Bankruptcy, Not Bailout

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

I have been sent this link by 2 friends that do not know each other, but know me very well. Jeffrey Miron makes some amazing points.

• The implicit backing of the federal government for Freddie and Fannie encouraged them to take on far more risk than a free market would have allowed.
• "Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending."
• "The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government."
• "If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen."
• "Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents."

Read the article. He makes many more points that fill in the blanks, but I figured 5 was a good synopsis.

Math Joke

The ark lands after The Flood. Noah lets all the animals out and says, "Go and multiply."

Several months pass. Noah decides to check up on the animals. All are doing fine except a pair of snakes.

"What's the problem?" says Noah.
"Cut down some trees and let us live there", say the snakes.

Noah follows their advice. Several more weeks pass. Noah checks on the snakes again. Lots of little snakes, everybody is happy.

Noah asks, "Want to tell me how the trees helped?"
"Certainly", say the snakes. "We're adders, and we need logs to multiply."

Rat brain powered robot

http://technology.newscientist.com/channel/tech/mg19926696.100-rise-of-the-ratbrained-robots.html

A disembodied rat brain interfaced to a computer chip, interfaced to a robot, which moves around the lab.

'As they do so, the disembodied neurons are communicating, sending electrical signals to one another just as they do in a living creature. We know this because the network of neurons is connected at the base of the pot to 80 electrodes, and the voltages sparked by the neurons are displayed on a computer screen.'

This is strongly in territory of 'unknown' of the same sort that can be scary. But I can't think of any specific ethical issues that I have with this line of research.

HT to Timothy at Slashdot.

Philosophy of Liberty

This was posted 2 years ago, and I just now found it. I have now seen it 3 times, examining it closely for any idea that I even in part disagree with. The only point I have found is a minor one that can wait until you've seen the clip.



Back to that point, When the author says that people should stop asking their governments to initiate force on their behalf, it assumes democratic governments. Dictators pursue ownership of the life and liberty of their subjects as an objective for their own life. And may cause global atrocities without the deliberate consent of their people.

Information Overload: A Blessed Curse

What is so bad about information overload?
How the Google generation thinks differently.

The first article specifically talks about the advent of email deluge. How the flood of email from colleagues and clients can get far too powerful to feasibly answer or even read.

The second article is by a mom who doesn't understand why her son does 5 entertaining things while researching a report for his science class. The author distills these characteristics in regards to Google infopath adoption.

NATIVES v IMMIGRANTS

Digital natives
Like receiving information quickly from multiple media sources.
Like parallel processing and multi-tasking.
Like processing pictures, sounds and video before text.
Like random access to hyperlinked multimedia information.
Like to network with others.
Like to learn “just in time”.

Digital immigrants
Like slow and controlled release of information from limited sources.
Like singular processing and single or limited tasking.
Like processing text before pictures, sounds and video.
Like to receive information linearly, logically and sequentially.
Like to work independently.
Like to learn “just in case”.

Rudy Giuliani Defines Freedom

Freedom is about authority. Freedom is about the willingness of every single human being to cede to lawful authority a great deal of discretion about what you do and how you do it.
-Rudy Giuliani

Compare that to:

You cannot build character and courage by taking away a man's initiative and independence.
-Abraham Lincoln

Freedom is not worth having if it does not include the freedom to make mistakes.
-Mahatma Ghandi

If you want total security, go to prison. There you're fed, clothed, given medical care and so on. The only thing lacking... is freedom.
-Dwight Eisenhower

Food Crisis

I found some great commentaries here on the recent rise in food prices.
American Thinker | Financial Times: Economists Forum | New York Times: A Global Need...

Things to think about while listening to the news on the Food Crisis:

Since Gasoline and Biofuels are well on their way to becoming true substitutes, and biofuels are made from food, high oil prices will become directly related to higher food prices. Not only can food substitute for oil, but it apparently works the other way too. I should make a whole blog post just on that.
Wired

India, China, and South America are developing far wealthier populations who consume more of both food and fuel. Driving the demand of both, raising the prices of both.

Those same three regions are also using that wealth to increase their productive capacities. The US utilizes only 0.27% of the world's crop land, but produced 16.8% of all the world's grain in 2007. Which means the US produces grain 80 times more effeciently than the rest of the world, so there's room for 7978% improvement in global grain production without any new technologies. That's about 80 new earths to put that in terms Daniel W. Basse can understand.

I don't have many links to back this up, but it seems that as wealth passes some level, quality begins to take precedence over quantity to the average consumer. High class restaurants serve smaller portions than low class restaurants. Areas with higher average population have more Chipotle's and fewer Taco Bell's. If this is true, then as the West gets still wealthier, it will begin to consume fewer pounds of grain while expending far more in terms of other wealth to get it. That might relax demand for low priced grains for poorer areas.

Idle chit chat with Ryan G

Ryan is a friend of mine from Mason who is currently studying graduate Econ at Oxford. This is a conversation we had a few minutes ago.

Ryan: I am writing a paper on market failure, government intervention, Coase Theorem, etc...
Now I need to do an applied section where I walk through a real case any good ideas? I would do the obvious, environemnt, or education, but I will be doing seperate papers on those two topics next.
me: tragedy of the commons is the most frequent real market failure. so overfishing?
Ryan: yeah, thought of that
me: logging on public lands?
Ryan: hmmm, ok, that would be interesting
me: information assymetry is also good. You could do healthcare.
Ryan: That is a whole nother paper. I am already at 10 pages, I had to leave out dynamic incapacities, and asymentric info otherwise it would have taken me 15 -20 pages just to define the different problems
I think I may do a paper on Health care later, so hopefully I can deal with those problems then.
me: dynamic incapacities, is that like, how electricty gets overconsumed because it's so hard to have live pricing? Google isn't turning up much.
Ryan: i think so, i dunno. He defined it, but we didn't really spend much time on it
and I didn't know where to research for it My other thought were to do big game animals again
I wrote a paper on that a while ago.
Or public financing of sports stadiums which I also did a couple years ago

me: I thought public financing of sports was more of a public choice problem instead of a market failure. It's actually a market success that stadiums don't get built

Ryan: public choice deals with market failures. lol, true.

The usualy arguments for government intervention in markets is market failure

me: so the pub choice argument is that the lack of stadiums is a market failure, so spend public funds on them?

Ryan: Yes, becasue they give positive externalities to the city

such as increased jobs, city pride etc....

things the private world won't take into account

public choice would say rent seeking and government inefficiency would result so the stadium should be financed privately

me: I wonder how you would monetize city pride as a variable

Ryan: hard to

We still don't know too much about dynamic incapacities, so if you know anything, please leave a comment.

Smurf Healthcare vs. US Healthcare

The Smurfs on Healthcare

My favorite part is how Jokey gets worse and worse as he gets more 'health care' from the other smurfs who 'just want to help.'
Here's Robin Hanson's take on health care at EconTalk. He talks a lot about the psychological effect about the act of providing health care. There's also a lot of research on information asymmetry, like donating a funny bone because the docter says your friend will need one.
Dr. Hanson talked about the RAND health experiment, where people who got free health care were compared to people who paid for all of their own health care. The comparison said that even though the free health care folks used 30% more health care, they got essentially zero health benefit. So all that extra money spent bought zero additional health. I recall Dr. Hanson asking class when I took his class at Mason,

"If you assume that some treatments are helpful, and on average, extra treatment buys no health, then doesn't that mean that some of that treatment hurts?"

Reminder of How Science Works

DNA Puts Itself Together 'Impossible'

In case anyone forgot, the world we live in is a wonderful place that the totality of human knowledge barely understands. The world contains matter and energy, they interact in ways that we can see and in ways that we cannot. Science is the process of seeing as much as possible and creating the best possible ideas to understand how all those interactions occur. Compared to the totality of the world, we're barely scratching the surface.

Tim Hartford Talks Stock Picking

Tim Hartford as the Undercover Economist explains the absurdity of predicting the stock market by telling people he can predict which que will move the fastest. Hartford also apparently has no Wikipedia article, that needs to be fixed.

It seems to me that a key difference might be the perceived simplicity of a que vs. the perceived complexities of picking a stock. Most people who are in que have lots of experience being in ques, and know that nobody can predict which one will move fastest. They see the complex stock market, though, and see a few people doing extremely well and figure that it must be predicable.

Educational Duties to the Future

Video clip of Richard Dreyfus on liberal education.



Any Questions?

Hat Tip to Brian Holler at Thinking on the Margin.

Immigration Regulations

On the other side of this argument are the well reasoned arguments of Samuel Huntington in Who We Are. My personal perspective is more along the lines of how immigration restriction restricts freedom, here explained by Don Boudreaux.

Huntington's point about culture is true, immigrants will change a culture, and ideal characteristics that attracted the immigrants are likely to be watered down or eliminated. But immigration is the very freedom that allowed those settlers to create this nation in the first place and removing that freedom seems very wrong to me. A wall on the border, for it's own sake seems like a perfectly reasonable project to me, but not for the purposes of keeping immigrants out. The great wall of china was built for real security reasons, I have no problem with that. I'd support the wall, if open immigration were in place on a very permanent basis.

Hat tip to Ampersand at Alas, a blog.

Libertarian Solution to a Political Conflict

A Libertarian Solution to Evolution Controversy: No More Public Schools

When you force people to teach a subject in a way they don't want it taught, and the school system is a political beast, which our public schools are, you're going to see the curriculum you have in mind corrupted by the political process. People campaigning for strong teaching of evolutionary biology in public schools are ignoring that this is what's purportedly been going for the last 50 years. There are no states with a theistic presentation in their classrooms. Real science is what's supposed to be taught; yet when you look at polling data, the ones who see a non-theistic, purely naturalist explanation are in the minority.

The particular libertarian speaking there is strongly pro-evolution, and is trying to resolve the debate about whether to allow the intelligent design curriculum to be taught in public schools.
A lot of people feel very strongly that EVERYONE should be well educated. I rather agree with that, education expands the human experience and gives them the tools to provide high quality services to the people around them throughout their lives. It preserves the knowledge base for a growing economy.
Many people assume however, that the ONLY way to do this is through a ubiquitous government run public education system. The argument for 'school choice' is that you could use the same tax dollars used to fund the public education system to provide limited credits that can be used to pay tuition at all sorts of educational institutions. This would make the market for education more competitive, raising quality, lowering price, and vastly simplifying the content debate.

I am in favor of school choice from kindergarden through the fourth year of college.

Tabarrok on the knowledge economy

Dismal Science Sees Upbeat Future - Alex Tabarrok

So imagine this: If China and India were as wealthy as the U.S., the market for cancer drugs would be eight times larger than it is today.
...
People used to think that more population was bad for growth. In this view, people are stomachs--they eat, leaving less for everyone else. But once we realize the importance of ideas in the economy, people become brains--they innovate, creating more for everyone else.

New ideas mean more growth, and even small changes in economic growth rates produce large economic and social benefits. At current income levels, with an inflation-adjusted growth rate of 3% per year, America's real per capita gross domestic product would exceed $1 million per year in just over 100 years, more than 22 times higher than it is today. Growth like that could solve many problems.

It's definitely about time for some major works on how the knowledge economy works. There's just not a lot out there and it leads to some real misunderstanding and probably miss communication.

This is a somewhat connected to an earlier post by Tyler Cowen, co-author of Marginal Revolution with Alex Tabarrok. Also my commentary on that post.

Hat tip to Brian Hollar @ Thinking on the Margin.

Student Expelled For 'getting involved' on campus

Student expelled for student body activism

NEWSFLASH: When you make a stink about something, your target will look at you're background.
The real news is that they might expel you for making amateur movies (nothing indecent, either) for a contest. If you read it through, there was apparently an ad the student put together that scared the president so much he asked for a temporary bodyguard. But seriously, there was no real threat in the ad.

In a related story, from the article above:

FIRE is simultaneously pressuring Valdosta State to reverse its “free speech area” policy, which is unusually rigid in restricting student expression to a single stage on the 168-acre campus, only between the hours of 12 and 1 p.m. and 5 and 6 p.m., with prior registration.

GO MASON.
Go Mason Student Government.
Hat-tip to 'flutterecho' at Slashdot