Heavy Lifting - thoughts and web finds by an economist
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Tuesday, June 01, 2004

Why didn't I think of that...

This contraption might save you a few pennies a year. On the other hand, it might be so cool that you want to take longer showers, use more hot water, and therefore cost yourself more in the end. Still, what would happen if it were possible for an entire city to put a little electricity back into the grid while taking showers in the morning? I'm not an electrical engineer, but with sufficient numbers, is it not conceivable that a noticeable contribution could be made?

Who are YOUR heroes?

Yesterday was a strange day. In once sense it was filled with joy over our new baby and having both sets of grandparents to visit. On the other hand, it was filled with a somber reflection on the sacrifices that so many have laid down to guarantee that we have the freedoms we enjoy today and that my daughter will enjoy in the future.

So, here are some of my heroes:

Third U.S. Army

1st Armored Division

3rd Infantry Division

4th Infantry Division

10th Mountain Division

101st Airborne Division

1st Cavalry (Airborne)

1st Infantry Division

25th Infantry

82nd Airborne Division

173 Airborne Brigade

2nd Armored Cavalry

3rd Armored Cavalry

3rd Corps Support and Command

75th Ranger Regiment

5th Special Forces Group (Airborne)

Color insignia for dress uniforms, tan for desert camouflage.

Thanks to all the men and women in uniform and especially for those who have given their life and limbs for our freedom.

The Media Matrix

I have been concerned for some time that the media is not telling "the truth, the whole truth, and nothing but the truth." I have given up on the "talking head" shows, barely watch network news and basically get everything I need from the ticker that runs across the bottom of the screen on Fox or CNN.

This article explains why I, and probably many others, feel that there is no objective media. The article explains how the political machines have "surragates" (Read shills) that get out and preach the good word (on both the left and the right) as if it was news. Now it makes sense why in about a two day period everyone in the press (at least on television) accused Pres. Bush of having no "gravitas" when the word hadn't been used three times in the previous four years - it was most likely a plant by the Gore campaign.

We are presented news that isn't really news, given a perspective of things that isn't the whole truth and is shaded by reporters' and editors' personal preferences and ideologies.

Sunday, May 30, 2004

What is hockey?

Watching the hockey game last night, I found myself explaining the rules to my father, who should know better. However, it is somewhat confusing to figure out what you can and can't do and what those blue and red lines are all about.

Found this primer on hockey.

Go Flames!!!

Friday, May 28, 2004

I am not sure, but...

Talking about human ingenuity, these guys have built a replica B-52 that's bigger than a car and actually flies. I'm not sure, but one would think this would be skirting the edge of legality. I know our military has the Predator, and other unmanned craft, but when civies are building these things, with turbine engines, etc., are we close to having private air forces? The replica does seem to have bomb-bay doors. Thank goodness neither the Hatfields nor the McCoys had something like this.

This guy is close to getting his V-22 Osprey (built from scratch) to fly - perhaps he will beat Bell Helicopter to the punch?

The Sky is NOT falling...

We have not heard much about the overall economy lately. Not only do the democrats and the media have more juicy things to talk about - prison scandal, Iraqi handover, and Al Gore's newfound intensity - but the overall status of the economy looks really good. I have stared at the following graphs (available in the Dallas Fed's 2003 Annual Report which deals with productivity) for a few minutes and have decided that it is very difficult to put a convincing negative spin on the overall trend of things.

1. Unemployment Rate

2.Labor Force Participation Rate

3. Consumption as a Share of Income

4. Productivity

5. Average Workweek

6. Consumption per Person
I do remember a couple of months ago that there was a day of outrage that the workweek was declining - of course there were two days of outrage last fall when the average workweek had crept up a few minutes. The latter was a clear example of the corporate black box grinding up the individual, working him to death; the declining work week is a clear example of people not being able to work as much as they want because of outsourcing, or some other such nonsense.

Overall, things are going good. Some general comments. Is productivity nonstationary?* Productivity growth looks pretty stable, and it makes sense that productivity would be nonstationary as long as human ingenuity and imagination is allowed to flourish. If the level of knowledge is non-stationary then productivity, which is a function of human imagination and ingenuity, would likewise be non-stationary.

But the payoff is in the bottom two graphs. Consumption per person is increasing while the average work week is declining. The upshot: More consumin' and less workin'. Put in economic terms, people can spend time working or in leisure. Leisure time is when we do the most consuming. In order to consume we need income which we get through working. Hence the (often distasteful) tradeoff between leisure and work. The bottom two graphs show that we are able to work less and consume more, which is what improves "utility" or satisfaction.

* For those who are not specialists in econometrics, non-stationary variables continue to increase or decrease without "reverting to a mean." Reversion to the mean is a commonplace in many areas of economics, for example the stock market which has historically had average annual returns of approximately 10%. While in some years stock market returns can be high, like last year's 18%, and other years can be low like in 2000, there is reversion to the mean. For non-stationary variables, there is no reversion to a stable mean.

Thursday, May 27, 2004

How many Bozos in the world?

My friend Courtney LaFountain points out that there is some controversy at the Clown Hall of Fame about which Bozo the Clown should be inducted this year. BTW, the Clown Hall of Fame is in Millwaukee, Wisconsin - go figure. The museum probably got funding through a previous Highway Bill.

According to the article, there were more than 200 Bozos trained over the years. This seems to be a gross underestimate of the number of Bozos in the country, not to mention the world. The inductee list has been declining over the years - iduction started in 1989 - but there are very few inductees that are still alive. Evidently there hasn't been much entry in the clown market, or at least entry that is of sufficient quality.

Finally, there is only one name I recognize in the entire Hall of Fame - Red Skelton. I suppose that is the way it is supposed to be - isn't the whole raison d'etre of a clown to be unknown? Seems like the museum would have a limited audience but I am sure that Milwaukee hypes the clown hall of fame as a quality tourist destination.

I recommend the formation of the Mime Hall of Fame, maybe in lieu of the Rain forest they want to build in the middle of Iowa - at least the acceptance speeches will be short.



Mike Ward: "200 Bozos? I've met every one of them."

Courtney LaFountain: "What a bunch of clowns."

Linda Depken: "The International Clown Hall of Fame is probably in someone's basement." Well, she is close. The ICHoF is in the GRAND AVENUE MALL in Milwaukee (I should read the fine print on web sites a little closer). I can find no reference to the ICHoF on the Milwaukee internet tourism sites that I visited. I understand not wanting to print brochures about the ICHoF, but the web is free advertising. Is the market for the ICHoF really too thin?

Where was this Al Gore in 2000?

Al Gore has now become the Southern preacher that he probably was meant to be all along. This speech is pure lunacy and shows exactly how the American left has either missed the point of the WTC attacks or shows how absolutely terrified they are that Pres. Bush will be successful in Iraq. In my opinion it is the latter, because the American left is not so stupid to believe that we should not have responded to Sept. 11 IN FORCE.

The only thing the left has now is to claim that Iraq is a failure before we know if it is a failure or not. Another is to claim that Bush had/has no plan when it is patently obvious that a plan exists - it might not be a plan that the left wanted Bush to implement, but that is different than not having a plan. Oh well, such is politics.

Notice the lack of headlines about the economy, deflation, jobless claims, trade deficits, and interest rates. No longer do we have daily reports of how the budget is too large, that the budget deficit will forever expand. No longer do we have daily headlines about how the PATRIOT ACT is ruining civil liberties, nor do we have daily reports of how senior citizens are eating dog food in order to buy prescription drugs. We don't have daily headlines about how Bush has failed to fund the No Child Left Behind Act, we have no headlines about how the energy crisis is the result of conspiracy between Chaney and Haliburtin.

The main reason we don't have these headlines any more is because they would be lies. When the headlines proclaimed, seemingly with glee, that the unemployment rate had increased, and "experts" predicted more of the same, the democrats were quick to jump on board and call Pres. Bush inept and out of touch with the American people. The answer lies in John Kerry, who (as we all know) is a regular guy..ahem.

Now, the media is not so quick to point out the good economic news, nor to highlight any possible good that can come out of Iraq. The national media completely ignores the Nick Berg video and focuses on recently released pictures of events that took plact LAST YEAR!!! It is absolutely frustrating, and I sincerely hope that speeches such as that given by Al Gore do not go far in changing minds.

How would Al Gore, et al, have responded if Pres. Bush (Sr.) and VP Dan Quayle had called for Janet Reno's resignation after Waco and Ruby Ridge, or had called for Donna Shallala's resignation after every one of her speeches and policy proposals. I am sure Al and Clinton, et al, would have responded with counter-accusations of treason, that Republicans were engaged in bitter partisan character assassination, and that the calls for resignation showed a fundamental lack of respect for the separation of powers codified in the U.S. Constitution. I am sure the national media would have gladly stuck cameras and microphones in the face and mouth of everyone who wanted to call Republicans racist, sexist, treasonist, anti-American, big-business conspiring oafs.

After Al Gore's speech what do we hear from the national media? Are those crickets? Not even that....pathetic.

Wednesday, May 26, 2004

Unintended consequences of "uniting" with the French

This BBC story discusses an European Union ruling that butchers are not allowed to give away bones and meat trimings for dogs, unless such waste is stored and displayed like all other meat products sold to the public.
The Defra [Department of the Environment, Food and Rural Affairs] spokesman added: "All the waste from a butcher's shop is being seen as a by-product and must not be used for human consumption.

"But there is an exemption because customers can take bones away with them when they ask a butcher to de-bone some meat because it's still considered human food.

"But the moment a bone or trimming is regarded as waste or pet food then it's a by-product and cannot be passed to the public."

The regulation is a consequence of the animal by-products regulations 2003.

Oh, the unintended consequences of protecting special interests. As one local butcher put it:

Aled Morgan, 35, a fifth generation butcher from Aberystwyth, said: "I just don't see where the EU is coming from.

"It's just going to cost butchers more money. It's going to cost an additional £2,000 a year to dispose of the fat and bones.

"The local butcher had the edge when it came to bones compared to supermarkets. They could pass the bone over, but it makes you think whether this directive is a result of pressure from powerful supermarkets. It's just a stupid rule."

I would blame it on the French, but it is just Leviathan. Alas, poor Fido and Spot now suffer from the bureaucracy.

Does the punishment fit the crime?

From the annals of "Jungle Justice" comes this report from the BBC about swans attacking dogs in a local park. However, it might be the case that the swan is responding in kind as "[t]he BBC understands the swan may have lost cygnets in a previous shooting incident at the park."

Wait a second. Innocent dogs are being killed in revenge for the bad behavior of someone higher on the food chain? Talk about a low blow. Instead of taking on the actual perpertrator(s), the swan has to go after man's best friend.

Reminds me of the NCAA, which habitually hands out punishments for violations by the men's basketball team that are ultimately borne by the women's golf team or some other innocent, non-revenue generating sport. Perhaps those who do the crime don't always do the time - both in human and animal societies?

AARP study says exactly what about drug prices?

The AARP releases their Watchdog Report claiming that drug prices are rising too fast. The claim is that drug prices rose three times the rate of inflation last year and that this is a bad thing. The majority of consumers are unhappy about rising prices, regardless of whether it is medication, gasoline, or the afternoon matinee. However, the AARP report, and subsequent press stories, such as this one from the Ft. Worth Star-Telegram, confuse macroeconomics with microeconomics. As much as we would like to easily shift between the two, it isn't really that easy.

For instance, the rate of inflation is simply a composite average of how prices are changing across most major metropolitan areas and these metro areas are then used to create a national average. This general trend in prices has very little connection to the price of a particular good. Moreover, many products that have relatively volatile prices, such as gasoline and heating oil, are not normally included in the calculation of inflation. Therefore, the rate of inflation is an intertemporal comparison of prices but suffers from numerous problems, which economists have been pointing out for a number of years.

For the layman, it is enough to view the rate of inflation as an average. Because the rate is an average, there are some products that have seen greater than average increases in inflation just as there have been other goods that have experienced price increases less than the rate of inflation, or (gasp!) actual decreases in prices in the same time period. It is not surprising that drug prices are increasing in the short run: there is an increasing demand for prescription drugs, the income of the population demanding these drugs is (on average) relatively high, and the value of the drugs (in terms of the miracles they perform) are worth more today than ever.

On the other hand, the prices of buggy whips and manual typewriters have not kept pace with inflation. Nor has the price of Derek Lilliquist baseball cards and those really cute Ty Beanie Babies.

What would we think if we saw the following (hacked from the Star-Telegram article):
The price of the IBM Selectric Typewriter failed to meet the rate of overall inflation last year, and in many places the prices of the machines fell by more than 20%, two groups pressing for higher prices said in studies Tuesday.

The reports by the 35 member American Assocation for Unwanted and Underdemanded Products (AAUUP) and the producer-investor group United Sellers of America (USA) said the gap between prices for products such as typewriters, Rubik's cubes, Beannie Babies, and #2 Pencils, and general inflation has widened in recent years, diminishing the profit earned by many older Americans who, usually in control of their faculties, invested in such products in order to augment their Social Security, which increases based on the Consumer Price Index.

"If the price of Beannie Babies keeps going up slower than inflation, it will become more and more difficult for me to be able to make a profit," AAUUP policy director Chasma Deptry said.

The Bush administration pointed out the newly introduced Idiot Protection cards that offer extra profits of 10 percent to 17 percent on obsolete and unwanted products. The card can be used beginning June 1.

The average price decrease for the top 30 least-demanded products was 6.5 percent last year, the USA report said. AAUUP's study showed an average 6.9 percent price decrease for nearly 200 products. Inflation in general was 1.9 percent.

Both "stories" are equally ridiculous. The Star-Telegram story could have just said "Consumers want lower prices," whereas my version of the story could have just said "Producers and sellers want higher prices." We could have a lot less ink and more advertising in the newspaper if we could write stories like this. The AARP "report" is a classic non-story story, and is indicative of how "news" is generated by those with policy agendas - in this case to force the Federal government (read, you and I) to pay for someone else's prescription drugs.

Great. When can I get the government to force someone in Seattle to help me pay for a new interior and rag top for my Mercedes?

Where to store 20,000 digital pictures

Oh my!!

When you want to take 20,000 digital pictures

Last summer in England, I had a 128MB flash card for the camera. This spring I have a 256MB flash card for the camera. But, if I could get a hold of one of these I wouldn't have to buy another flashcard EVER.

Tuesday, May 25, 2004

Some diversions

What happens after 15 years of extended drug use (thanks Coolios).

What some people do to themselves to stay "pretty" and "famous."

Printing on Pringles? The company rep says no decision has been made on possible advertising on potato chips. Yeah, right.

How to guarantee you don't get your security deposit back when moving out.

Reason #4546 for not messing with the United States to the point of getting our military involved. In the U.S. more people are killed each year by "loved ones," which doesn't bode well for those whom we don't like. Moreover, we are two generations of technology away from having 22 million 12-15 year olds who can fight an "Ender's Game" type of warfare and dominate the world. One would expect that things like this would make others think twice before picking a fight with us.

Welcome to the U.S.S.A.

There are plenty of stories from behind the Iron Curtain about how private individuals were not allowed to have a typewriter or a copying machine, how cameras were limited in use and people who took pictures near "state assets" could be arrested and thrown in the Gulag for Article 58 violations (read Solzhenitsyn's Archipelago). The argument was that an individual who had pictures of a Dam on the Volga River might send/sell them to enemies of the state that might use them for military information.

Sounds funny right?

Think again.

Sliced bacon more expensive than bacon bits?

These people have way too much free time. However, in their "expirement" with bacon bits, they found that 12 slices of bacon were needed to equal three ounces of chopped bacon bits. Here's their cost breakdown:
 PricePackage SizeCooked yieldPrice per cooked oz.Price per slice
Bacon Bits$1.893 oz.3 oz.$0.63$0.31
Raw Bacon$5.9916 oz.4.75 oz$1.30$0.63

Their claim: bacon is priced like diamonds - the larger the size the more expensive?

Here is a page of other such experiments, including How many packets of ketchup in a bottle, and how much is in vegimite?

Sunday, May 23, 2004

We have a baby, now what?

Mom and Campbell came home today. Now that there is no button to push for "Call Nurse," it hits us that the two of us have full responsibility for Campbell and her well-being. No matter how much you have read and studied on the internet, I think any reasonable adult recognizes the immense responsibilities that come with being a parent. Those who are overeducated perhaps also tend to freak about the little things moreso than others. Therefore, there were lots of questions we asked nurses and doctors that were never answered.

A few insights into the health care system were gleaned over the weekend. Our local hospital was nothing but professional about things when it came to taking care care of mom and baby. However, our pregnancy and delivery went so easy compared to many of the others that took place that weekend, I think we were a bit overlooked. Linda would ask for a nurse to come help with whatever and it might take 30 or 40 minutes for them to respond. Looking around, it was clear that nurses were busy doing something, just not helping my wife. In the end, nurses have to make decisions as to what is important and what isn't and I understand that.

On the other hand, nurses are not necessarily universal angels of mercy we romanticize them to be. Nurses are, like professors, cops, lawyers, mechanics, regular people with the same regular foibles that we all have. Some examples included "lies" or "mistakes," depending on your charity, about what one nurse had told my wife and then reported to others. This happened on more than one occasion - nothing important to diagnosis or overall health care, but stupid things like whether a nurse had discussed the proper changing of diapers, whether the lactation consultant had been notified that Linda wanted to see her, whether pain medicine had ever been offered after delivery.

The other frustrating aspect of the health care system is the unwillingness, inability, or legal Catch-22 that nurses and doctors find themselves in when it comes to answering questions straightforwardly. I get better answers from my barber and mechanic than from just about every medical professional I came in contact with. Linda's labor lasted 3.5 hours, which I think is fast for a first pregnancy, but you would never know it from the answers that we received to the question. Indeed, no one would commit to how long labor might be expected to last, whether her contractions seemed strong or weak given the amount of time they had been going on, and in the end things went so fast that the "page the doctor" call went out. Ultimately, the answer to just about every question about pregnancy, delivery, recovery, baby status, mother status, and what the weather was like outside, was "everyone is different." Well, no shit, but such an answer is completely worthless.

How long until her stomach will return to "normal?" Seems like a reasonable question for a first-time mother. Answer, "from one day to a year. Everyone is different." Very frustrating. I don't know if they are unwilling to "go out on a limb" for fear of litigation or what, but the answer given is really the ultimate non-answer. If that is all it takes to be a nurse/doctor, hell I can do that. Think of how good at forecasting we economists could be if, when asked about next month's unemployment figures we could just say something like "well, every month is different. Unemployment could go up, go down, or stay the same, who can really tell about these things." Rrrrrrr.

A final interesting issue was the overnight nursery. In my romanticized view of the hospital nursery there are rows of new-born babies, many crying, some sleeping, some wriggling, but most of all they were in one room. In this single room of screaming children, there is some nurse who is either deaf, has earplugs, or has the patience of Job goes around and looks after the babies. The upshot is that fathers and family members can point and stare through the glass at the newbies and, more importantly, mom can get some sleep. In our hospital, the baby could stay in the nursery as long as the baby was quiet. Fussy babies were sent back to mom. Now, this make sense if one wants to make sure that one baby doesn't cause a chain reaction of other babies crying and screaming. But who benefits from this? It seems that the nurses stand to gain the most. Individual mothers whose kids are fussy do not get any sleep, only those mothers who kids are well behaved. An interesting moral hazard problem.

Oh well. I have spent a considerable number of years avoiding the health care system, and therefore I probably have no business being critical of the system. After all, we did have a healthy baby and I still have my wife. I have been blessed in my life that I haven't had to spend much time in hospitals for myself, or my family, over the past twenty years. Hopefully, I will have the same blessings in the years to come.

Saturday, May 22, 2004

Baby watch ends...

Our baby watch is finally over!! After 3.5 hours of labor, Campbell Avery Depken was born on May 21, 2004 at 12:10 Central Daylight Savings Time. Campbell weighed in at 6lbs 12oz and 19.5 inches. She is, of course, beautiful. Mom and baby are doing fine and come home on Sunday.







Campbell is a lucky girl. She was born in the greatest country in the history of the world and during the most exciting of times, given anticipated technological and sociological advancements. Actually, the word "luck" is not appropriate. In the twentieth century, my wife's grandparents and my great grandparents decided to get on a boat, the former from Belgium and the latter from Sweden. Those decisions, frought with uncertainty and risk, have now culminated in the latest addition to the Depken-D'hoore clan. What an amazing gift Campbell's forefathers gave her. I hope she grows to appreciate and live up to it.

Friday, May 21, 2004

Baby Watch Continues...

Baby watch continues, but only for the next seven hours (12:15am Friday Central time). We go to the hospital at 5:30am for induced labor. Fingers are crossed, brow is beaded with sweat, skin is thick - I am ready for the screaming and cursing. I am less convinced about the parenting thing. I hope to be a good father and parent, but I had to jump through more hoops to get into graduate school than I did to have a child. Perhaps the world would be a lot better if it was the other way around?

Blog posts might dry up for a while - or I will continually post pictures with cute captions (okay, I promise not to).

All of those who need to know - a sitrep will come your way as soon as possible. If I have your number you will get a call sometime tomorrow.

Here we go.....

Wednesday, May 19, 2004

Another thing to blame on Pres. Bush

This paper, just published by the San Francisco Fed, has some interesting facts about the IT market in the United States. First, is the trend of IT spending that ultimately declined significantly after 2000, leading (or following?) the dot-com bubble burst.

I am surprised that the democrats haven't tried to blame Pres. Bush for this. It is clear that after he "stole" the election, the IT spending spree shriveled up.

Another interesting tidbit was the trend line of processor speed improvement. Moore's law claims that processor speed should double every 18 months, which predicts a linear logartithmic expansion. However, in levels Moore's law predics a non-linear growth of processor speed. This picture suggests that Intel made greater gains in processor speed during the IT spending spree in the late 1990s and that since then Intel has been on the same processor-speed growth path as before the IT spending spree.

An interesting question is what caused what. Did Intel create faster processors during the late 1990s because there was more money in it, i.e., the investment in IT technology was sufficiently large to increase the rate of Intel's improvement. Or, is it the case that the IT investment spree was caused by Intel's technological improvements. This possibility would suggest the Intel found some returns to scale that was unique to the range of processor speeds produced in the late 1990s or there was something else unique to the time period that is not available today.

My bet is that the monetary benefits to improving processor speeds is what helped motivate Intel along. It would be a good dissertation topic to flesh this out.

Markets in everything

This story is about an entrepreneur who is using the CB radio and the loneliness of truckers to turn a buck selling pornographic movies on a side road by a major truck stop. Unfortunately, the good folks of Mount Comfort, Indiana, are not too excited about a smut peddler operating in their neighborhood, especially when the pickup with the smut is parked less than a mile from a school and a churh.

The main problem? The local zoning officer claims that selling porn "...is not a permitted use for that property." However, the local sheriff "Nick Gulling said he does not know of any laws being violated." Moreover, his office adds that Mount Comfort doesn't "...have a peddlers ordinance or law in this county that we know of."

The answer? The county commissioners may just pass a law to make selling porn illegal. Go figure.


What's good for the goose...


Our military is attempting to standardize its fuel requirements so that tanks, trucks, motorcylces, and other vehicles will run on a single type of fuel. This is expected to reduce redundancy on the battelfield and simplify logistics. Here is a picture of the joint U.S./U.K. project to build a diesel motorcycle (More). It gets a cool 120 miles per gallon. Evidently the firm that has figured out how to modify the Kawasaki engine (F1 Engineering is ready to provide the bike to the general population, expected in 2005.

So, what's the hangup?

It seems that the EPA and the U.S. Department of Transportation are not satisfied that the bike is environmentally friendly or that the bike is safe to ride, drive, or run into. Hopefully the bureaucrats do not stifle this technology just when it might prove useful.

Economists (and doomsdayers) have long predicted that a back-stop technology would come about when the price of gasoline/crude oil increased sufficiently. I don't think anyone predicted that $2.00 a gallon is the target price that would make alternative technologies practical - my recollection is that the estimates required $80-$90 per barrel (twice as expensive as today).

However, there are other exciting advancements being made:

  1. Car manufacturers have decided that hybrid (electric-gas) cars don't have to be ugly. Ford is introducing the hybrid Escape, GM has a hybird Sierra. Hybrid technology is probably the future use of the internal-combustion engine. However it is not immediately clear that hybrids would reduce the overall demand for gasoline, although it seems likely that it would.
  2. This bus places an engine in each of the rear wheels. The bus is quieter and more efficient as the engine drives the wheels alone.
  3. This "atomic" plane flies on hot-air after using a regular jet engine to take off and reach cruising altitude.

Who knows where we end up? Those without faith in markets will seek help from the government either through regulation of price or quantity. Those with faith in markets will sit back and enjoy the show of human ingenuity.

Tuesday, May 18, 2004


Baby watch continues...


Haven't had much time to post because of three pressing issues: a) impending birth; b) prepping a new course for the summer semester; c) working on a paper for presentation at the Western Economic Association in late June.

But, hopefully two of the three will be off the list in the next week and I can get back to posting in earnest.

However, I cannot let the current hot-air about gas prices go untouched.

Gas prices are continuing to increase, but this is not surprising. We need to understand that the days of $1.50 gasoline are probably never going to return. Why, it is as clear a case of supply and demand as we as economists could hope for.
Demand side:
  1. China is now the second largest daily consumer of crude (after the U.S.);
  2. The vehicle miles driven in the U.S. continues to increase
  3. Average miles-per-gallon of newer cars is lower than in previous decades (SUVs vs. mid-size sedans)

Supply side:
  1. Refinery capacity is 2/3 what it was in the early 1980s - it is impossible for the U.S. to refine more gasoline without expanding capacity;
  2. Reformulated gasoline and local regulations make it impossible for inventories to be shifted from areas of surplus to areas of shortage (or more specifically, areas of lower prices to areas of higher prices) and reduce fuel mileage by up to 10%;
  3. Concerns about the steady flow of crude from the Middle East;
  4. Increased costs of storing refined gasoline makes just-in-time production preferred


The reality is that while J.F.K. can lay back and suggest that the Bush administration is once again not doing right by the American people by not releasing 60 million barrels of crude from the Strategic Petroleum Reserve, there is nothing that can be reasonably done in the short to mid-term that will bring the price of gasoline down. The biggest bottleneck is not OPEC or even China, but the lack of refining capacity and the reformulation requirements. If the EPA had not made it impossible for the smaller refineries to operate (during the 1980s) we would likely not have seen such an increase in price.

The relationship between supply and demand is well known and inuitively obvious. A one time increase in supply by releasing the SPR would have no long term impact on price, unless it sent a signal to the oil futures market that the U.S. government will credibly become the oil supplier of last resort - which would be a disastrous policy to pursue (again, I claim that JFK should keep his mouth shut - his poll numbers improve when he doesn't introduce more bad ideas). To reduce price over the long-term, one or both of the following must happen: demand declines and/or supply increases. The former is unlikely in the short-run and the latter is unlikely in the long-run (given current NIMBY attitudes and enviro-alarmist propoganda).

It turns out that things are worse in other places.

Friday, May 14, 2004

Wine for the Children

There are two towns that are completely subsumed by Arlington - Dalworthington Gardens and Pantego. The former has about 1,100 residents and Pantego has close to 3,000. In contrast, the rest of Arlington has almost 350,000. These three towns have no wine and liquor sales (at least that is the claim - there are supposedly three liquor stores that remit their taxes to Arlington). The worry now is that Arlington, especially, is foregoing desperately needed tax money (the city is running deficits around $12m per year) and if only wine/liqour sales were allowed things would be so much better.

There is a movement in Arlington to get the issue on a ballot, but when you're talking about inviting Satan to move into town, the issue moves very slowly. Upshot: no ballot initiative for Arlington this year.

Enter the quaint town of Pantego (which is literally 1/4 mile from my house) which obtained the required 377 signitures (rather than 25,000 required in Arlington) to allow a vote on Saturday whether to invite Satan to live in Pantego by allowing wine/liquor sales there. This Star-Telegram article outlines the upsides for Pantego. Specifically, "[Pantego] is so close in proximity to so many who do not have [wine] at this point."

Here's the reality: Pantego (and the relatively large chunck of Arlington that surrounds it) is about four - maybe up to six - miles away from Big Daddy's Liquor Store, Majestic Liquors, and two other stores the names of which I cannot remember at the moment. These liquor stores are all bunched up on the Arlington-Ft. Worth border (go figure) but are not inconvenient to the wine/liquor set. Pantego might have a first mover advantage relative to Arlington, but I can't see the tax revenue for Pantego being significant. Regardless, I hope Pantego passes its referendum.

I suppose the tax argument helps the ballot process, but the more sound argument for allowing wine/liquor sales is based on freedom. We live in a country in which wine, beer and liquor are regulated but not prohibited substances. Those who want to drink wine should be allowed to do so, and a freedom-loving country, county, or city, would grant individuals the right to purchase what they can legally consume.

I know, I know. Freedom? Who would dare decide such an issue on principle? We need tax money for the schools, dammit...

(thanks to my brother Christian at Le Chai for the heads up)

Wednesday, May 12, 2004


Final post of the day...


This is my final post today - I have to grade my final exams. However, this was too good to be true.

Another waffle off the old Kerry iron. Yesterday a vote to extend unemployment benefits failed by one vote - evidently that of John Kerry who didn't make it to his JOB because he was campaigning about the unemployed in Kentucky. What a tin ear this guy has.

Here's a Kerry spokesman's description of Kerry's stance on the issue of unemployment benefits:
Campaign spokesman David Wade had said earlier in the day that Kerry "has fought again and again to extend unemployment benefits for workers left behind in the Bush economy. The reason we haven't succeeded is because George Bush opposes extending unemployment insurance and so do his allies in the Republican House of Representatives and 39 Republican senators."


Here's John Kerry's rationalization for not making it to the Senate floor:
Campaigning in Florida, Kerry said he didn't come back to Washington for the vote because he understood that Senate Republicans would not let the measure pass.

"We were told that no matter what would happen they would change a vote in the Senate and they were not going to let it happen," Kerry said in an interview in Jacksonville with television stations WIXX and WTLV. "They don't want it to happen. It is very clear that even if they pass it in the Senate, they are not going to pass it in the House."


Unbelievable.


Do it for the children...


This story points to one of the most important issues of the day - smoking in films. Any smoking should lead to an 'R' rating, suggests Maryland Attorney General Joseph Curran. The reason? A (proverbial) study (source unnamed) that claimed to find that kids are more likely to smoke when they see smoking in movies. Therefore, ban smoking and kids won't be tempted?

I suppose that those who commit murder with a firearm also had seen a movie in the past in which a gun was used to kill someone. Also, those who get caught speeding probably saw a movie in which a car was driven fast. The list of correlations could go on indefinitely, with equally ridiculous results. All movies need to be rated 'R' to keep the virgin eyes of kids from being soiled by Hollywood's filth. Think of all the revisionist film-editing that will have to be done - James Dean in 'Rebel Without a Cause' or Bogart in 'Casablanca' and every war movie ever made.

This is a result of our affluence. This issue is an example of the margins on which national policy is now determined. For all who insist that the country is going in the wrong direction, etc., stories such as this should be reassuring. Relax, don't worry, things are just fine - the big stuff has been taken care of and now we can worry about protecting the children from every possible negative influence.


The Simpsons


Already one of the best shows on television, and destined to be one of the best of all time (in the future), this past Sunday's episode about turning Springfield into an un-kid friendly town was interesting. As I have been a DINK for the past seven years, I was sympathetic with the initial argument that those without kids are busy subsidizing those with kids. Now that I am on baby watch, of course my opinion is completely different.

However, during the episode Moe turned the backwards R to make the name Toys R Us which caused Milhouse to weep/cry. I remember the scene but didn't dial into the historical connection. Thankfully there are those who are quicker than me.


Amnesty for pirates?


Software piracy is considered a major problem by the Business Software Alliance and most U.S. software producers. So, what to do with those who have stolen software but might also be vulnerable to internet (I am on board with the "movement" to 'de-capitalize' the word) worms and viruses? Microsoft and other companies face a dilemma one that is perhaps mixed between morals and profits. In the end, it seems that MS has decided to let pirates get access to the next round of security updates for Windows XP.

Barry Goffe, an MS executive, had the following to say:
"It was a tough choice, but we finally decided that even if someone has pirated copy of Windows, it is more important to keep him safe than it is to be concerned about the revenue issue," he added.

He admitted, however, that it is more than altruism that helped Microsoft come to this decision.

"Having these unsecured users means bigger worm and virus outbreaks - which also impacts the Internet and consequently, our legitimate users as well."
So, positive network externalities are a reason for pirating software but negative network externalities are a reason for helping the pirates. Interesting...

Tuesday, May 11, 2004


Who commits the real attrocities?


So the U.S. is accused of violating the Geneva Convention and the Defense Secretary offers compensation to those fragile flowers in Iraq who were traumatized by standing naked, etc. in prison. While the Congressional Democrats today spent precious time and treasure "investigating" the so-called abuses, Al Qaeda releases the video of the decapitation of U.S. civilian Nick Berg. Dangit...

The left can't buy a break when trying to show how Pres. Bush, et al. are ruining the country. Al Gore gives his global warming speech on the coldest day in New York City in 110 years, and now just at the time the left is going to get Pres. Bush on failing to monitor the daily and nightly activities of 150,000 soldiers in Iraq, the Radical Islamists ruin things by re-orienting our perspective.

There are "atrocities" and then there are atrocities.

Will the rest of the world offer any outrage over Iraqis beheading a U.S. civilian who was in country to help repair communications systems?


War - a state of nature?


Given the Iraqi prison flap, it is sometimes useful to remind ourselves that man's rationality is what separates him from the rest of the animal kingdom. War seems to be the ultimate Hicksian paradox and yet it is an all-too-common occurence for both man and animal.


Do you need instructions with that hamburger?


One look at the multitude of "do not" labels on our appliances and tools is indication enough that people still don't have a firm grasp on how to use things (Like this kid). I get frustrated with some who can't use an ATM or a computer or can't figure out how to pay for their gas at the pump.

However, there was a time when the gadgets we take for granted were new and different - things like the radio, television and telephone. At one time the phone company felt it necessary to provide a "users manual" for the telephone. Importat tips about courtesy, hanging up the phone gently, and answering promptly. Perhaps we could use a reprinting?

Here's the original post.


Badly named laws...


There was a time when Congress passed laws called the Sherman Act or the Clayton Act, named for their authors, I assume because the authors were proud of the legislation. These days we get cute names for laws that are (potentially) misleading such as the USA PATRIOT Act: Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism, CAN-SPAM Act of 2003: Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, and now the JOBS Act: Jumpstart Our Business Strength.

The JOBS Act deals with tax breaks and tax breaks and tax breaks but ostensibly is concerned with the offshore outsourcing of jobs that supposedly happens because of tax considerations. While this may be the case in some situations, the offshore outsourcing of jobs has to do with comparative advantage considerations - some countries have a comparative advantage over the United States in, say, low skill labor intensive products, whereas the U.S. has a comparative advantage in high skill capital intensive products.

The JOBS Act is not likely to have a dramatic impact on the offshore outsourcing of jobs because such outsourcing follows the laws of comparative advantage not tax loopholes.

Thomas provides an interesting lesson in log-rolling (or pork barrel stuffing). The introduced legislation had 16 sections. The final legislation has around 170 sections.


The government misappropriates tax revenue?


This New York Times article points out that the state of New York collects $1.20 in special taxes per month from every cellphone subscriber in the state. The money is supposed to be used for enhanced cellular 911 systems that can track the location of callers and do other snazzy things. The taxes generate more than $130 million per year (there are lots of cellular subscribers in the Empire State), but still the 911 system is incomplete and is being funded by bonds. Why?

Alas, it seems that only $0.12 of the tax is actually being spent on the cellular 911 systems.
Most of the money goes far afield. Fifty cents of the $1.20-a-month tax paid by nearly every cellphone user goes not to the 911 system but to the state's general fund, the all-purpose budgetary pot that finances whatever the governor and the Legislature want. Twenty-four cents a month goes to the state police, which built and operates a statewide 911 system but has also used the money to pay for things like dry cleaning and travel.

About 34 cents goes for "homeland security," including the budgets of other state agencies, like Corrections and Parks and Recreation. Last week, the Pataki administration awarded the contract for a proposed $1 billion wireless radio network that will also be paid for using the money.

That leaves only about 12 cents of the monthly fee for the still-developing cellular 911 system, whose advocates complain that the state has misled its taxpayers and placed politics ahead of public safety.


Monday, May 10, 2004


Where's PETA?


When things like this are going on?


The elderly are the future...


Anyone who cares to do a little digging will quickly discover that the programs addressing the elderly might be disastrously overextended. As the population 65+ years of age becomes larger (both physically and agedly) over the coming decades, there will have to be some serious changes considered. Politicians are loathe to discuss the two most obvious solutions: decrease benefits or increase taxation. The former is costly because the elderly tend to vote in greater proportion than their younger counterparts and therefore cutting benefits might be a suicidal strategy for a politician. Moreover, raising taxes to pay for programs that specifically target the elderly can raise the ire of the younger voters that might likewise damage the chances for reelection.

Therefore, it seems that politicians are more comfortable to stick their head in the sand and do nothing about the programs for the elderly in the hopes that when the house of cards falls they (the current crop of politicians) will no longer be in office. Whether the programs for the elderly are the result of increased political pressure by the aged or a way for the younger generation to "buy" off the need to personally care for elderly parents and family members, it is becoming increasingly obvious that means testing or other forms of limiting benefits will be required.

Many are concerned about means testing, in which only those with sufficiently low income or other resources would qualify for government assistance, for at least two reasons. The first is a belief that most of the elderly are on fixed incomes in which the elderly are more succeptible to inflationary pressures. Means testing is not fair because regardless of the level of the fixed income, all face the same inflationary concerns. A second concern is that those who are excused from government services might actually be able to purchase higher quality services, thereby making it unfair for the less affluent elderly.

However, the House Ways and Means Committee's Green Book has an interesting appendix with lots of data on the elderly population. In particular it is dangerous to assume that elderly households live on very low fixed incomes.

For instance, Table A-8 indicates that




AllMarriedNon-Married
Median income other than Social Security $9,268 $18,111 $4,545
Median Social Security Income $12,355 $16,848 $10,368


What the first row indicates is that a considerable number of the elderly continue to work after sixty five, or otherwise have income flows. Thus, for the median 65+ household, only 57% of income is fixed, the remainder is variable to some extent and is most likely artificially limited by the extremely high marginal tax rates on social security transfers when earned incomes exceed $10,000 per year.

Indeed, the myth of the elderly household with fragile income and difficult decisions such as whether to eat or take medicine may only be true for a relatively few households. Table A-9 indicates that fully 57.6% of all elderly households have annual incomes greater than $20,000 per year and that 21% have annual incomes greater than $40,000 per year.

It seems that politicians are reluctant to suggest that the elderly pitch in to help fund the programs that aim to provide health care, retirement pension, food distribution, prescription drug distribution, public transportation, and the other services specifically targeted towards their age group. Perhaps this would require some to return to work, but Table A-3 indicates that in 1950 almost 50% of males 65+ years old participated in the work force, in 2003 that number was down to 18.5%. Granted, the participation rate is a ratio (#Participate/#Population), in which the denominator is getting larger. However, it is likely that there are many in this age group that would and could continue to work if they had to. Many may not want to, but then again I don't want to work and I am only 35. (To date I haven't been able to convince Congress that a special assistance program should be set up for 35+ year old academic economists.)

Politicians continue to act as if the elderly all live hand to mouth on less than $10,000 per year and therefore require (free) government programs to survive; most politicians have at least one nightmare story to share with the crowd (even if it is not entirely true?). However, the data suggest that a significant portion of the elderly population would be able (and willing?) to pay some or all of the true cost of the programs aimed to assist them. In other words, grandma will take reduced prescription drug prices if the government provides them (grandma might be old but she ain't stupid), however it seems that many might be able to pay the "normal" price of prescription drugs and other services.



Unemployment data


Many are focusing on the Iraq-prison "scandal," and I wonder why there is no discussion of how bad the economy is. With the increase in media news outlets, one might expect that there would be an increase in the diversity of the topics discussed. For instance, CNN might focus on the prison scandal while MSNBC would focus on how bad the economy is, while Fox might talk about how Congress can't seem to stop spending, and CNBC might focus on the outsourcing issue. Instead, we see "topic" agglomeration in which only one topic is "hot" at a given moment and all stations focus on this single topic. Often the same "experts" show up on different channels on the same day discussing the same things.

The Iraq prison scandal is the "news" du semaine and so perhaps rather dry discussion about the economy is naturally going to be pushed to the background. Which network would voluntarily talk about the economy when juicy pictures are available for discussion? I think I understand the nature of the media as an industry, but that doesn't mean I have to like it (or watch it).

For those who care, things are looking better than they did this time last year.









These graphs provide reason for optimism but depict net job gains (losses) and do not address a question in many people's minds - what about job losses? Things are looking pretty good here as well:




I understand the ethos of "if it bleeds, it leads" but seeing as how much energy and time was devoted to explaining how bad the economy was early in this calendar year, it would seem somewhat appropriate to revisit the issue when the predictions of doom and gloom have been proven incorrect.

Oh, well...too much to ask, I suppose.


The Allure of Survivor


As an academic I am pretty much a loner when it comes to my work. I do not team-teach and very rarely do I have a research project with more than one coauthor. Part of the allure of the life of the academic is the promise that you can work alone and think alone as much as you want; there is no "forced teamwork" as in many other job environments.

This is why I think that the "reality" shows like Survivor, Big Brother, Bachelor, etc., have absolutely no appeal to me. Watching people sit around and back bite, set up false allegiances, and ultimately screw over one or more "teammates" might be entertaining in a game-theoretic sense, but I suffer from attention deficit syndrome and have to move on to watch poker or pool on a sports channel.

My hypothesis is that the "reality" shows hold appeal to many because the free-rider, the glory-hog, or the whiner, is actually voted off the team. In actual job environments, in which team-work is emphasized, I am sure that these very attributes are commonly on display. However, in most cases members of the team are not allowed or not able to "vote" the free-riders off the team; that's a job for the manager and he or she may not see the reasons for removing an individual. Therefore, Survivor, et al., owe their success to the vicarious enjoyment that the audience gets in taking it out on the slacker.

However, while re-reading C.S. Lewis's Screwtape Letters the introduction provided his definition of "hell" as:
...my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern...an official society held together entirely by fear and greed. On the surface, manners are normally suave. Rudeness to one's superiors would obviously be suicidal; rudeness to one's equals might put them on their guard before you were ready to spring your mine. For of course "Dog eat dog" is the prinicple of the whole organization. Everyone wishes everyone else's discrediting, demotion, and ruin; everyone is an expert in the confidential report, the pretended allegiance, the stab in the back. Over all this their good manners, their expressions of grave respect, their "tributes" to one another's invaluable services form a thin crust. Every now and then it gets punctured, and the scalding lava of their hatred spurts out.


Upon reading this I was stunned, because I immediately thought of Survivor, Big Brother, and the other "reality shows" - not of academia or even the business world. Lewis's definition of Hell comes scarily close to the majority of new programming on television. Perhaps this is why it holds no allure to me.

Saturday, May 08, 2004


Bad things afoot in North Korea


Found this before and after comparison of the train explosion that occurred in Ryongchon, North Korea last month. There were other such blasts in the Soviet Union back in the fifties, and a couple here in the states early in the twentieth century, but I don't recall hearing of something of this magnitude lately.

What a shame...


Value added is questionable, but...


This guy has way too much free time and a very tolerant wife. The hole is now called an "underground deer observation hut" and contributes(?) something to the guy's property, asking price $59K.

Gotta love this country.


Why I live in the Southland...



This set of pictures makes my joints hurt just looking at them. There is a reason to live the in the South and it is, in particular, to avoid instances such as this.

Found at Top Down, which is a pretty good blog of cool links.


Oh my god...


This is not suitable for work, and really isn't suitable at all.


Ameriquest Field at where?


So the Rangers sold the name of the Ballpark in Arlington to Ameriquest Mortgage - the new name is Ameriquest Field in Arlington. Tom Hicks, owner of the team, lived up to the "gentleman's agreement" he had with the city to keep the word Arlington in the name. Unfortunately, the rest of the world will soon known the stadium as Ameriquest Field. Thus, the team will receive $75 million over thirty years and the city's name will slowly be disassociated with the stadium.

Before I moved to Arlington, I only knew the city existed because of the Ballpark in Arlington. The Texas Rangers could play anywhere in the large state of Texas, but no - they played in Arlington, which is in the Dallas-Ft. Worth metroplex. The city's name in the stadium was not only quaint and a bit old-fashioned (not a negative to baseball fans), but it did provide some "advertising" for the city.

Another interesting aspect of naming rights deals is that they are almost always signed for ten, twenty or thirty years. Hell, the Texas Rangers have only been in Arlington for thirty years and very well may be relocated to another stadium in the next thirty years. Other deals signed with Enron, Pacific Bell, TWA, and so forth have all gone by the wayside as the firms that signed the deal either went bankrupt, were bought out by other firms or otherwised merged. The long-range planning of the people at Ameriquest may be an attempt to send a signal to investors that Ameriquest plans to stick around that long, but given the previous history of naming deals it is unlikely that the signal conveys any information that investors don't already know.

I am sure that here in Arlington the stadium will always be called the Ballpark - perhaps that will hold over in the immediate vicinity. However, the city of Arlington lost out in the naming deal and, too boot, will not share in the proceeds. Hicks suggested that he might spend the extra money on additional players, but this is hard to believe on the surface.

Indeed, using data from the 1990's, initial empirical tests indicate that selling the name of the stadium has nt subsequent impact on the real dollars spent on player salaries - not surprising seeing as the return on $2.5m is likely higher in other endeavors than investing in a ball player. The idea that the team owner would buy more talent after selling the naming rights might seem reasonable to baseball fans but has no economic rationale.

However, it is refreshing that even if commercialization will continue apace on the outside of the stadium, the fans rebelled against proposed advertisements of Spider Man 2 on the bases and home plate. Baseball has evidently scuttled the deal.

Tuesday, May 04, 2004


On the Iraqi prisoner scandal...


It seems that the majority of the recent accusations against a few U.S. servicemen for abusing Iraqi dissident prisoners are true. However, I wonder if some of the pictures being shown are legit. In today's world of digital enhancement and the continuing scandals in the print media about plagarism, falsification, and a lack of editorial integrity, it may be the case that some of the images have been doctored.

World Net Daily reports that some staged pornographic pictures depicting Coalitiion forces supposedly raping Iraqi women were passed off by at least two Arabic news sources as legitimate. Now we know that the pictures are fake, but it is unlikely that the Arab media will publish a wide-spread retraction.

This is troubling, because whether our service men do bad or good, a majority of the Arab world might think that they only do bad. Gresham's law in photojournalism?


Kim, Kim, Kim....tsk


Kim Delaney quit NYPD Blue in order to give movies a crack. The end result has been a short stint on CSI: Miami and the forgettable 10.5 miniseires that aired on NBC over the weekend. I missed Sunday's excitement because we were at the Rangers game and that which I saw on Monday was badly written, poorly acted and ultimately unbelievable.

Most glaring was the idea that the fault lines would be "fused" together using nuclear bombs - buried to a whopping four hundred feet. I didn't watch close enough to get what size the bombs were supposed to be, but having a nuclear bomb go off less than two hundred feet from the surface doesn't sound too safe, even if the President signed off on it (and people are nervous about Pres. Bush!).

I doubt any serious seismologist would think that the blasts would actually "fuse" the fault line. This page shows the earthquakes in the SF Bay area over the past week. Most of the tremors are multiple kilometers below the surface - seemingly out of the reach of the nuclear blasts portrayed in 10.5




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