, all the better.  Construction and union and environmental interests hold hands.  (The first two have solid self-serving interests in HSR, but environmentalists who believe that HSR will be good for the environment are amazingly deluded.)

This is all old stuff.  But chickens have now come home to roost in Europe.  I had thought (silly me) that the message would be seen here too, but we are seemingly not there yet.  Our politicians still cannot say "no". 

There are street riots on Athens, S & P downgrade threats, and we have all seen news clips of the Italian Labor Minister Elsa Fornero breaking down in tears.  But in California it is business as usual.


Mark Perry suggests an alternative to Amtrak, perhaps even HSR.

Monday, December 05, 2011

Creative destruction

My previous two posts involve a contradiction. In Friday's I noted some sensible policy reforms elaborated in Alex Tabarrok's new book.  But are the policy makers we read about each day the ones to implement such reforms?  In the post just before Friday's I described a policy catch-22 because politics as we know it is anathema to the creative destruction that is essential to a dynamic economy.

In full gotcha mode, yesterday's LA Times has this above the front-page fold: "Romney's focus wasn't on jobs then ... At the private equity firm he headed, the priority was creating wealth ..."  Everyone likes job creation.  Most Democrats tout public spending as the means.  Republicans are trapped and counter that entrepreneurs create jobs.  True enough.  But that is never their mission.  The mission is wealth creation, but you cannot say so because reporters such as at the LA Times (and many others) are on the case.  Job creation plays to the crowd as creative destruction cannot.

What to do?  James Buchanan famously suggested various amendements to the U.S. Constitution.  But how likely are these to get a hearing?  The only amendment proposals that do get a hearing once in a while involve some version of a balanced budget amendment.  Warts and all, is that the best we can get?  Is half a loaf better than none?  I wonder. 

Friday, December 02, 2011

Smart policies

Life is good.  It took me about a minute to download Alex Tabarrok's Launching the Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast to my Kindle. The cost of the eBook is just $2.99.  It is short and easy to read.  And it is full of good ideas. 

Alex explains how and why we can and should reform our attitudes and policies regarding patents, prizes, education, global markets and cosmopolitanism. Just when we worry about the duration of the Great Stagnation and (even worse) listen to the many gasbags in high office who claim they know what to do about it, Alex's ideas are especially refreshing.

Alex introduced me to this thought some years ago:  "Many economists are theoretical empirics; they make empirical statements on the basis of theory." Sure. There are models that suggest that without monopoly protections, the incentives to innovate will not be adequate.  Patents law is necessary. Case closed. 

Trouble is that the evidence for this claim is remarkably thin.  Tabarrok points to the high costs of imitation; most patent protections are unnecessary. The high costs of monopoly privilege include plenty of rent seeking (many lawyers and lobbyists) and the whole thing is mostly unnecessary. 

There are many other worthy insights. Read the book, spread the word. 

Tuesday, November 29, 2011

Fix labor markets first

Here are Cowen-Brynjolfsson (each evoking arguments in their recent books) debating whether technological change as we are now experiencing it is grounds for economic optimism or pessimism.  Cowen admits that we have some great new tech toys but one of his concerns (about 3.5 minutes into his opening statement) is that the associated new jobs are very few. In this New Yorker (gated) piece on Peter Thiel, he also complains that the information age has not created enough jobs.

The job creation rhetoric preoccupies politicians of both political parties. Trade agreements are always discussed in terms of jobs created, never in terms of lower product prices.  We live to work; not the other way around. But Randall Holcombe reminds us that this is backwards.  Labor is a cost; its product is the benefit.  "We need to drop the job creation rhetoric, because mistakenly characterizes a cost as a benefit. If someone tries to convince me that a solar energy project will add value to the economy, at least the argument is reasonable. If someone tries to convince me a project should be initiated because it will create jobs, the argument that this is a benefit is just plain wrong."

The most pithy phrase in econmics is Joseph Schumpeter's "creative destruction."  It goes to the heart of what occurs in a dynamic economy but it is near impossible for a politician to champion.  Production involves income opportunities as well as product.  But it is the income opportunities that people pay attention to.  OWS demonstrators and many others long for the post-WW II years and the idea of well paying and steady jobs.  The GM bailout was a bow in that direction.

It seems that, more then ever, labor markets are a weak link that requires attention. What do we know?  First, labor markets do not easily clear but politically popular policies (raising minimum wages, extending unemployment insurance) only make that situation even worse (Richard Epstein makes that case).  Second, education must keep up with technology.  Our educational system(s) are not up to the job.  Politicians see "monopoly" where it is not (prosecutions of IBM, Microsoft, Google, etc.), but are blind to innovation by these groups.  But the same powers that be also defend teacher's unions, monopolies that do get in the way of innovation and choice.

Finally, here is an interesting labor market innovation prompted by another set of bad policies (H/T Marginal Revolution).


I have not yet Alex Tabarrok's new book, but it sounds like a winner.

Monday, November 28, 2011

Wishful thinking

Here is Chris Leinberger opinining on little evidence over the "Death of the Fringe Suburbs" in the NY Times.  He also offers a novel explanation for the economic downturn:  "It was predominantly the collapse of the car-dependent suburban fringe that caused the mortgage collapse."

But here are the last decade's fastest growing counties in terms of housing.  Granted some of the new houses are empty.  But here are data for population.  Most of these counties are the fringe suburbs. 

And I had previously cited Wendell Cox's report of census population data for 2010 which show continuing suburbanization.

Arguing from data beats arguing from wishful thinking.


Data from Joel Kotkin

Saturday, November 26, 2011

OWS do not get it

The OWS people do not get it.  Their problem (everyone's problem) is with crony capitalism.   The bad guys of Wall Street owe their survival to their friends in Washington.  Fred Siegel makes this point in this morning's WSJ.

Confusions like this (over Good Capitalism, Bad Capitalism and the economics of growth and prosperity) were nicely sorted out by William Baumol, Robert Litan and Carl Schramm.  But the ignorance of the crowd reverts to a sort of zero-sum stale Marxism.

What do China and the U.S. have in common?  Each is mired in their own crony capitalism.  Today's WSJ also has a piece on the "princelings" of China, the Children of the Revolution.

This Ngram shows that the term "crony capitalism" did not take off until the second Clinton term and peaked in the early Bush years.  Ngram only goes to 2008 so we do not yet know whether there has been a comeback in the Obama years.  I'll bet there has.


Dear Left ...

Thursday, November 24, 2011

Regulate Marijuana Like Wine

Here are news of the latest marijuana crackdown.  America's marijuana laws are stupid.  But repeal efforts have had little success.  All the more reason to appreciate a current California effort which sensibly suggests that the State should Regulate Marijuana Like Wine.  The petition can be signed on-line.

Media coverage usually includes interviews with the spaciest pot-head the reporter can find.  So I have two requests .  If you live in California, please sign the petition.  And if an advocate, please do not speak to news people when on a marijuana high -- at least while the RMLW campaign is alive.

Happy Thanksgiving.

Tuesday, November 22, 2011

Where talent goes

Here are county-to-county IRS migration data as represented on interactive maps via Forbes.

As readers of this page know, I worry about large-county (or large-area) aggregates.  The variances for most measures are much too big.

USC's Cheng-yi Lin has fun playing with PUMS migration data.  These areas are much smaller and their population density readings more useful.

Consider the top receiving (PUMS areas) PUMAs for MA+ (advanced degree) movers.  They ended up in dense districts of Manhattan as well as in much less dense districts of Silicon Valley. In 2009, the #1 receiving PUMA for MA+ people (with MA degrees or higher; 12,537 arrivals) was in Manhattan with a population density of 44,799 residents per sq km. But the #2 receving area was in Silicon Valley (11,912 arrivals) at a place with a population density of 773 residents per sq km.

The density ratio of #1 vs #2 was a factor of 58 times.

For the top-50 receiving PUMAs, the average population density was 5877 per sq km, but the standard deviation was 8875; the coefficient of variation for population densities of the top fifty PUMAs was 1.51.


Witold Rybzcynski notes that metro area densities can denote many things, including suburbs where people meet and trade ideas.

Sunday, November 20, 2011


The NY Times' Charles Blow discussed Pew Global Attitudes survey results and noted the apparent "Decline of American Exceptionalism."

I am wary of surveys like this and leary of inevitable framing effects. Daniel Kahneman drives this home.  His amazing Thinking Fast and Slow clarifies these and many related problems as we try (try) to learn and think.

But aside from all that, we expect some cultural chauvinism everywhere. We also hope that there is some increase in cosmopolitanism.

If we are going to rank/compare cultures, how about whether or not they have incorporated Enlightenment values?  In fact, when Steven Pinker looks for explanations for declining violence, Enlightenment values is one of his favorites.

But whereas Blow highlights global similarities (47% of Germans think their culture is "superior", but 49% of Americans do), I noted some of the key survey differences.  Asked whether "Freedom to pursue life's goals without state interference" is more important than "State guarantees nobody is in need", only the Americans were the only ones who weighed in more heavily for the former.  Asked whether "Success in life is determined by forces outside our control," Americans showed the highest levels of disagreement. 

We do not have to call it "exceptionalism", but it is exceptional.

Friday, November 18, 2011

More than cuckoo clocks

Anyone who has seen The Third Man recalls Orson Wells' remark that, "In Italy for thirty years under the Borgias they had warfare. terror, murder, bloodshed -- they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love, five hundred years of democracy, and peace, and what did they produce? The cuckoo clock."  Not the best history, but suggestive of some of the continent's riddles. 

The Euro and the Euro-zone were supposed to end the rivalries that had led to the most awful wars and conflicts.  But it's unraveling.  Here is David Brooks slamming the Brussels bureaucrats.  Here is Nigel Farage doing the same (H/T Walter Grinder).

Make trade, not war, is a great idea.  But can they make trade without a Euro and a Euro-zone?  I think they can.  Doing it with a Euro and a Euro-zone gives us the sort of poaching we are now witnessing.  Politicians who could not say "no", are looking for bailouts from those who ran a tighter ship.  The public choice model wins again. 

The Swiss, of course, did much more than produce cuckoo clocks.  They avoided horrific wars and they also sidestepped the Euro.

Wednesday, November 16, 2011

Hold them to a higher standard

Holman Jenkins has a different take on Congress's insiders engaged in insider trading ("Congress's Insider-Trading Non-Scandal").  He writes that, "There are few ways in which a congressman can be more innocently employed than in day trading."  But, on the whole, "... congressmen underperform the market for all the same reasons that most active traders do.  They buy high, sell low and waste money on trading commissions." 

Points granted.  They are all just people, like the rest of us.  But they are the ones who suggest that they go by a higher standard ("public servants").  They are the ones who are zealous about regulating all of the (other) "greedy" people out there.  They are the ones who have the power to tax, subpeona, prosecute, regulate, etc.  They are the ones who are always ready and eager to exempt themselves form the laws and regulations they impose on others.

I agree with Jenkins that "insider trading" is a complex idea and there are always over-zealous prosecutions (e.g., Martha Stewart).  But I worry about under-zealous (probably no such word) when it comes to the folks who are special in the four ways I just mentioned.

Monday, November 14, 2011

Dated opera

60 Minutes presented an interesting expose of insider trading by members of Congress.  The implicated (of both parties) did their usual dance.  I thought that Pelosi's answers were amazingly disingenuous -- even for her.  But here she is sticking to her story.  No problem making money on an IPO fed to her and others in powerful positions -- because she has been relentless in her pursuit of "credit card reform." !!!

And there you have it. She profits financially as an insider while she profits politically by posing as a "reformer."  And getting away with it. 

This is what I do not get about the OWS people and their friends.  Private sector people accused of insider trading are proscecuted (there is often a perp walk for TV) and many do serious penitentiary time.  But the OWS people seemingly live in a 19th century opera, the one populated by fat robber barons wearing top hats, riding in limos that splash water on the socialist news boy as they speed by.  There are no Pelosis in that cartoon.


I found this at Carpe Diem.


Richard Green points to a source which says that elected officials are not immune to insider trading prosecution.  One awaits action from the Department of Justice.

Saturday, November 12, 2011

What if ...?

"What if Rest of World Had as Many Cars as U.S.?"  "What if..." questions like this pop up all the time. The implication is that the result would "unsustainable."  Another is that growth is a problem.  These are Luddite conversations.  They are also misleading for the simple reason that if all of those people could afford all those cars, they would have to be much more productive than they are now.  The world would be a very different place and the intended implication of the question does not follow.

Julian Simon was right and all of the doomsday foreacasts have been wrong.  These observations are not a basis for smugness, but they are a good counter to the "what if?" questions.  The Doomsday Myth recounts 10,000 years of these.  The book is a few years old, but it has held up and probably will for a while.

Friday, November 11, 2011

Good and bad preening

David Brooks writes about the many kinds of inequality -- and about the interesting fact that some are more acceptable/fashionable than others.  It's OK to flaunt your academic credentials but not the resulting income or wealth unless they are spent in politically acceptable/correct ways.

There are also health inequalities, longevity inequalities, contentment inequalities and many others.  Brooks offers a longer list.  There is good preening and bad preening. Robin Hanson notes that there is a battle for accepteable vs unacceptable status displays with winners and losers.

Of course.  Have you ever wondered why and how wealthy entertainers have the gall to show up at OWC events and get away with it?  Have you ever wondered how wealth-bashing leftist politicians have the chutzpah to hang out with rich Hollywood celebs?

But the status biz is tricky.  Vogue had to do a PR dance re it's breathless coverage of Syria's First Lady when it became clear that her other half was just another murderous tyrant.   And who can forget all the fun Tom Wolfe had with the NYC radical chic?

Thursday, November 10, 2011


Malcolm Gladwell writes about Steve Jobs as "The Tweaker" in this week's New Yorker.  Gladwell takes off from a recent paper by Meisenzahl and Mokyr who write about the industrial revolution in Great Britain.  M&M show that the scientists, the engineers and the highly talented craftspeople happened to all be on hand in abundance.  All of them were required to make it all happen, not just the well known visionaries and their macro-inventions.

My "shop" classes in high school are some of my favorite memories, even though I was never destined to be any good at these crafts.  My fear is that we no longer have enough "shop" or enough apprenticeship opportunities.

Gladwell's point is that Steve Jobs' success is explained by the fact that he was as an obsessive tweaker.

But there is some of the tweaker in all of us.  I can tweak text and powerpoints all night long.  We all adopt different stopping rules.  In theory, we set marginal this to marginal that -- and find the best stopping point.  But it is really the expected marginal costs and benefits of further work (or search).  These involve forecasts.

So it is not a question of who is the most obessive tweaker.  Rather, it is about who forecasts best re what the extra hour of tweaking will get us vs. what it will cost us.

Tuesday, November 08, 2011

Creative cities

The way that market participants create complex supply chains should amaze us.  Paul Romer famously noted (in Daedalus, 1994, not available online) that:
There have been 10**18 seconds since the Big Bang, and there are 10*88 particles in the known universe. Those are very large numbers … but they are dwarfed by the number of ways that things or ideas can be combined. Even something as simple as a deck of cards can be arranged in unimaginably numerous ways. There are 10**68 possible card decks, which means that any order you happen to shuffle has probably never appeared before.
I had prevsiously mentioned the Handbook of Creative Cities, David Emanuel Andersson, Ake E. Andersson and Charlotta Mellander, (AAM) eds.  Sandy Ikeda and I have a chapter in the collection, but I want to call attention to how the discussion made me go to Romer's story. 

The volume includes 26 chapters that elaborate on Richard Florida's work on creative cities and creative people.  I learned that Ake Andersson had written about the penomenon as early as 1985 in Swedish.  But Florida is the one who has made a splash. 

Many urban planners were inspired by Florida's work and concluded that planning for creative cities or districts is part of their repsonsibility.  But Randall Holcombe in Ch. 19 of AAM tells quite another story.  He argues (successfully, in my view) that "The idea of planning a creative city misses the whole concept of creativity" (p. 403).

Go back to combinatorics and complexity. Imagine a medium-sized city with one million population.  There would be about 250,000 parcels and (allowing for density options) at least 15 possible land uses (5 possible uses, each at a high or medium or low density).  That's 2.5**20 possible land use patterns. I doubt that the single global optimum is computable.  But cities survive by competing successfully.  Stick them with land use patterns that get in the way of productivity and the city loses.  It loses labor and capital as well as creative, entrepreneurial people. 

Sunday, November 06, 2011


Roger Backhouse and Bradley Bateman comment on the state of economics in today's NY Times.   While their piece has merit, the authors tie the recent economic troubles to "unfettered capitalism."  Really?  Crony capitalism, yes.  Unfettered, no way.

The Federal Register was up to 82,590 pages in 2010.  It had dipped to 74,408 pages in 2007, down from 83,294 in 2000; but it only had 14,479 pages in 1960. I know these are crude measures, but where do we find "unfettered"?

And in our federal system, there are many state and local governments that also do some regulating.  In terms of share of GDP (table), if the federal share hovers around 20 percent, adding state and local pushes government share up to about 35 percent. 

The NY Times Magazine includes Adam Davidson's "Can Anyone Really Create Jobs? The answer is no. And that goes for the presidential candidates too".  Most of the piece is useful because the idea that politicians can somehow "create jobs" is now standard political jargon.  They can surely add bulk to the Federal Register, but that's another story.


Today's WSJ lists some recent U.S. industrial policy corporate welfare.

Friday, November 04, 2011

Half-full? Half empty?

Ed Glaeser writes that the best we can do for our cities (and the economy) is to Unleash the Entrpreneurs.  No doubt.  He wants to end to job-killing policies and cites some specifics.  He notes that:
In general, we should never use public dollars to bribe people to remain in dead-end jobs. We should place far less emphasis on the industries of the past and more on those of the future. Federal policies that bail out auto companies and subsidize agriculture aren’t merely expensive; they also encourage people to stay in declining industries rather than strike out on their own.
But the people we elect to office have a natural interest in preserving what is.  Existing industries have an easier time getting out the vote than potential industries that might be. 

"Progressive" journalists and bloggers argue that we should listen to the OWS "protesters".  But on the occasions that these folks say something comprehensible, it sounds more anchored to nostalgia for an imagined past than anything else.  Would they really enjoy living in those days?  Without an internet?  Without their iPads and similar toys?  Without cheap airplane rides?  One can make a very long list.

Tom Sowell is characteristically blunt in assessing what he sees in the demonstrations.   I am still looking for one or two of them to carry a banner that says "Unleash the Entrepreneurs."

Here is today's LA Times editorial re the tripling of the cost of California's high-speed rail.  "It's still a gamble worth taking".  This is not the dumbest thing they have ever written, but it is a contender.

I begin each day trying to be Ed Glaeser-optimistic rather than Tom Sowell-pessimistic.  But then I find pieces like this. 

Wednesday, November 02, 2011

So simple, even kids can do it

Trick-or-treaters understand that exchange augments material wealth -- even when nothing new is being produced. Stuff ends up where it is most valued. (It gets even better when there is production by specialists.) This NPR report indicates that 11-year olds readily traded Snickers for Smarties. (H/T The Browser) As fas as I could tell, no econ 101 textbooks or professors were involved.
Will these trick-or-treaters forget if/when they become politicians or lobbyists or talking heads? Yes, they will. Tyler Cowen has noted several times at his blog that public choice economics is one of the most underrated/ignored fields. Of course. Can we think of any other approach that has as much to say about the everyday politics, whether national, state or local -- or international, that we see or hear about?
Lisa Schweitzer worries about the $98 billion tab that even the advocates now attach to California high-speed rail. How much support will the new math cost them? Not much. I put my money on the predictions of public choice economics.

Monday, October 31, 2011

Cities and information networks

Ryan Avent and Russ Roberts discuss Ryan's The Gated City in this week's EconTalk podcast.  They touch on many interesting topics, including the role of "density" and urban amenities.  They also discuss the urban productivity costs of tough land use controls. I posted my usual reservations with respect to large-area density averages at the comments section of their blog.

We expect density to be a proxy measure for the information networks we are able to form in cities.  Cities were always a good way to economize on moving goods and people.  They are now also a good way to economize on information exchange.  The "aha!" moments that we crave can occur when we combine ideas in new ways from our own heads, but it is much better when we can tap into the heads of others -- nearby and not.  But, while it is natural to look for ways that modern communications substitute to the traditional, they may also be complements.  We use the internet.  And many of us settle on a mix of commuting and telecommuting.  And we get on airplanes to attend meetings the old-fashioned way.  We choose and maintain a complex mix of information networks (in light of prices and opportunities), but asking "density" to explain all of this is asking a lot.

The internet has not made "cities" less important.  But the benefits are now available over a larger space.  Cities and their substantial suburban hinterlands are where we set up the complex networking opportunities that work best for each of us.

Saturday, October 29, 2011

Negative bang for big bucks

The U.S. Department of Transportation reported that there were 345 high-occupancy vehicle projects in the U.S. in 2008.  Estimates are that these add up to 2,500-3,000 lane-miles. What do these things cost?  This source provides a range of $7.3-$15.4 million per mile. 

There is more to it.  I live near and survived carmageddon, but while the Interstate 405 in West Los Angeles is open, the 10-mile HOV-lane add-on construction will go on for years.  This creates all sorts of neighborhood traffic bottlenecks due to barriers around the construction site.

HOV-lanes were supposed to encourage commuting by carpool.  But first-to-the-data Wendell Cox reports here that the 2010 Census found that 9.4 percent of commuters in the 51 largest metropolitan areas carpooled, but 11.8 percent did so in 2000.  In other words, there has been a 20 percent decline.  Cost-benefit analysis is amazingly simple when spending more results in declining output.  (Yes, the rebuttal now fashionable is that, "but if we had spent more ...")

With Richard Epstein, you get quality as well as quantity.  He is amazingly clear and puts quite a few words, sentences, ideas into this eight-minute PBS NewHour interview. (H/T Carpe Diem)

Note what he says towards the end re infrastructure projects now and  50-years ago.  It was not always as crazy as today.  Is it that Bootleggers and Baptists was never this potent?  If so, is there any way out?  Can we have Richard Epstein for President? 

Thursday, October 27, 2011


Among the 2010 census results that received a lot of attention was news of "The Rapid Growth of the Suburban Poor"

But most Americans now live in "the suburbs," which means that just about every group and every phenomenon, including poverty, can be found there.  There is diversity out there.

In fact, it is silly to apply one term and one set of thoughts to so large a place. This is mostly the mind set of people who still worry that "the suburbs" represent an unfortunate and alien aberration.  These folks are not among the best informed.

I did not find it easy to read this essay by Jason Griffiths, but he and his colleague did get out there to have a look.  Here is what they conclude:
Our initial impression of suburbia devolved around an abstracted idea of repetition and serialization — a dehumanized world comprised of a form of nullified architecture. Eight years and thousands of miles later, this view has shifted into a multiplicity of facets describing a place that is far more difficult to define. Our once hermetic view of the supposedly hermetic suburban world has taken on a prismatic new form — and with it a far greater sense of omnipresence.
Not the simplest prose, but I think that they too discovered that it is not so easy to summarize a vast and complex country.  "The cities" would be a poor way to describe urban America and "the countryside" does not do justice to the many faces of rural America. 

Tuesday, October 25, 2011

First things first

My October 12 post made the simple point that, while it is easy to speak up for various infrastructure improvements, no one has told us how to avoid getting into another porkfest.  Exhortations on the "need" for infrasrtucture spending (and possible "stimulus" effects) pop up wherever a Bootleggers and Baptists coalition can possibly be cobbled together.

I stand corrected because my colleague Richard Little has a September 24, 2010 essay in Ken Orski's Innovation NewsBriefs series (apparently gated).  Richard cites the Defense Base and Closure and Realignment Commission  (BRAC) process which was finally agreed to in 2005, which has apparently stood up and which allows for only simple up-or-down votes by Congress.

Reapportionment in California has also been farmed out to a new commission which may finally put an end to the awful practice of having politicians in the State legistlature select their voters.

So logjams can be broken.  My point on Oct 12 was simply that specifics on just how to avoid the pork trap must come first.  Until then, spare us another speech or one more finger-wagging op-ed about the "need" to fix America's infrastructure.

Sunday, October 23, 2011

Breaking the logjam

Alex Tabarrok is unimpressed with the Schumer-Lee buy-a-house-get-a-visitor-visa immigration proposal.  So as not to offend unions and their supporters, the visa does not allow the holder to get a job.

U.S. immigration policy is awful in many ways.  In a better world, labor and capital would be free to seek their best opportunities.  But for the U.S., the demand for labor and capital are clear while the politics continue to be protectionist and mercantilist.  Schumer-Lee seemingly looks for a compromise.

Over at EconLog, the bloggers have discussed various proposals for entrance fees (perhaps paid off over the years that the immigrant works here) that would let more people in and, perhaps, placate protectionist opponents.

I have no idea whether enough political support can be garnered in this way. To break the logjam, perhaps the entrance fee revenues could be earmarked for infrastructure projects, green energy, teachers, police and firefighters, etc.  If the new revenues could be shown to support all of the pet projects of the protectionist left, we might make some progress.   Schumer and Lee might even come on board.

Friday, October 21, 2011

Expose the popular unexamined propositions

When you close (politicize) markets, you have problems.  Cliff Winston, Robert Crandall and Vikram Maheshri recently published First Thing We Do, Let's Deregulate All the Lawyers.  One of the questions they ask is why firms that hire freshly minted lawyers have to spend so much time training them.  In fact, why do state bar exams seemingly require time and money spent on prep -- after the candidate has graduated from law school?

The WSJ recently ran "What's First-Year Lawyer Worth? Not Much, Say a Growing Number of Corporate Clients Who Refuse to Pay."

Credentialing and branding can/will occur if licensing and politics are taken out of the picture.  But this is a hard sell.  The professions will fight to keep their lock on supply when and where they have it.  Many others go along, presuming we would be lost without state sanctioned seals of approval.

Here is the bottom line from Morris Kleiner's "Licensing Occupations: Ensuring Quality by Restricting Competition?" Journal of Economic Perspectives, Autumn, 2000: "From the evidence I was able to gather, there is no overall quality benefit (measured in a number of different ways) of licensing to consumers.  Consequently, the cost of regulation to society is higher prices or longer waits for service.  An additional societal cost is the reallocation of income from consumers to practitioners of the licensed occupation as well as lost output."

Many economists want to make macro-economic forecasts (which are in demand) but are loathe to admit they cannot really pull it off.  They can teach valuable lessons about the popular unexamined propositions used to make band policies.


Here is Russ Roberts interviewing Valerie Ramey re quality of (and the prospects for improved) macro-economic forecasts.

Tuesday, October 18, 2011

Forget about it

We know that the recovery picture is discouraging.  Massive policy interventions have failed and all that we get from advocates is that their policies would have-could have succeeded if only the programs were bigger and better.  Many people did not get the hope-and-change they dreamed about.  They seemingly do not buy the excuses.

Tea Party dissatisfaction is a few years old and has had an effect, as 2010 and assorted off-year elections have demonstrated.   As I had noted a few posts ago, I have no idea how conventional politicians (namely Democrats) will handle the Occupy people.  Part of the problem is that it's hard to figure out who/what they are.  There are fewer than media coverage suggests.

Some are in love with the idea of a second chance at participating in a counterculture.  If they missed the 1960s and 1970s, here is their opportunity.  Others are legitimately frustrated as mentioned in the opening paragraph.  Arnold Kling writes about the Myth of the Median Worker.  Different workers are on very different escalators, some going up and others going down.  Some skills are valued while others not at all.  How does one switch escalators?  It may be harder than ever.

Finally, there are horrible economic misunderstandings re the current recession.  Blame Wall Street?  Blame Washington?  I had mentioned in previous posts that crony capitalism includes both.  It's a tent big enough include Democrats as well as Republicans.  The research will go on for years, but Gretchen Morgenson and Joshua Rosner implicate both.

The Occupiers make themselves feel good by railing against greed.  Do they feel the same about the other six deadly sins, including envy?

Their teachers (in and out of school) should not be left off the hook.  Every human being has the capacity to binge on every one of the deadly sins, but we have had (since at least Adam Smith) a remarkable recognition that competition in markets harnesses one of them (greed) in positive directions.  If and only if we allow competition -- and wall the economy off from crony capitalism.  It is mission that will never get traction if it is not even understood.  I fear that it is not even widely taught.

Do not even mention the Invisible Hand if you do not immediately note that it is all lost when sweetheart deals are possible.  And forget about the charms of "public-private sector cooperation."


And much closer to home than I thought.  Here is the update.


Fred Siegel on crony capitalism.

Sunday, October 16, 2011

Amazing story

I never knew the Henrietta Lacks story or about the HeLa cell line.  But Rebecca Skloot's telling of the story is superb.  Advances in medical science, problems of medical ethics, U.S. race relations history and much more are skillfully combined in this amazing story.

Gene technology is moving to where we cannot know, but it is doing so ever faster.   Ethics, law, and policy will have to keep up.  This is very likely to become a huge challenge.  If anyone wants to start thinking about these difficulties, you can start by reading this book.

Friday, October 14, 2011


I enjoyed this discussion by Bryan Caplan (and the trailing comments) about the (slow) decline of "otherness" in America.  Read them.

Many of us can see it in our own lifetimes. We can also compare the state of "otherness" here and abroad if we have spent enough time outside the U.S.

I have posted many times that I think of residual tribalism as a great evil.  "Otherness" is one of its manifestations.  Modern America may represent the world's most auspicious path out of this atavism.  Americans may pick from Barack Obama and Herman Cain based on perceptions of each candidate's personality and platform.  If so, perceived "otherness" will have become the preoccupation of the inevitable retrogrades.

These continue to exist on the "right" as well as the "left".  What's the difference?  Those on the right are properly scorned for what they are.  But those on the left are celebrated on university campuses everywhere.  "Multiculturalism" is the fancy label attached to the preservation of otherness and tribalism.  To say that they are playing with fire is understatement.  In my view, they are also missing the point.


Yesterday's NY Times included "In Strangers' Glances, Family Tensions Linger".  There is always good news and bad news on this front.  Mixed marriages and cross-race adoptions are up.  The treatment of the individuals involved is also mixed.  The insults include those that are intentional and also the ones that are unintentional, reflecting the inevitable obtuseness of many people.

This film is based on surviving minutes of the Nazis' Wanssee Konferenz, where plans for the death camps were drafted.  Watch it to see what stumped the participants.  What to do with mixed marriage (Jewish and Aryan) couples and families?  We now know the answer.  But the conferees worried over the sons of mixed marriage couples, returning from duty at the front, and seeing the Jewish mother or father was being carted off to be murdered.

Wednesday, October 12, 2011

Essential detail

Joe Nocera is one of many sober voices who points out that now is the time to move on a "sustained infrastructure program."  Yes, many of our roads and highways are a danger as well as an embarrassment.  But I wish that just one of the Smart Set would tell us how to proceed.

Much has been written about how we have wasted infrastructure funds in the past.  Flyvbjerg and his colleagues have told the story in great detail.  Pork spending episodes are almost a staple of the evening news.  Once we agree to a "sustained infrastructure program," what happens next?  The Solyndra way?  Perhaps most offensive in this mess is the inability of so many to take delivery.  ("These things happen." "There are also mistakes by private investors." etc.)

"Studies" that support any project are easily found.  How to do honest and credible assessments?  The Copenhagen Consensus rankings are a nice example.  Until procedures like this are a part of the discussion,  the exhortations are simply political posturing -- and wasting our time and attention.

Sunday, October 09, 2011

Reasons to smile

"Taken by Pirates" in today's NY Times Magazine takes readers where they do not want to go.  No one wants to be abducted, of course, but some behind-the-scenes looks at the hell-holes of Somalia makes the story worth reading.

I am reading Steven Pinker's The Better Angels of Our Nature which is living up to expectations.  It is (so far) just as good as the rave reviews (Peter Singer's is in today's NY Times).  Pinker does great work and he develops my favorite theme:  Life on the planet is slowly (if unevenly) getting better.

It is, of course, a hard sell.  See story on piracy.  See the evening news.  But moral progress may be the most profound theme.  Faith in a better world (here or hereafter) has helped people through the worst of times.  But when smart people like Pinker assemble credible evidence to buttress that faith, then we have reasons to smile.

Friday, October 07, 2011

Today's populists

The WSJ's editorial writers could not pass up "Jobs and Jobs", combining tribute to Steve Jobs with commentary on the state of the economy.  I have been scooped again!

In the age of ubiquitous photography, Flickr, Facebook the images from Occupy Wall Street will remain available.  Social historians will be able to mine these some day.  One protestor held up a simple sign that said "We Need Good Jobs."  Yes, they do.  I see that a $20 minium wage proposal is on the minds of some.  That should do it.

It's pretty clear that people like Steve Jobs created "good jobs" in abundance.  So, how do we get more such activity?  Do any of the "jobs bills" that we are likely to see help or hurt in that direction?  How about the proposed taxes on "the rich"?  I have no idea how qualified the sign-holder is for one of these "good jobs", but the odds are not good.

The same issue of the WSJ headlines "Democrats' Populist Puzzle."   Populist movements are a fact of life.  In 2010, Republicans (for the most part) managed to benefit from their Tea Party populist movement.  Will Democrats have similar good fortune with this latest populist manifestation?  That would be interesting.  I would not mind being a fly on the wall as this one is being batted around.

Wednesday, October 05, 2011

Signs of the times

My Sep 18 post includes my two cents on Solyndra.  Many others have discussed it in much greater depth (see especially various posts by Megan McArdle).  But we have reason to worry that industrial policy is coming back.  The Economist recently cited support from serious academic economists. The New Yorker's James Surowieki chimes in with his Oct 10 column.  His "pro" case is easily rebutted.  (i) Politicians make politicized choices; and (ii) they cannot assemble the detailed and dispersed knowledge that markets gather when ideas and projects are vetted.  He seemingly accepts the first as a possibility, and barely touches the second.

The downside of accelerating change is the way it leaves some people in the dust.  Add hard economic times and you may have a problem.  The confused claims and slogans of the Wall Street protestors and their allies are a depressing sight.  But what about all the others who have come think that industrial policy deserves a new look?  That may be the more dismal development.

Monday, October 03, 2011

What they "know"

Google's Ngram only takes us to 2008.  But in a 2000-2008 plot of envy, lust and greed, they all rise steadily with envy on top, lust second, and greed third (almost flat).

This may be surprising.  Some of the popular discussions (and "news") that we hear the most about have to do with distributions of income and wealth (although the two are often confused).  These discussions can be painful to listen to for many reasons.  They are emotional/political.  The key variables are very hard to measure.  There is disagreement on what to measure.  The terms are vague ("fairness", "equity", "justice", etc.) and mostly used for rhetorical effect.  Comparing "snapshot" distributions (over time or between places) is easiest, but wrong and misleading because people move (up as well as down, in and out). 

Many of these problems are taken up in this Russ Roberts discussion with Bruce Meyer.  It turns out that if the many data difficulties are actually addressed, the increasing inequality conclusion (which almost everyone "knows" to be true) may not hold at all.  The "declining middle class" idea also may be wrong.

Will Rogers was right.  It's not what people don't know.  It's all the things they "know" that are wrong.


Tom Heller emails me that it was Artemus Ward, not Will Rogers, who I should cite.  Thanks, Tom.   Mark Twain also expressed similar sentiments.

Saturday, October 01, 2011

Iconic image

Iconic images can change the world, often for the better.  Rosa Parks is a clear example.  A seemingly dignified woman claiming a simple right and not just humiliated, but also jailed by Montgomery, Alabama, cops in 1955, made a huge difference.

Today's WSJ includes "The Latest Crime Wave: Sending Your Child to a Better School" with a large photo of Kelley Williams-Bolar, handcuffed and led away by cops.  This mom registered her kids at her father's address so that they could attend a better school.  She spent nine days in jail and was convicted of two felony counts -- later to be granted clemency with charges reduced by Ohio Gov. John Kasich.

We can hope that the photo of Ms. Williams-Bolar will also help change the world.

Our Smart Set identifies "good" as well as "bad" monopolies.  Everyone in tech, large and small, innovates.  But the Googles, Microsofts, IBMs, etc. have been or will be put through costly legal battles because they are seen as "too big". 

But teachers unions are protected even though they are the guardians of monopoly education for poor families.  That puts and keeps the poorest kids in the worst schools.

This could not be made any clearer than by the photo of Ms. Williams-Bolar in cuffs.  Rosa Parks helped to change the world and we can hope that Kelley Williams-Bolar does the same.

Thursday, September 29, 2011

Free markets and free institutions are compassionate

In its "Notable and Quotable" today's WSJ compares the George H.W. Bush and Ronald Reagan responses to an April 28, 1980, debate question about immigration.  The editors are seemingly pointing to this part of Reagan's answer:
"Rather than talking about putting up a fence, why don't we work out some recognition of our mutual problems? Make it possible for them to come here legally with a work permit -- and then while they're working and earning here, they pay taxes here.  And when they want to go back, they can go back.  And open the border both ways by understanding their problems."
What do we know?  Reagan won.  Sad to say, he did not make much progress on this part of his stance.

Bleeding Heart Libertarians takes up the simple idea that free and open markets and institutions can be quite "compassionate".  I put the word in quotes because its free and easy use has become a rhetorical device and a conversation stopper.

Steven Landsburg recently took up this problem in his review of the Q and A between Wolf Blitzer and Ron Paul, re a hypothetical about turning an uninsured heart attack victim away at an emergency clinic.   Landsburg points out that the reflexive compassionate choice is the easy one.  In a world of scarcity, much deeper questions are involved.

Libertarians and free market types have something to contribute here.  But very few political candidates even try to make this case.  Reagan apparently tried and still managed to get elected.  If more tried, these ideas might even make some progress.

Tuesday, September 27, 2011

Good news?

USA Today reports "Bad traffic congestion can be a good sign for jobs". 

We know that there is brisk demand for economic indicators.  Warren Buffett likes rail freight carriers.

The cited Texas Transportation Institute report (co-sponsored by the American Road & Transport Assoc.) notes the rebound in the Washington DC area.  One can never be sure that this is a good thing for the rest of us.  What do these guys produce?  Granted that some rule-making and rules-enforcement is too the good, I worry about the sons and daughter of Solyndra scurrying around the capital and accounting for the extra traffic delays that USA Today conjectures is an upbeat sign.

No public program has ever been "overfunded", but most of them are always "underfunded."  Can it be that they misuse the resources they have?  Clifford Winston makes the case that for transportation this is exactly the problem.

Sunday, September 25, 2011


I have lived in LA most of my life and have driven to be near the Hollywood (formerly Hollywoodland, to advertise a local real estate development) sign twice, each time when out-of-town visitors asked to go there.  It was never simple (it is not an officially designated monument) and there are fences (depending on the approach).  But GPS has changed the ballgame.  Today's NY Times tells that story ("Stalking the Biggest Star in Hollywood: Its Sign").

Conflicting property rights always makes a good story (if you are not personally involved).  This is where people form opinions and alliances.  It is also where lawmakers and even judges eventually step in.  And even then, there are typically no happy endings.

The Times story mentions one historian who compares the sign to the Eiffel Tower.  My recollection of Y2K events on TV  brings this up.  Coverage followed the advance of the new millenium across the planet.  We got to see some of the celebrations in Sydney, Paris, London, New York -- all of which are easily photogenic.  As the Earth rotated, Y2K came to LA and I started to wonder which will be the photogenic LA icon? 

By this time, the Y2K novelty was receding.  The TV cameras revealed then-Mayor Richard Reardon and some of the local pols standing around the Hollywood sign.  Poor Reardon read the obligatory awkward statement.  Then the cameras went to a line-dancing event at a high school gym in nearby Burbank.

Places like LA and Burbank compete on their own terms. The Grand Manner city planning tradition (Kostof) has come and gone.  If we forget this, we get embarrasing TV coverage as on Y2K.  We also get another tourists-vs-residents conflict as now seen in the Hollywood hills.

Thursday, September 22, 2011

The wise and the Wise

Here is my wise USC colleague Lisa Schweitzer describing her unhappiness with the latest public transit news.  And here is my wise friend Wendell Cox describing continued suburbanization in the U.S.  Both trends were supposed to have turned around in (pick your date, author or source). 

A propos, below is "A Parable" about Wise Elders (this time capitalized), as told by the wise Paul Heyne:
Once upon a time the Wise Leaders of an unnamed country came to the conclusion the experience of watching movies in the theater was essential to the flourishing of the human spirit, and that consequently people should never be denied the opportunity to attend a movie simply because they could not afford it. So the government took over ownership of all the movie theaters and began admitting people free of charge.

Then a quite unexpected thing happened. Going to the movies became a horrible experience. First of all, you had to stand in line every time you wanted to go. Then when you got in you couldn’t find two seats together—unless you had queued up an hour early. And when the movie started you couldn’t hear. People were talking, running around, engaging in all sorts of horseplay. Every movie was full of kids, most of whom seemed to have more interest in socializing than in watching the film. And many of the kids were very little. Troops of small children regularly filed into movie theaters led by someone who looked like a baby sitter. And they usually wound up creating a terrible din. But it wasn’t only the kids. Adults, too, seemed to spend more time going out for pop and popcorn than sitting in their seats. And when they did finally settle down, it was worse than when they were running in and out, because so many of them chattered incessantly. It was as if most of the people who now came to movies weren’t particularly interested in movies, and consequently made movies a horrible experience for those who really did care about them and wanted to see and heart and enjoy the experience that had once been rightly deemed essential to the flourishing of the human spirit. The spirit was no longer flourishing. People regularly got into fights at the movies, and some people, it is believed, started coming to the movies just to watch the fights and cheer them on.

And so the Wise Elders gathered in council to deal with the crisis of congestion in the movies theaters. They debated two alternatives. One proposal called for building more movie theaters to accommodate all the people who now wanted to go to the movies. The other proposal called for subsidies to improve the quality of television programming, in the hope that this would draw enough people out of the theaters to ease congestion. Given the fact that movies were essential to the flourishing of the human spirit, and that people should consequently not be denied admission because of mere inability to pay, there seemed to be no other options. And so the Wise Elders debated long and fiercely: Should they build more theaters? Should they improve the quality of television? Or should they do some of both?”

Wednesday, September 21, 2011

Images and impossibilities

Politicians on the campaign trail fish around for "the right" image and this is a much bigger deal in the age of TV than ever.  I broached this in a blog last Thurs (Sep 15) because I was always stumped by how and why the Richard Nixon image worked with voters.

Today's  WSJ includes "Candidates Figure What Voters Need From Them Is a Good Dressing Down ... Hopefuls Embrace 'Campaign Casual' And Roll Up Their Sleeves Only So Far."  It's a fun read and an update on how the image-thing is going these days.  Will Mitt Romney wear the Gap skinny jeans his wife bought when he's next on the campaign trail?

Would James Madison be surprised? I do not know.  I imagine Kenneth Arrow is not surprised.  He did win a Nobel for proving an Impossibility Theorem.  If different voters have different priorities, it is difficult to cobble together a platform that satisfies a majority -- very roughly speaking.

The candidates understand well the difficulties of cobbling together a winning coalition.  We often cite any "charisma".  Charismatic people get way with murder (so to speak) because we relax our due diligence when they walk into the room.  One can more easily cobble together a winning coalition if one can get away with telling different groups what they want to hear, even when there are inconsistencies between the story one tells group A and the version one tells group B.

Get the image right.  (Figure out just how far to roll up sleeves, if a guy.)  Take a shot at charisma.  Blur your stances on issues.  Appeal to group A as well as group B.  Win election.

These guys have read their Ken Arrow.

Sunday, September 18, 2011

Best and brightest

I have now experienced two "best and brightest" Presidential administrations.  JFK's administration prompted David Halberstam to give us that apt phrase, but assassination and myth-making blurred the lesson for most people.  Some people fall in love with the idea that the "best and the brightest" are in office and "run the country."  Falling in love has some well known risks.

The second "best and brightest" episode is the one that began sometime in 2008.  The second episode also included many voters falling in love with the candidate. 

There is not much left to say about Solyndra.  Industrial policy has the twin Achilles' heels (either one would be bad enough) of inevitable politicization and ignoring the knowledge problem.  Knowledge is much too dispersed for top-down wisdom to replace market vetting.  But "green jobs" and "stimulus" were just too much temptation.   Paul Gregory summarizes all of this very clearly. 

There is every reason to believe that the Bushies would have gone forward with the Solyndra deal (or others like it) but they would never have been as slick or effective in their staging and presentation as the news conference now being played by all the TV news shows of Obama's 2010 unveiling speech at the Solyndra facility.

So what is there left to say?  We can be surprised that people are surpised by the whole episode.  And we can be disappointed that the lesson that many choose to take from the episode is that it was just a matter of moving too fast and "inadequate vetting."  I have not yet heard "the law of unintended consequences" being invoked, but that one is always within reach.  


"Ex-Solyndra Employees Now Applying for Trade Adjustment Assistance"  H/T Carpe Diem.

Thursday, September 15, 2011


Governance and politics are vastly complicated and therefore fascinating.  We know that images are all-important, but are nevertheless fascinated when the masks come off.  Today's LA Times includes "Jackie Kennedy, warts and all ... Interviews from 1964 give us a less than flattering but fuller portrayal of the iconic first lady."

I have never understood how the Richard Nixon image (package) worked for as long as it did. Some of the mystery is clarified by David Halberstam in his masterful The Fifties.  I have only limited recall of those days, but Halberstam reminds readers of the weight of fears of Communism in American life and politics, the influence of Joe McCarthy, the Republican effort to regain power, their interest in Eisenhower, their preception that a Nixon could do some things that an Eisenhower could not, etc.  Interestingly, Eisenhower could never really understand Nixon and there is lots of evidence that he disdained his VP.  Ike tried to dump him from the ticket in 1952 an again in 1956 -- each time stinging the old Nixon paranoia re his outsider status.

Halberstam devotes half of the Nixon chapter to wife Pat (Ryan) Nixon, her past and her role in the image-making behind the Nixon successes.  Richard Nixon was every bit as weird as his odd look.  (Sam Rayburn is quoted on his assessment that Nixon's was the most hateful face he had ever seen in the House of Reps.)  But Halberstam evokes the emergence of the Nixons and the Ryans from poverty and (outsider status) -- and the eventual successful Dick-and-Pat image.  The Nixons evidently pioneered the use of the adoring wife prop in their politicking.  Her posture in the TV and other campaign appearances (including the "Checkers" speech) was their innovation.

It is all much more complex than I can describe here.  The good news is that we manage to survive these characters.  May it last.