If you look at the facts, the two are a LOT alike.
First, some background:
Progressive taxation essentially means taxing people a higher percentage of their income as their income increases. If you make $50,000 in the United States, you are probably paying something closer to 10% of your income in federal income taxes, as opposed to 20% if you are making $200,000 annually. Theoretically, this allows the government to raise funds more easily and reduces inequality.
Price Discrimination means charging different people different prices for a product. A lot of people thinks this means that businesses are being mean to minorities or women: not so. Amazon bundling books on their website is price discrimination, as is a movie selling a cheaper ticket to a student or a senior citizen. Businesses do this whenever possible, because it is profit-maximizing.
How are these two similar in any way?
Well, businesses price discriminate primarily because, for any given product, there are heavy users and casual users. Consider Cubs games. There are those, like some of the Brothers in my fraternity, that REALLY love the Cubs and try to watch every home game. On other hand, I watch a Cubs only every once in a while. So, we have different demand curves. If possible, you want to charge the people that have higher demand curves a higher price, since they are willing to pay it.
Governments are capable of doing the same thing. Government is a bit like a service or a product offered by businesses. What it offers is safety and enhancement of welfare. That doesn't mean that government should be maximizing profit (that'd be a bit immoral, no?), but it does mean people have different demands for government services. For government, though, the demand curve is based less on the "need" for the service and more on the ability to pay: Rich people have more money, and thus can afford more government...their demand curve is therefore higher.
So, if a government wants to effectively raise income, it should be charging rich people more. And that...is progressive taxation.
Now, that's not to say that progressive taxation is always the way to go. Income taxes typically are expensive to operate. They require good census data and a big agency to enforce the laws (the IRS is by no means "small" or "uncostly"). So, income taxes should only be used if you need to raise a LOT of money.
But if you are going to use an income tax, you might as well do it right: go progressive
Wednesday, May 21, 2008
Tuesday, May 20, 2008
The Dangers of Marketing Yourself Low
Most people ignore the true power of marketing and how you sell dreams and lifestyles. To a lot of people, it's just "lowest price wins."
During the Great Depression, Pepsi lowered its price to 5 cents a bottle and called itself the discount drink.
When the economy recovered, people were embarrassed to sell Pepsi and switched to Coke, because only poor people would drink Pepsi.
This would basically continue until Pepsi poached Coke's marketing man and marketed itself as the drink for the "Pepsi Generation"
Just a reminder: price ain't everything
During the Great Depression, Pepsi lowered its price to 5 cents a bottle and called itself the discount drink.
When the economy recovered, people were embarrassed to sell Pepsi and switched to Coke, because only poor people would drink Pepsi.
This would basically continue until Pepsi poached Coke's marketing man and marketed itself as the drink for the "Pepsi Generation"
Just a reminder: price ain't everything
So, went to California
Some interesting stuff I learned:
The bugs in Yosemite are insane. They're like super-bugs. On the first night, my brother and I were swatting at mosquitoes. Now, usually, we're pretty damn good at getting bugs. We can pick flies out of mid-air, and do the same for bees without injuring ourselves.
These buggers were insane, though. They hovered, and then executed hair pin turns and jawbreaking acceleration whenever we snapped our fingers at them. It was like watching an excellent ballet: two college males twisting and turning, darting at random spots in the air, always unable to get our objective.
Damn mosquitoes.
In addition, virtually everything in Disneyworld is better than whatever is in Disneyland. The food, the rides, the lines, the atmosphere...goes right down to the trash on the street (which is NOT there in Disneyworld). Disneyland just doesn't that have magical feeling: it seems like just another theme park.
Also, buses in Santa Monica are 50 cents. The CTA buses here are $2...that's not cool. The walk in Santa Monica is shorter and along a beach :(
The bugs in Yosemite are insane. They're like super-bugs. On the first night, my brother and I were swatting at mosquitoes. Now, usually, we're pretty damn good at getting bugs. We can pick flies out of mid-air, and do the same for bees without injuring ourselves.
These buggers were insane, though. They hovered, and then executed hair pin turns and jawbreaking acceleration whenever we snapped our fingers at them. It was like watching an excellent ballet: two college males twisting and turning, darting at random spots in the air, always unable to get our objective.
Damn mosquitoes.
In addition, virtually everything in Disneyworld is better than whatever is in Disneyland. The food, the rides, the lines, the atmosphere...goes right down to the trash on the street (which is NOT there in Disneyworld). Disneyland just doesn't that have magical feeling: it seems like just another theme park.
Also, buses in Santa Monica are 50 cents. The CTA buses here are $2...that's not cool. The walk in Santa Monica is shorter and along a beach :(
The end of school
Final grades:
Environmental Economics: A
Industrial Organization: A
Econometrics: A
Investments: B (missed the A by two points!)
Compensation: C
That compensation class is going to haunt me.
Environmental Economics: A
Industrial Organization: A
Econometrics: A
Investments: B (missed the A by two points!)
Compensation: C
That compensation class is going to haunt me.
Saturday, May 10, 2008
Mass Transit Ridership Soaring
From the New York Times
Should make a good bit sense. Eventually, the gasoline just gets so damn expensive that it is cheaper to use mass transportation instead. I can't say I have seen a big impact in Chicago: Don't keep a running list of the number of people.
Personally, I love mass transit: it relieves me of stressful driving. Standing still on a highway for an hour is not my idea of a good time. And I can easily chat with my friends on the Metra trains, or read, or do homework. That's freedom that you can't get in an automobile.
Not everything is sunshine and flowers, though:
See: Chicago's public transit crisis, resulting in large service cuts. Eeeeep. Ain't no such thing as a free ride.
Some cities with long-established public transit systems, like New York and Boston, have seen increases in ridership of 5 percent or more so far this year. But the biggest surges — of 10 to 15 percent or more over last year — are occurring in many metropolitan areas in the South and West where the driving culture is strongest and bus and rail lines are more limited...the increase in transit use coincides with other signs that American motorists are beginning to change their driving habits, including buying smaller vehicles. The Energy Department recently predicted that Americans would consume slightly less gasoline this year than last — for the first yearly decline since 1991.
Should make a good bit sense. Eventually, the gasoline just gets so damn expensive that it is cheaper to use mass transportation instead. I can't say I have seen a big impact in Chicago: Don't keep a running list of the number of people.
Personally, I love mass transit: it relieves me of stressful driving. Standing still on a highway for an hour is not my idea of a good time. And I can easily chat with my friends on the Metra trains, or read, or do homework. That's freedom that you can't get in an automobile.
Not everything is sunshine and flowers, though:
But meeting the greater demand for mass transit is proving difficult. The cost of fuel and power for public transportation is about three times that of four years ago, and the slowing economy means local sales tax receipts are down, so there is less money available for transit services. Higher steel prices are making planned expansions more expensive.
Typically, mass transit systems rely on fares to cover about a third of their costs, so they depend on sales taxes and other government funding. Few states use gas tax revenue for mass transit.
See: Chicago's public transit crisis, resulting in large service cuts. Eeeeep. Ain't no such thing as a free ride.
Friday, May 9, 2008
The Final Day of Finals Week
Woke up at 7:20. Felt like total garbage.
Hopped on my train and rode over to Union Station. I tried to study along the way...didn't work out too well. I was a bit distracted by some odd dreams I had.
Anyways, I walked over to campus from Union Station. I figured it is going to be an easy walk...sun made it a bit warmer than I expected. At least the feces on the sidewalk were mostly gone (about time, they were there all damn week).
Picked up a copy of the Red Eye as I passed the CTA station. Headed over to the Atrium to sit with Peter and Harris as they were studying for their final.
Me? I did sudoku. They thought I was crazy. But it was economics...and I'm a damn econ major! Come on guys, lets do the math.
The final started a bit after 10:30. 9 short-response questions, of which we are to pick 7. Then two mathematical problems.
I think I rocked it pretty well.
And then...I was done with finals. And I went and got my Mother a gift for Mother's Day!
And all was well...
Hopped on my train and rode over to Union Station. I tried to study along the way...didn't work out too well. I was a bit distracted by some odd dreams I had.
Anyways, I walked over to campus from Union Station. I figured it is going to be an easy walk...sun made it a bit warmer than I expected. At least the feces on the sidewalk were mostly gone (about time, they were there all damn week).
Picked up a copy of the Red Eye as I passed the CTA station. Headed over to the Atrium to sit with Peter and Harris as they were studying for their final.
Me? I did sudoku. They thought I was crazy. But it was economics...and I'm a damn econ major! Come on guys, lets do the math.
The final started a bit after 10:30. 9 short-response questions, of which we are to pick 7. Then two mathematical problems.
I think I rocked it pretty well.
And then...I was done with finals. And I went and got my Mother a gift for Mother's Day!
And all was well...
Thursday, May 8, 2008
Frans De Waal on Freakonomics
See the column here
Some interesting tidbits:
"Outside bonobos, there are many other animals that engage in sex even if reproduction is impossible, such as when the female is pregnant, or between members of the same sex. Also here, the sex serves a bonding function, or to signal dominance."
The important thing to note here is that sex, especially in bonobos, serves a primarily social role (IE, building relationships, defusing tension, etc). In fact, it is the primary method by which they DO interact socially. Chimpanzees hit each other with sticks, humans talk, and bonobos copulate like a bunch of horny teens on spring break.
So, we shouldn't be too surprised when we see the phrase "to signal dominance" at the end. However, this begs an interesting question: How exactly DOES sex signal dominance? Is it signaling dominance to the other bonobo, or bonobos who are watching? Does it imply the "r-word?"
And, most disturbing...how does this behavior manifest itself in homo sapiens?
Another thing to note is that the bonobos hardly have an ideal, communist lifestyle: they have social hierarchy, too, even if they don't have open violence.
"When I came to this country, over twenty-five years ago, I was amazed that creationism was still taken seriously, and assumed that it would blow over. It never did, of course. "
Hehehehehe. I just find this funny.
"I actually don’t think the response is irrational at all, but related to the fact that in a cooperative system, one needs to watch what kind of investment one makes and what one gets in return. If your partners always ends up getting a greater share, this means that you’re being taken advantage of. So, the rational thing to do is withhold cooperation until the reward division improves.
This holds an important message for American society which is becoming less fair by the day...I expect the same inequity aversion in dogs and wolves, but not cats (which are solitary hunters, and shouldn’t care much about what others get)."
A lot of anti-market people seem to think that, since people will take a "screw you" approach, it means all the assumptions of capitalism are wrong and that markets are a miserable failure (a violation of the rational maximizer means, for instance, that markets don't work properly because the demand curve won't work).
What's important to note:
1. People ARE maximizing. They are simply maximizing their welfare in a way that is unexpected to an untrained observer. To a person that knows the importance of relationships and the social dynamics of the marketplace and the workplace, no one is surprised when a person who isn't getting paid as much as his peers doesn't work very hard. We also don't call for an immediate government intervention to some supposed market failure.
2. Yep, sometimes we are irrational. It's impossible to admit otherwise. A human is not a perfect rationalizer, otherwise we would all be able to zip through Sudokus in a couple minutes. Every single one of us has developed our own heuristics and algorithms to solve problems. These are the combination of our own genetic code (which is why chimpanzees stop working when they are getting screwed) and the hard years of mental work and experience through our lives (which is why some of us are racists and some of us are hippies). Ultimately, some of these heuristics and algorithms are incorrect and make us do stupid things, like, say, throw rocks at cute girls to get their attention.
"The general rule in primates is that one sex or the other leaves the group at puberty. In many monkeys, the males leave and seek another group. With apes (and overwhelmingly in human societies, too), it are the females who leave. "
Yet, men are pretty mobile these days, too...no?
All in all, a good post on Freakonomics indeed
Some interesting tidbits:
"Outside bonobos, there are many other animals that engage in sex even if reproduction is impossible, such as when the female is pregnant, or between members of the same sex. Also here, the sex serves a bonding function, or to signal dominance."
The important thing to note here is that sex, especially in bonobos, serves a primarily social role (IE, building relationships, defusing tension, etc). In fact, it is the primary method by which they DO interact socially. Chimpanzees hit each other with sticks, humans talk, and bonobos copulate like a bunch of horny teens on spring break.
So, we shouldn't be too surprised when we see the phrase "to signal dominance" at the end. However, this begs an interesting question: How exactly DOES sex signal dominance? Is it signaling dominance to the other bonobo, or bonobos who are watching? Does it imply the "r-word?"
And, most disturbing...how does this behavior manifest itself in homo sapiens?
Another thing to note is that the bonobos hardly have an ideal, communist lifestyle: they have social hierarchy, too, even if they don't have open violence.
"When I came to this country, over twenty-five years ago, I was amazed that creationism was still taken seriously, and assumed that it would blow over. It never did, of course. "
Hehehehehe. I just find this funny.
"I actually don’t think the response is irrational at all, but related to the fact that in a cooperative system, one needs to watch what kind of investment one makes and what one gets in return. If your partners always ends up getting a greater share, this means that you’re being taken advantage of. So, the rational thing to do is withhold cooperation until the reward division improves.
This holds an important message for American society which is becoming less fair by the day...I expect the same inequity aversion in dogs and wolves, but not cats (which are solitary hunters, and shouldn’t care much about what others get)."
A lot of anti-market people seem to think that, since people will take a "screw you" approach, it means all the assumptions of capitalism are wrong and that markets are a miserable failure (a violation of the rational maximizer means, for instance, that markets don't work properly because the demand curve won't work).
What's important to note:
1. People ARE maximizing. They are simply maximizing their welfare in a way that is unexpected to an untrained observer. To a person that knows the importance of relationships and the social dynamics of the marketplace and the workplace, no one is surprised when a person who isn't getting paid as much as his peers doesn't work very hard. We also don't call for an immediate government intervention to some supposed market failure.
2. Yep, sometimes we are irrational. It's impossible to admit otherwise. A human is not a perfect rationalizer, otherwise we would all be able to zip through Sudokus in a couple minutes. Every single one of us has developed our own heuristics and algorithms to solve problems. These are the combination of our own genetic code (which is why chimpanzees stop working when they are getting screwed) and the hard years of mental work and experience through our lives (which is why some of us are racists and some of us are hippies). Ultimately, some of these heuristics and algorithms are incorrect and make us do stupid things, like, say, throw rocks at cute girls to get their attention.
"The general rule in primates is that one sex or the other leaves the group at puberty. In many monkeys, the males leave and seek another group. With apes (and overwhelmingly in human societies, too), it are the females who leave. "
Yet, men are pretty mobile these days, too...no?
All in all, a good post on Freakonomics indeed
Day 3 of Finals
Note to Econ Majors: Econometrics is a doozie. Study hard. Especially if you aren't quantitatively inclined, like myself
Wednesday, May 7, 2008
Day 2 of Finals
Still Breathing!
-Got on campus around 12:30
-Met up with Ahmed and some other friends
-Read my Compensation Management
-Took a Nap
-Took the test
-Read Businessweek
-Went to Jimmy Johns, where students could get free sandwiches if they sign up for credit cards (yeah, screw that, I paid for the sandwich)
-Hung out with some Fraternity members for a while
And they say Finals Week is stressful. I haven't even started talking to myself yet.
I did walk into a wall, though
-Got on campus around 12:30
-Met up with Ahmed and some other friends
-Read my Compensation Management
-Took a Nap
-Took the test
-Read Businessweek
-Went to Jimmy Johns, where students could get free sandwiches if they sign up for credit cards (yeah, screw that, I paid for the sandwich)
-Hung out with some Fraternity members for a while
And they say Finals Week is stressful. I haven't even started talking to myself yet.
I did walk into a wall, though
What I learned from Compensation Management
1. Adam's Equity Theory!
2. Compensation strategy is extremely diverse, as "pay grades" are extremely flexible.
3. Job Analysis sucks. Badly (6 hour homework assignments make me cry).
2. Compensation strategy is extremely diverse, as "pay grades" are extremely flexible.
3. Job Analysis sucks. Badly (6 hour homework assignments make me cry).
This man captures my thinking well:
Joe Mathlete doesn't like Facebook:
Reason for deactivating his account:
"Facebook is like a creepy and pointless videogame where people collect every person they've ever met, then waste their time spying on all the dumb bullshit they do all day. I don't care if some moron I went to high school with bought a new iPod, I don't want to play the vampire biting game, and I don't want people I don't care about to know what I'm up to if they're not going to bother asking me with words."
Yep, pretty much. I only keep it for the pictures. And about 90% of my "friends" are also members of Alpha Kappa Psi that I see relatively often anyways.
Reason for deactivating his account:
"Facebook is like a creepy and pointless videogame where people collect every person they've ever met, then waste their time spying on all the dumb bullshit they do all day. I don't care if some moron I went to high school with bought a new iPod, I don't want to play the vampire biting game, and I don't want people I don't care about to know what I'm up to if they're not going to bother asking me with words."
Yep, pretty much. I only keep it for the pictures. And about 90% of my "friends" are also members of Alpha Kappa Psi that I see relatively often anyways.
Tuesday, May 6, 2008
Sports and musical chairs: Competition vs. Cooperation
One of the big issues I see with wide-eyed college students who have *GASP* actually paid attention in Econ 130 (basic micro and basic macro) is the same issue a lot of people see: they tend to become overly confident in market forces. It's the trend of new students becoming heartless libertarians after they learn about supply and demand!
Heck, anyone who spent time in my Management 350 class knows exactly what I am talking. Almost every single day, an arrogant, confident libertarian would argue with our socialist professor about topics that had nothing to do with the class (it was a class about law and business...they talked about everything under the sun).
The biggest problem is a problem with tools. These students get their basic tools (supply and demand graphs) and they try to apply it to everything. A kid that runs away hammering away on stuff with his new rubber mallet, basically. It's pretty funny, but it doesn't make for good solutions.
That's why most Macroeconomists are Democrats (not me, though)
The biggest problem is the obsession with competition. What's the solution to any market? More competition. What's the problem with any malfunctioning market? Too little competition (probably because of the government. They forget things like fixed costs)
But, the entire economy doesn't revolve around competition and market forces. Who here among us really thinks that markets are the best way to distribute babies? And if you show up to your place of employment, do you think that marketing is going to bid with procurement to use you for that particular day?
Heck no. Both examples are examples of command economies. Every business is an example of a command economy: it's why a lot of socialists think regulation can work, since almost half of the largest 100 economic entities on this planet are corporations.
An example about cooperation vs. competition: Sports. Any sports team where the players are not working together is bound to fail. The best teams are teams where players sacrifice and compliment each other's talents.
And what do people enjoy more? Consider a scenario: we have two groups of people playing two separate games. The first game is musical chairs. There is one less chair than there are people, and the people circle the chairs until music stops playing. The players then try to sit on a chair. The one who doesn't sit on a chair is eliminated.
The other game is a "stack game." All the players try to build a pyramid so that everyone is standing on the chair. Which game do you think people will have more fun with?
This scenario occurred in my high school communications class, and we enjoyed the stacking game a lot more than musical chairs.
On the other hand, it's false to make the assumption that, since cooperation makes people happier and improves productivity, we should all just say "screw the market" and roll out the welcome mat for the commies. Markets support cooperation, too. They support "intelligent" cooperation, namely that we will cooperate as long as you pay me enough.
It's a brilliant combination the market is able to perform. And it's just like a sports team: they have no motivation to work hard unless they have a team to play against.
It just doesn't necessarily work all of the time.
Heck, anyone who spent time in my Management 350 class knows exactly what I am talking. Almost every single day, an arrogant, confident libertarian would argue with our socialist professor about topics that had nothing to do with the class (it was a class about law and business...they talked about everything under the sun).
The biggest problem is a problem with tools. These students get their basic tools (supply and demand graphs) and they try to apply it to everything. A kid that runs away hammering away on stuff with his new rubber mallet, basically. It's pretty funny, but it doesn't make for good solutions.
That's why most Macroeconomists are Democrats (not me, though)
The biggest problem is the obsession with competition. What's the solution to any market? More competition. What's the problem with any malfunctioning market? Too little competition (probably because of the government. They forget things like fixed costs)
But, the entire economy doesn't revolve around competition and market forces. Who here among us really thinks that markets are the best way to distribute babies? And if you show up to your place of employment, do you think that marketing is going to bid with procurement to use you for that particular day?
Heck no. Both examples are examples of command economies. Every business is an example of a command economy: it's why a lot of socialists think regulation can work, since almost half of the largest 100 economic entities on this planet are corporations.
An example about cooperation vs. competition: Sports. Any sports team where the players are not working together is bound to fail. The best teams are teams where players sacrifice and compliment each other's talents.
And what do people enjoy more? Consider a scenario: we have two groups of people playing two separate games. The first game is musical chairs. There is one less chair than there are people, and the people circle the chairs until music stops playing. The players then try to sit on a chair. The one who doesn't sit on a chair is eliminated.
The other game is a "stack game." All the players try to build a pyramid so that everyone is standing on the chair. Which game do you think people will have more fun with?
This scenario occurred in my high school communications class, and we enjoyed the stacking game a lot more than musical chairs.
On the other hand, it's false to make the assumption that, since cooperation makes people happier and improves productivity, we should all just say "screw the market" and roll out the welcome mat for the commies. Markets support cooperation, too. They support "intelligent" cooperation, namely that we will cooperate as long as you pay me enough.
It's a brilliant combination the market is able to perform. And it's just like a sports team: they have no motivation to work hard unless they have a team to play against.
It just doesn't necessarily work all of the time.
Day 1 of Finals
1. Rocked Econ 329 (wasn't the first to finish because I forgot to multiply both sides of an equation by the same number. It seemed that two firms in one market would be LOSING money when demand was higher than MC)
2. Got my ice cream
3. Ate my Potbelly sandwich. Apparently Potbellys takes orders online now. Kick ass or what?
2. Got my ice cream
3. Ate my Potbelly sandwich. Apparently Potbellys takes orders online now. Kick ass or what?
Monday, May 5, 2008
Lemonade and Ice Cream for Business Students!
From my email:
Stop by the CBA between final exams to take a break. Make an ice cream
sundae and have some lemonade.
Monday, May 5 and Tuesday, May 6
11:30 - 1:30
1105 UH
I sure as hell am coming by after my Econ final :)
Stop by the CBA between final exams to take a break. Make an ice cream
sundae and have some lemonade.
Monday, May 5 and Tuesday, May 6
11:30 - 1:30
1105 UH
I sure as hell am coming by after my Econ final :)
Sunday, May 4, 2008
A plea to KFC
Please come back to my hometown. Please!!! It just isn't the same without you and your delicious fried chicken smothered in macaroni and otherwise-not-tasty yellow corn :(
Thinking about Violence as a Disease
From the New York Times:
"IN THE PUBLIC-HEALTH field, there have long been two schools of thought on derailing violence. One focuses on environmental factors, specifically trying to limit gun purchases and making guns safer. The other tries to influence behavior by introducing school-based curricula like antidrug and safe-sex campaigns.
Slutkin is going after it in a third way — as if he were trying to contain an infectious disease. The fact that there’s no vaccine or medical cure for violence doesn’t dissuade him. He points out that in the early days of AIDS, there was no treatment either. In the short run, he’s just trying to halt the spread of violence. In the long run, though, he says he hopes to alter behavior and what’s considered socially acceptable"
"IN THE PUBLIC-HEALTH field, there have long been two schools of thought on derailing violence. One focuses on environmental factors, specifically trying to limit gun purchases and making guns safer. The other tries to influence behavior by introducing school-based curricula like antidrug and safe-sex campaigns.
Slutkin is going after it in a third way — as if he were trying to contain an infectious disease. The fact that there’s no vaccine or medical cure for violence doesn’t dissuade him. He points out that in the early days of AIDS, there was no treatment either. In the short run, he’s just trying to halt the spread of violence. In the long run, though, he says he hopes to alter behavior and what’s considered socially acceptable"
Seems to make sense to me. You can come to the same conclusion from even a basic psychological/political perspective: remove or neutralize the people most likely to incite violence, and you reduce the overall level of violence in the community.
Attention UIC Business Students
Still a few slots open for the Cubs outing:
"Join the UIC Athletic Department for the annual Cubs Rooftop Outing on
Saturday, May 10, for what always proves to be an afternoon of food, fun
and baseball. This is a must-see game for die hard Cubs fans as the Cubs
take on the Arizona Diamondbacks in a rematch of last year's National
League playoff series.
For any baseball fan, the Skybox on Sheffield (3627 N. Sheffield) rooftop
experience provides a truly unique vantage point to catch a game at
historic Wrigley Field. An all-you-can-eat buffet with open bar starting
30 minutes prior to first pitch (2:45 PM) and running through the seventh
inning is included and guarantees you will not leave hungry.
Cost is $150 PER PERSON
To reserve your spot or for more information please contact Lisa Meindl,
Coordinator of Special Events & Alumni, Booster and Donor Relations at
(312) 996-5874. Or send an email to lisam@uic.edu. "
"Join the UIC Athletic Department for the annual Cubs Rooftop Outing on
Saturday, May 10, for what always proves to be an afternoon of food, fun
and baseball. This is a must-see game for die hard Cubs fans as the Cubs
take on the Arizona Diamondbacks in a rematch of last year's National
League playoff series.
For any baseball fan, the Skybox on Sheffield (3627 N. Sheffield) rooftop
experience provides a truly unique vantage point to catch a game at
historic Wrigley Field. An all-you-can-eat buffet with open bar starting
30 minutes prior to first pitch (2:45 PM) and running through the seventh
inning is included and guarantees you will not leave hungry.
Cost is $150 PER PERSON
To reserve your spot or for more information please contact Lisa Meindl,
Coordinator of Special Events & Alumni, Booster and Donor Relations at
(312) 996-5874. Or send an email to lisam@uic.edu. "
Bit too costly for me, and I ain't going to a Cubs game in the middle of finals week. But this might be just the thing some of you need to destress
Frans de Waal is coming to Freakonomics
I am excite-rpated
This is a very interesting fellow and an expert primatologist(you know, the guys who study primates).
Should be pretty interesting, I intend on reading this blog post very carefully.
Friday, May 2, 2008
Relay for Life (okay, a bit late)
Last week, a couple of the Brothers and I headed up to the DePaul campus to run in the Relay for Life event at their student center.
It was time to do some philanthropy work, after all. And there is no better cause than fighting cancer.
Besides the uneventful bus ride, the night was pretty okay on the whole. We checked in at the registration center a bit after 6 PM. After that, we headed up to the gym area. A large net-type divider was set up, splitting the gym into two parts: one was for the basketball pick-up games, and the other part was dedicated as a "base camp" for the Relay for Life Teams.
SideBar:For those that are unfamiliar, you sign up to participate as a team. You are supposed to have one person on your team walking on whatever path they have set up for 12 hours. Since you're stuck there for, well, a long time, people usually bring food and blankets and set up camp off the track.
Anyways, my buddy Ice Baby and I take a look at the basketball games going on. Those guys were pretty damn big and muscular. No damn way was I playing against them. I'm just a poor lil' white guy with no stamina and a beer gut. So we walked on to the Relay for Life area.
That area was FULL of students (almost all from Greek organizations). Each organization had set up its own little fundraising booth. Some of them were really creative.
Anyways, we know for a fact Alpha Kappa Psi has a camp set up somewhere already, and head straight to the AK Psi Banner hanging from the second story. Oops, looks like they set up in the middle, we realize. No biggie.
I left around 9 PM, but some of the highlights:
-Free Mexican food!
-There were no survivors for the survivor walk :(
-The DePaul's Mens Acappella Group stopped by to give us a treat. They were pretty gorgeous, I must say
-AK Psi Brothers got their nails painted.
All in all, it was pretty fun. I highly recommend participating in your local Relay For Life events. They are almost like parties, but they are alcohol-free ( sadface) and raise money to help cure cancer (which is mega-awesome).
DO EET
Advertising
I really don't remember much from elementary school, but I DO remember the first time we were ever taught about advertising. It was a Wednesday, I believe, and we were heading up the library for our designated reading time (once a week, we would go to the library to pick out books to read).
This week, we weren't going to read a book. We were going to watch a special video. So, like little children, we climbed up "Hershey Hill"
As you can see, it is called Hershey Hill because it looks like chocolate and a hill. And, damn, I can't believe I was every so tiny.
Anyways, we scampered up the thing and sat down for the video. The teacher turns out the lights and we start watching a video on...advertising! I don't remember the specifics, but the video went through a lot of the commericals out at the time (like "ZOMG, Sign up and WIN!") and how they all had fine print explaining what was REALLY going on.
And I was all like "DAMN, those buggers are trying to trick me into BUYING stuff!"
Of course, I was pretty liberal throughout most of middle school and high school. My opinion didn't really budge much: my opinion on marketing was really sour. My high school broadcasting teacher especially was really against it, citing how marketing warps the minds of young people, especially on topics like beauty and love.
I have since taken a couple marketing classes, and I have to say that I am still somewhat confused on the issue.
Ideally, in a free market, marketing provides essential information to consumers. It's hard for a market to operate effectively without someone performing that information-distributing function.
On the other hand, marketing does a LOT more than just "provide information." Marketers don't just sell products: they sell ideas and lifestyles. Take, for example, DeWalt. Originally, Black and Decker was getting was getting smacked across the face pretty hard by Makhita in contractor power tools market (IE, the independent contractors and carpenters, not the big boys or the home use power tool folk). Considering that market was growing especially fast, Black and Decker really needed a new strategy.
BAM! DeWalt comes rolling out from the Black and Decker people. DeWalt is a MAN's power tool. It's a yellow and black power tool, which is unique in the power tools market (Black and Decker used black, Makhita used teal) allowing market differentiation. It also looked pretty damn cool...yellow is a commonly used color on construction sites, after all: it implies safety.
Not only that, DeWalt's tools were designed to big and bulky, and rough to the touch: JUST the way a MAN wants his power tools. And the box it came in was pretty damn hard, too. Yep, DeWalt was a marketing success, and because it was sold as an IDEA and not just a product.
Some view this as underhanded. In a way, I suppose it is. It is using human psychology to help sell a product. HOWEVER, is it really that bad to use psychology to help sell a product?
We all accept that humans have basic needs, like food and water. We all accept that humans have higher needs in an advanced economy, like the need for internet, or, in DeWalt's case, the need for a tool that can fix stuff. And we accept that it is alright for a company to make a bit of money by satisfying those needs in the marketplace.
But don't people have psychological needs as well? Humans also have "needs" for truth, belonging, beauty, love, and acceptance. Unfortunately, not everyone can get these needs totally satisfied in their relationships or religion. In that case, a product that can also satisfy those psychological needs is a SUPERIOR product. So why shouldn't companies strive to give us products that make us feel popular and cool as well as products that allow me to download 148378374834 terrabytes of television shows per second?
It's HUMANITARIAN, dammit!
On the other hand, if marketers end up dilly-dallying around with the psychology of people, there can be some pretty harmful consequences. Our perception of beauty, of what is cool and isn't cool, and even right and wrong, are indeed colored by the commercial images we see every day.
The question is begged though...don't we all have some influence on that?
It's a confusing topic. Overall, I support modern marketing: it meets the needs of consumers more effectively than past marketing. It also could have negative social consequences.
Who knows?
Wednesday, April 30, 2008
Poverty in America
An always touchy topic that comes to come up every now and then (usually a fierce debate on the blogopshere after some new study followed by months of not talking about the issue at all).
As of 2005, 12.7% of the US population was below the poverty line. The official poverty line, I believe, is calculated as three times the cost of the "economy food plan" defined by Department of Agriculture (this is because households spend 1/3 of their income on food. If they cannot even afford cheap food, then they are probably impoverished).
That's a sizable number, but it gets even worse if you look at certain minority groups (African-Americans and Lations) and Americans under the age of 18(14.8%, or so Wikipedia tells me).
This statistic is a bit misleading, however. Most people that are "poor" at any given time will not stay there for very long; much like unemployment, poverty tends to be a temporary set-back. Of households that tend to be poor for extended periods of time, roughly half are households headed by a single mother with very little education (IE, high school or below). And a big cause of poverty in individuals is untreated mental instability. It's a bit tough to land a job when the voices in your head are telling you to go kill birds, after all.
So, it's reasonably safe to conclude that being poor and STAYING poor in America is a very, very unusual occurrence for people who have otherwise planned their lives well.
But, there are other questions about poverty that are relevant. For instance, is poverty a cycle? Some liberals and conservatives think so, but disagree on the exact causes. Liberals look at economics: children that are poor have poor life prospects as they are less likely to get a good education and have few connections through their parents.
Conservatives look at psychological and social factors. Children model their parent's unproductive behaviors, making them lazy and unproductive. They also learn how to live a life without working very hard by exploiting welfare, stealing, etc. Hence, children will remain poor.
If anything, I tend to fall more on the conservative spectrum when it comes to the question about the cycle of poverty. Finances are indeed a major issue for many families (college is really goddam expensive these days). However, most of the basic life needs are met by the government for every family. Basic healthcare and immunizations are free or close-to-free, public schools in the US are relatively decent (relative to the rest of the world...not so much compared to the rest of the Western world, perhaps), and the government provides a myriad of various services for the poor, ranging from Headstart to Federal Work Study to student lunches. Considering how tough it is to remain poor in America, financial stress when young should not be a serious issue.
Psychological and social issues? Much more relevant. It's hard to be emotionally stable when you are abused at home. It's hard to know how to act in society when your mother is work at all day and your father bailed out when you were a child. And it's tough to study when your neighborhood is full of drug dealers shooting each other.
So, if I were to launch a new "War on Poverty," I'd be focused on social and psychological issues, and perhaps to get rid of abstinence-only education.
That's my view-point.
Sunday, April 27, 2008
NAFTA and Global Trade
From Today's New York Times
"No matter how hard economists look for trade’s fingerprints on these inequities, they find it plays only a bit part. Josh Bivens of the Economic Policy Institute estimated that rising trade with poor countries increased wage inequality between college and high school graduates by about 7 percent over the past quarter-century — but the wage gap has widened by more than six times that amount over that period. And many economists think Mr. Bivens overstates trade’s impact. Robert Lawrence of Harvard, who was an adviser to President Bill Clinton, concluded that the increase in wage inequality since the 1990s had little to do with trade."
"Looking at trade data between 1994 and 2005, Broda and Romalis construct inflation rates for different income groups and find that rates for the richest outpaced rates for the poorest by about 4 percent over the period. Since income inequality between the top and bottom 10 percent of earners grew by about 6 percent, the different inflation rates among income groups wipes out about two-thirds of the rise in inequality."
Is trade really associated with rising inequality? One might think so, because trade brings "gains" and "gains" are supposedly being allocated to the rich.
This might not be the case. Out of MarginalRevolution:
"Looking at trade data between 1994 and 2005, Broda and Romalis construct inflation rates for different income groups and find that rates for the richest outpaced rates for the poorest by about 4 percent over the period. Since income inequality between the top and bottom 10 percent of earners grew by about 6 percent, the different inflation rates among income groups wipes out about two-thirds of the rise in inequality."
In other words, the inflation rate on consumer goods for rich people has been raising much faster than the inflation rate on goods for everyone else. And where do the low-end consumer goods come from?
That's right, a large portion seem to be arriving from China and other developing nations. So, trade's effect on inequality is somewhat mitigated (or perhaps might even be an equalizer in incomes).
Furthermore, the income of the very wealthy has been increasing rapidly since the early 1970s, and through the 1980s. The 80s happened to be a period where growth in international trade was relatively small relative to the 70s and the 90s...so it's very tough to conclude that trade has historically been a factor in increasing inequality. If anything, trade has only been increasing inequality fairly recently (which is the subject of Krugman's latest paper).
Rather, the income inequality can probably be described as arriving from more...structural issues. Rising CEO pay, entertainment salaries, etc. And those probably aren't influenced much by trade at all.
Friday, April 25, 2008
Musings on Communism
There are a number of communists that interact with on a daily basis. For better or worse, they are mostly restricted to online interaction. College just doesn't seem to be that bastion of extreme liberal thought that it has the reputation for (or maybe I just don't see most of them, given that I am a business student).
However, I never really understood the fascination with "communism," IE, the great utopian anarchy.
The biggest flaw I see, first and foremost, is the total utter lack of government. Let's consider defense. National Defense is the best example of a public good. It is non-exclusive, meaning that if someone doesn't pay, we can hardly NOT protect their homes. It also requires massive public investment over many decades. Military bases are not constructed over night, and top generals are developed over decades of training. All that requires a lot of planning and a lot of money, and, historically, it is very tough to get large numbers of people to voluntarily commit to such ventures. Hence, the reason why taxation was invented in the first place. Hell, it's one of the primary reasons that we wrote the Constitution to replace the Articles of Confederation.
So, I don't see a small communist society as ever being capable of defending itself adequately.
Another issue with government is the very concept of laws. Without an actual legal system enforced by a police service, there is no means to permanently settle disputes. That's not to say that government is perfect or that private law has no place at all in society. Arbitration, after all, plays a large role in the American legal system today.
However, without a means to actually enforce its decision, the law of society is completely up to voluntary enforcement by individuals (or perhaps a private police service). This is theoretically possible. It is, however, not a likely outcome. Laws tend to require enforcement by a very large, very powerful force. A force with guns that is capable of imposing its will on people that will not agree.
It is hardly an ideal system, but it is a system preferable to one with no laws and only abstract "social conventions."
Finally, I have a complete lack of faith in communism's ability to adequately provide even basic goods. The system of trade, as explained here, sounds a lot like a barter system. As any econ major is aware of, barter systems are highly inefficient. Transaction costs are extremely high, preventing a lot of potentially profitable trades. It also requires "double coincidence." Double coincidence means that you have something I want, and I have something you want. Two coincidences at once...it is highly unlikely to occur very frequently, hence the name. Currency, though, ensures that someone ALWAYS has something valuable on hand.
So, a communist society, as it appears to me, would lack a very strong trade sector. Without it, I don't see much welfare gain at all.
This says nothing about communist complaints about our society (most of which I feel are inaccurate). This is only about a possible communist society.
Thursday, April 24, 2008
Webcasting Court Cases?
From Freakonomics:
"In 2006, a Rhode Island jury found three major paint makers liable for the toxic effects of lead paint on children...Now the paint manufacturers are appealing...due to the extraordinary level of interest in the case, oral arguments will be Webcast live."
Can I just say that this is beyond awesome? Probably the best thing since I was able to catch Book TV on the web after my cable company stopped providing C-SPAN2.
Then again, I may be a bit over-enthusiastic. I liked reading legal briefs in my law and management class. I've never watched an ACTUAL proceeding. I'd probably be nodding off after the first 20 minutes while the lawyers moan about subject matter jurisdiction or some crap like that.
"In 2006, a Rhode Island jury found three major paint makers liable for the toxic effects of lead paint on children...Now the paint manufacturers are appealing...due to the extraordinary level of interest in the case, oral arguments will be Webcast live."
Can I just say that this is beyond awesome? Probably the best thing since I was able to catch Book TV on the web after my cable company stopped providing C-SPAN2.
Then again, I may be a bit over-enthusiastic. I liked reading legal briefs in my law and management class. I've never watched an ACTUAL proceeding. I'd probably be nodding off after the first 20 minutes while the lawyers moan about subject matter jurisdiction or some crap like that.
Problems in Education
Our compensation management teacher likes to spend the first several weeks of class going over some basic microeconomic theory (cost curves, total production, etc. Never even really get into isoquants, for those of you that are indeed econ majors). The reason he does this, he explains, is to educate us on basic business strategy. I really don’t see the point of it: it can be summarized in the equation:
Marginal Revenue=Marginal Cost
Meaning that you don’t hire someone unless you are sure that employee is actually doing something productive and making you money instead of engaging in competitive thumb-twirling with his employees (talk about a demotivator).
Our professor then goes on to explain that HR professionals, in general, are NOT in tune with the rest of the corporation on strategic issues, and this means an inefficient workforce. Mr. CEO apparently can’t send his directions correctly through the memos. Or perhaps his secretary couldn’t understand his drunken ramblings after a night of expensive champagne and $5000 an hour hookers.
Anyways, the point is that we absolutely cannot make a compensation strategy unless we know what the overall business strategy is. Once again, that should make perfect sense, and that’s why I increasingly think college is really just education for lazy smart people.
So, what kind of homework assignment do we get on Tuesday?
Develop an executive compensation bonus package.
What are the objectives?
Damned if I know. I just gotta design an executive compensation bonus package. Not even the whole package, just the bonuses.
I would laugh at the irony, but tuition is $7,000 per semester.
Wednesday, April 23, 2008
An excellent comment from Marginal Revolution
"What I don't understand is why Europeans care that Americans think that their country is great.
I think my wife is the best woman in the world.
That is why I married her.
That doesn't mean that you can't think your wife is great too.
I think my country is great. That is why I live here.
I expect that Europeans think that their countries are great too. Good for them. I don't spend two seconds worrying about what other people think about their own country or trying to point out shortcomings. Heck I don't know enough first hand about any European country to even make valid comparisons (and most Europeans don't know enough about the US either).
Why so much haterism from Europeans? I'm with Tyler, seems like some insecurity about something to me."
Credit goes to a man named eccdogg
Are there too many Women Doctors?
BusinessWeek asks the question:
The facts:
1/3 of doctors are presently women
1/2 of med school students are women
Women doctors work 47 hours, compared to 53 for men
Women see 10% fewer patients
Women take off more time early in their careers
Women DO take lower-paying specialties, like Primary Care
Sounds to me like an issue of supply restriction: wouldn't the better response be to increase supply by, say, making it easier to get into/afford Medical School?
Restricting the number of doctors in this nation is not healthy for anyone other than doctors. It restricts output and raises costs, just like every other monopoly action.
Trash-talking on Call of Duty
"I had sex with your couch!"
"Well, I had sex with your dad!"
And you guys say I make an ass out of myself
Tuesday, April 22, 2008
Tomorrow: Management Banquet
Date: Wednesday, April 23, 2008
Time: 6:00pm - 8:00pm
Location: Cardinal Room in SCE
Street: 720 S Halsted Street
City/Town: Chicago, IL
Time: 6:00pm - 8:00pm
Location: Cardinal Room in SCE
Street: 720 S Halsted Street
City/Town: Chicago, IL
Looks like a bunch of professors and speakers and maybe even some corporate reps are gonna come. I better be on my A-Game.
Remember, kids, the key is networking. In American Society, it's how information gets transferred. Even with all our technology, we still rely primarily on social networks to move rumors around.
Now, I need a few cool stories to share about myself...
Economics
Probably the only course you can take where sleeping through every class does not preclude you from getting a 96 on a test with a mean score of 68.
Unless it's econometrics. Goddam I hate that class.
A Brief Thought on Profit
One of the important things a business student has to learn early on in his career is that profit margins are NOT of extreme importance...at least not all the time.
I was reminded of that this morning when reviewing a presentation my friend was preparing for some executives from a major corporation (no need to say which one). He said that the company's stores should switch from selling a low-margin product to a high-margin product, simply because of the margin.
But, intuitively, we all see something wrong with that. Namely, that low-margin products might sell faster, giving us more money in the long-run.
That's why we shouldn't look just at profit margins when we're determining how valuable a firm is. Otherwise, restaurants and supermarkets would be considered bad investments.
A much better measure is return on equity or return on assets, which shows how much money a company makes for every dollar of investment it has.
That's my thought on "profit" for today
I was reminded of that this morning when reviewing a presentation my friend was preparing for some executives from a major corporation (no need to say which one). He said that the company's stores should switch from selling a low-margin product to a high-margin product, simply because of the margin.
But, intuitively, we all see something wrong with that. Namely, that low-margin products might sell faster, giving us more money in the long-run.
That's why we shouldn't look just at profit margins when we're determining how valuable a firm is. Otherwise, restaurants and supermarkets would be considered bad investments.
A much better measure is return on equity or return on assets, which shows how much money a company makes for every dollar of investment it has.
That's my thought on "profit" for today
Monday, April 21, 2008
That guy called me a nerd
The guy who called Microsoft to find porn websites.
You meet the craziest people on IRC, I've come to realize. They remind me that I'm not that screwed up.
Don't believe me?
Not all safe for work. Definitely safe for your funny bone, though.
Don't say I didn't warn you.
Group Work
From my Businessweek:
80% of American Corporations now actively encourage working in groups. This should be no surprise to anyone, as groups are supposedly more effective at increasing employee retention, making a better final product, etc, etc. We've all heard the mantra in our idealistic, ritualistic, pro-friendship schools and televisions.
And it seems that we MIGHT be internalizing the message! Most employees don't seem to oppose working with a few peers. Only 10% prefer working alone. A majority(54%) prefer working in groups of three, and 27% prefer working in groups of four or more (I suppose everyone likes orgies at the office?).
I fall in the "three's a good size" category. With two people, a lot of workloads can feel unbearable...not to mention it can create some awkward situations. With four people, you start getting into the "shirking" zone...but if you stick with three, and one person starts slacking off, it's pretty simple to have the other two smack him/her in the head. With four people, there's a good chance you get two lazy folks: at that point, it's easier to just ignore them than try to get anything done.
The real story, though, is in WHY people like working in groups:
When asked if they like to work in groups in order to make something, we get the following stats:
36% of men said yes
25% of women
36% of the 65+ crowd
27% of the 25-64 crowd
13% of the 18-24 crowd
But, WAIT, you say, those damn whipper-snappers love getting into groups to do everything!
Well, that's true, but we're also a cynical bunch, which you will know if you read any of the literature on Generation Y. We fully expect other people to be lazy. We're also pretty narrow-minded and self-confident. We don't entirely appreciate that other people's perspectives are valuable, and it doesn't matter anyways: We are God's Gift to the world and we can do it better.
But the age and gender gaps REVERSE if you ask a different question...say...if you like working in groups to learn from someone else. 51% of women said "yes" to that, and a whopping 60% of the Generation Y cohort agreed that they want to learn from their counterparts.
So, workers, take note: My generation hungry to learn. But they don't entirely accept the usefulness of groups to actually make a superior product. Dr. Nardini from my BA 200 class would be sorely disappointed.
My Question about Compensation Management Today
Who the hell came up with the idea to pay bonuses to professional workers?
For those of you that have been sleeping underneath a rock for the past two decades, bonus pay is pay for performance: meet a certain benchmark, and you will earn extra cash at the end of the quarter or year. It can also take the form of a general commission (IE, you get paid 10% of each sale).
Such pay is considered to be a highly effective form of motivation for a lot of different kinds of people: you can give bonuses to executives so they actually work instead of lounging on a beach in the Bahamas, you can pay line-workers for every extra widget they produce, and you can let salespeople keep a portion of every sale they make. That all makes sense.
My question is, why would you pay financial analysts or accountants bonuses on anything other than how quickly they get work done?
Does that make sense to anyone?
Me thinks that someone in charge of compensation isn't thinking correctly...but you know what they say. Once you give a kid a hammer, everything looks a nail. I'm just used to seeing that kind of mindset on internet forums or in an Econ 101 class.
Sunday, April 20, 2008
Oddest Thing I Have Read Today
"Samsung today accounts for 18% of Korea's Gross Domestic Product and 21% of its exports"
Heh...centralized production...am I right?
Where I've Been, What I've been up to
This is my new group of good buddies, the Eta Rho Chapter of Alpha Kappa Psi. Alpha Kappa Psi is a business fraternity that focuses on the professional development of its members, building brotherhood, plus a whole lot of other fun stuff.I joined at the beginning of the fall semester, back in September. After 5 weeks of pledging, I became a full Brother in the fraternity. It's been a lot of fun and I wouldn't trade my time with these fine people for anything in the world.
We were a little low on members at the beginning of the Spring Semester, so I became a Pledge Educator. Basically, that made me responsible for all of the Spring pledges, such as making sure they are prepared for all the fraternity events and knowing the basic facts. That picture above is them. I'm very proud of all of them: they passed their exam with flying colors, showed up to all the pledge classes, did well in the interviews, and put on some awesome events for the full Brothers.
Welcome to the club!
I've been up to other things as well. School stuff...this semester has been dramatically tougher than my previous ones, and it may lower my GPA somewhat. Right now, I'm guessing that I will be getting a 3.4 (in contrast to my historic 3.83), though I could still pull off a 3.83 if I do well on the remaining tests.
Something usually happens to give me good grades...call it luck. Let's see if it holds. ;)
I've also done some switching around in Cybernations. Since my last post, I became a full nuclear power, rose to Secretary of Defense in the Fifth Column Confederation, and recently left the Confederation and become a member in the Viridian Entente. It's been a lot of fun, and I'm presently involved in my first alliance war against Inertia. I feel a bit bad about doing so much damage to my opponent (22o infra, plus god knows how much tech and land damage), especially since it ain't even a fair fight, but war is war.
Anyways, that's where I've been.
Saturday, April 19, 2008
So, I'll start posting again
And I'll change around the posting format a bit. It's going to be less like an attempt at Marginal Revolution, and more like a picture of a college student's musings.
A bit ironic to start it at the end of the semester...but it is what it is.
If I have any readers around...great ;)
Wednesday, June 6, 2007
Cost of Capital Higher in Poor Nations
http://www.hbs.edu/research/pdf/07-073.pdf
The obvious result: Growth is inhibited in poorer nations. I highly doubt that higher costs are entirely responsible for the poor diffusion of technology in between nations (the benefits are probably lower in nations as well, and internal costs and regulations most certainly play a factor), but this explains it somewhat. Solutions? I'll read this report more throughouly and see what they attribute the higher costs to.
The obvious result: Growth is inhibited in poorer nations. I highly doubt that higher costs are entirely responsible for the poor diffusion of technology in between nations (the benefits are probably lower in nations as well, and internal costs and regulations most certainly play a factor), but this explains it somewhat. Solutions? I'll read this report more throughouly and see what they attribute the higher costs to.
Tuesday, June 5, 2007
Things looking up?
http://macroblog.typepad.com/macroblog/2007/06/taking_it_slow.html
http://www.nytimes.com/reuters/business/business-usa-economy-factories.html?ref=business
At least in the short-term, I suppose. Retail Sales (along with income) actually fell in April, but both may have recovered somewhat in May, suggesting that personal consumption will hold up well enough to ward off recession. Exports and business investment are also contributing to demand growth, meaning we're no longer relying on JUST the consumer to keep the economy moving.
Unemployment rates have remained low as well, though it is possible that most of the effect has been felt on independent contractors and illegal immigrants.
Overall, I'd have to say that recession chances look much lower now.
http://www.nytimes.com/reuters/business/business-usa-economy-factories.html?ref=business
At least in the short-term, I suppose. Retail Sales (along with income) actually fell in April, but both may have recovered somewhat in May, suggesting that personal consumption will hold up well enough to ward off recession. Exports and business investment are also contributing to demand growth, meaning we're no longer relying on JUST the consumer to keep the economy moving.
Unemployment rates have remained low as well, though it is possible that most of the effect has been felt on independent contractors and illegal immigrants.
Overall, I'd have to say that recession chances look much lower now.
Monday, June 4, 2007
Wal-Mart, ey?
http://www.nytimes.com/reuters/business/business-walmart-research.html
I'd just like to provide this link to point out that Wal-Mart actually isn't an evil monopoly that is exercising a slow and inevitable takeover the world. They have reached their current limit, and everyone has recognized it. When Wal-Mart finally recognized it and decided to not expand anymore, the market rewarded them by recognizing them as a better stock-buy.
Incentives are cool.
I'd just like to provide this link to point out that Wal-Mart actually isn't an evil monopoly that is exercising a slow and inevitable takeover the world. They have reached their current limit, and everyone has recognized it. When Wal-Mart finally recognized it and decided to not expand anymore, the market rewarded them by recognizing them as a better stock-buy.
Incentives are cool.
Swedish Economics
http://economistsview.typepad.com/economistsview/2007/06/swedish_models.html
The commenters are quite right that Swedish productivity continued to rise and that the Swedish standard of living remained quite high, even through the stringent regulations of the welfare age.
The crux of the story, of course, is that the Swedish economy as a whole was growing slower in production terms under the stringent welfare state controls of the second-half of the 20th century. The Swedish economy was structured to favor consumption and unproductive investments like housing. Swedish tax reform in the early 1990s succeeded in eliminating some of these preferences, and the Swedish economy has been growing more efficiently (in production terms) since then.
The discussion is...do we favor the standard of living...or do we favor production?
My response is obvious: We should let the market decide. And the market wasn't deciding under old rules. The Swedish government laid down law after law that effectively limited the dynamism of their economy and favored consumption over investment.
The commenters are quite right that Swedish productivity continued to rise and that the Swedish standard of living remained quite high, even through the stringent regulations of the welfare age.
The crux of the story, of course, is that the Swedish economy as a whole was growing slower in production terms under the stringent welfare state controls of the second-half of the 20th century. The Swedish economy was structured to favor consumption and unproductive investments like housing. Swedish tax reform in the early 1990s succeeded in eliminating some of these preferences, and the Swedish economy has been growing more efficiently (in production terms) since then.
The discussion is...do we favor the standard of living...or do we favor production?
My response is obvious: We should let the market decide. And the market wasn't deciding under old rules. The Swedish government laid down law after law that effectively limited the dynamism of their economy and favored consumption over investment.
Thursday, May 31, 2007
More on the immigration bill
What could be one effect of the new bill? Well, apparently, it may contribute to shifting economic growth from the city to the suburbs: http://www.marginalrevolution.com/marginalrevolution/2007/05/should_immigrat.html
I have no idea how badly businesses inside cities depend on family labor, nor do I know the full social benefits of having a good family (though I support family life almost as much as I support free markets). However, it is important to note the opportunity cost in general; having more high-skilled immigrants means attacking the social capital that often enables small, family-owned immigrant businesses (and immigrants are the most likely group of people to be entrepreneurs!) to survive and prosper.
I have no idea how badly businesses inside cities depend on family labor, nor do I know the full social benefits of having a good family (though I support family life almost as much as I support free markets). However, it is important to note the opportunity cost in general; having more high-skilled immigrants means attacking the social capital that often enables small, family-owned immigrant businesses (and immigrants are the most likely group of people to be entrepreneurs!) to survive and prosper.
Sudan
As President Bush enacts yet more sanctions against Sudan over the recent violence in Darfur, I'm left to wonder: what the heck is going on here?
When I was in high school, I was assured that no one was doing a thing, and that this would be the most violent genocide since Rwanda; 400,000 dead in 6 months, I believe? Years later, the toll has apparently remained under 200k, and most people seem to be saying that we still aren't doing enough and that a serious crisis is just a second away.
Forgive me, but I think the problem is being a bit overstated. That's not to say that we shouldn't be working to undermine Sudan (although these sanctions probably won't do much) as it is one of the most irresponsible and inhumane governments on the planet. I would, however, like to see the moral crusade die down a bit, so cooler heads prevail and we can undertake a rational strategy.
When I was in high school, I was assured that no one was doing a thing, and that this would be the most violent genocide since Rwanda; 400,000 dead in 6 months, I believe? Years later, the toll has apparently remained under 200k, and most people seem to be saying that we still aren't doing enough and that a serious crisis is just a second away.
Forgive me, but I think the problem is being a bit overstated. That's not to say that we shouldn't be working to undermine Sudan (although these sanctions probably won't do much) as it is one of the most irresponsible and inhumane governments on the planet. I would, however, like to see the moral crusade die down a bit, so cooler heads prevail and we can undertake a rational strategy.
Tuesday, May 29, 2007
More on Wage Inequality
http://www.mcgill.ca/files/economics/performancepayand.pdf
Explains a quarter of the growth in male income inequality. I'd reckon that paying bonuses to people for more work also contributes a bit to the leisure inequality growth as well: If you get paid more as you work more, you're going to get to paid more AND work more.
In this way, it appears our economy could probably solve a bit of inequality by directly tying performance to salary, and somehow introducing more dynamism into the economy that would allow people to work more hours if they so choose to (although studies conclude that most American would rather work less...)
Explains a quarter of the growth in male income inequality. I'd reckon that paying bonuses to people for more work also contributes a bit to the leisure inequality growth as well: If you get paid more as you work more, you're going to get to paid more AND work more.
In this way, it appears our economy could probably solve a bit of inequality by directly tying performance to salary, and somehow introducing more dynamism into the economy that would allow people to work more hours if they so choose to (although studies conclude that most American would rather work less...)
Mr. Al Gore on the Daily Show
No, no links. Search for it on youtube yourselves, you Intellectual-Property-violating scoundrels!
Al Gore was chatting with Jon Stewart on the Daily Show a few nights ago about "The Assault on Reason," his newest book. (http://en.wikipedia.org/wiki/Assault_on_Reason)
Now, Gore is smart. He's an emotionless robot, but he's sharp, and did a lot of work during the Clinton years (especially the first term, or so I am told). So when he says that major news media isn't doing a good job of covering the news and that the way our society processes our information is based more on fear and ideology than facts, it's a good idea to listen.
News, of course, is now a commercial business focused on the bottom-line. Corporations have to be sensitive to the market, and the market seems to demand news that appeals to emotions, confirms their views, involves a lot of heated arguments, and follows a narrative format. It's sad to think that some day news might become a soap opera, with stories about the US and Iran clashing over Iraq as opposed to news laying out the details of our discussion with Iran.
The problem, though, is that Stewart called the internet an "equalizer" and Gore seemed to agree. As an economist, we can explain this clearly: Stewart and Gore believe that the institutions of media, rather than the people watching them, are the problem, and that the internet allows us to bypass the institution: information can get to the people without being distorted.
This argument is flawed. The reason television news is so popular is because networks define niches and successfully target them with interesting marketing ploys. The problem isn't that corporations are profit-seeking; the problem is that the people want entertainment and not news. Therefore, arguing that the internet will be a better source of information for the people is baseless, as the problem IS the people.
The internet does, of course, have unique advantages. It can carry a larger number of news networks, meaning more niches can be filled; therefore, Nazis can get their own website in the same way that Republicans get Fox News. I do wonder if this is what Gore and Stewart meant by making the internet out to be some sort of great savior?
The same biases that exist in TV news exist in internet news...actually, even more so. Pundits are, of course, naturally biased to be making extreme claims (http://www.economist.com/blogs/freeexchange/2007/02/trailing_the_truth.cfm) and Cass Sunstein's "Infotopia" offers a very good summary of current research that concludes that the internet blogosphere is heavily Balkanized into conservative and liberal camps.
That Balkanization, though, enables precisely what Stewart and Gore may actually desire: A place where "wrong" views aren't allowed and people aren't allowed to discuss things that Gore and Stewart think aren't important. A very elitist view, no?
This post is in no way a criticism of Al Gore's book. It is a criticism of the idea that internet is the best source of information because news media is terrible and doesn't allow discussion of good ideas.
Al Gore was chatting with Jon Stewart on the Daily Show a few nights ago about "The Assault on Reason," his newest book. (http://en.wikipedia.org/wiki/Assault_on_Reason)
Now, Gore is smart. He's an emotionless robot, but he's sharp, and did a lot of work during the Clinton years (especially the first term, or so I am told). So when he says that major news media isn't doing a good job of covering the news and that the way our society processes our information is based more on fear and ideology than facts, it's a good idea to listen.
News, of course, is now a commercial business focused on the bottom-line. Corporations have to be sensitive to the market, and the market seems to demand news that appeals to emotions, confirms their views, involves a lot of heated arguments, and follows a narrative format. It's sad to think that some day news might become a soap opera, with stories about the US and Iran clashing over Iraq as opposed to news laying out the details of our discussion with Iran.
The problem, though, is that Stewart called the internet an "equalizer" and Gore seemed to agree. As an economist, we can explain this clearly: Stewart and Gore believe that the institutions of media, rather than the people watching them, are the problem, and that the internet allows us to bypass the institution: information can get to the people without being distorted.
This argument is flawed. The reason television news is so popular is because networks define niches and successfully target them with interesting marketing ploys. The problem isn't that corporations are profit-seeking; the problem is that the people want entertainment and not news. Therefore, arguing that the internet will be a better source of information for the people is baseless, as the problem IS the people.
The internet does, of course, have unique advantages. It can carry a larger number of news networks, meaning more niches can be filled; therefore, Nazis can get their own website in the same way that Republicans get Fox News. I do wonder if this is what Gore and Stewart meant by making the internet out to be some sort of great savior?
The same biases that exist in TV news exist in internet news...actually, even more so. Pundits are, of course, naturally biased to be making extreme claims (http://www.economist.com/blogs/freeexchange/2007/02/trailing_the_truth.cfm) and Cass Sunstein's "Infotopia" offers a very good summary of current research that concludes that the internet blogosphere is heavily Balkanized into conservative and liberal camps.
That Balkanization, though, enables precisely what Stewart and Gore may actually desire: A place where "wrong" views aren't allowed and people aren't allowed to discuss things that Gore and Stewart think aren't important. A very elitist view, no?
This post is in no way a criticism of Al Gore's book. It is a criticism of the idea that internet is the best source of information because news media is terrible and doesn't allow discussion of good ideas.
Krugman goes nutso?
http://economistsview.typepad.com/economistsview/2007/05/paul_krugman_tr.html#trackback
Sorry. I'm lacking the link to the original article in the NY Times.
Krugman is, of course, notorious for wild statements and accussations. He's a "loony leftist" though he is damn sharp and almost always has a point worth considering.
What I'd like to point out are the comments about the current crop of Republican candidates, which are the REAL story in this commentary piece:
"Here’s the way it ought to be: When Rudy Giuliani says that Iran, which had nothing to do with 9/11, is part of a “movement” that “has already displayed more aggressive tendencies by coming here and killing us,” he should be treated as a lunatic.
When Mitt Romney says that a coalition of “Shia and Sunni and Hezbollah and Hamas and the Muslim Brotherhood and Al Qaeda” wants to “bring down the West,” he should be ridiculed for his ignorance.
And when John McCain says that Osama, who isn’t in Iraq, will “follow us home” if we leave, he should be laughed at. "
While I don't agree with the sentiment about Senator McCain, Krugman is right on the money about Romney and Giuliani: If they really said those things, they don't seem to understand that Islamism is not a Monolith who's sole purpose is destroy us. See this post (http://moaes.blogspot.com/2007/04/understanding-islamism.html) for details.
Specifically:
1. Giuliani is wrong when he says the Iranian "movement" has killed us on American soil. It most certainly has not displayed such direct approaches; the threat from Iran is regional, in the sense that it seeks to dominate the Middle East. A different movemenet has chosen to attack the United States: The global jihad that commenced with Osama's orders in 1998.
2. Romney, as much as I love the guy, is not correct in his statements. The Muslim Brotherhood is not working, as far as I know, with other Islamic movements, as the strategic goals are different. And Sunni and Shi'a groups are more focused on killing each other than working together to bring down the United States (unless people believe that Iran and Saudi Arabia are secretly allies, in which case our soldiers in Iraq are going to be dead very soon).
Dismissing them as LUNATICS, though, is over-the-top. It is unlikely that the Republican front-runners are as ignorant as they appear to be about this particular issue, in the same way it is unlikely that Obama and Clinton are really as stupid as they appear when they talk about Wal-Mart or free trade. It's called politics.
Sorry. I'm lacking the link to the original article in the NY Times.
Krugman is, of course, notorious for wild statements and accussations. He's a "loony leftist" though he is damn sharp and almost always has a point worth considering.
What I'd like to point out are the comments about the current crop of Republican candidates, which are the REAL story in this commentary piece:
"Here’s the way it ought to be: When Rudy Giuliani says that Iran, which had nothing to do with 9/11, is part of a “movement” that “has already displayed more aggressive tendencies by coming here and killing us,” he should be treated as a lunatic.
When Mitt Romney says that a coalition of “Shia and Sunni and Hezbollah and Hamas and the Muslim Brotherhood and Al Qaeda” wants to “bring down the West,” he should be ridiculed for his ignorance.
And when John McCain says that Osama, who isn’t in Iraq, will “follow us home” if we leave, he should be laughed at. "
While I don't agree with the sentiment about Senator McCain, Krugman is right on the money about Romney and Giuliani: If they really said those things, they don't seem to understand that Islamism is not a Monolith who's sole purpose is destroy us. See this post (http://moaes.blogspot.com/2007/04/understanding-islamism.html) for details.
Specifically:
1. Giuliani is wrong when he says the Iranian "movement" has killed us on American soil. It most certainly has not displayed such direct approaches; the threat from Iran is regional, in the sense that it seeks to dominate the Middle East. A different movemenet has chosen to attack the United States: The global jihad that commenced with Osama's orders in 1998.
2. Romney, as much as I love the guy, is not correct in his statements. The Muslim Brotherhood is not working, as far as I know, with other Islamic movements, as the strategic goals are different. And Sunni and Shi'a groups are more focused on killing each other than working together to bring down the United States (unless people believe that Iran and Saudi Arabia are secretly allies, in which case our soldiers in Iraq are going to be dead very soon).
Dismissing them as LUNATICS, though, is over-the-top. It is unlikely that the Republican front-runners are as ignorant as they appear to be about this particular issue, in the same way it is unlikely that Obama and Clinton are really as stupid as they appear when they talk about Wal-Mart or free trade. It's called politics.
Religion and Insurgencies
http://smallwarsjournal.com/blog/2007/05/more-on-fm-234-and-religion/
The points I consider most important:
The points I consider most important:
“Viewed in this way, it is not critical to accept that insurgencies are ‘religious insurgencies’ or not, but that all insurgencies are an expression of political struggle for power”
“Religion as political structure of the human culture is well accepted in the vast majority of schools spanning all sides of the human condition”
“The context of the extremist Islamist insurgent is the important matter here. Islam in a moderate context does not condone suicide bombing, killing of innocent victims and destruction of other societies.”
“Accepting this, Islam is marked as a faith based belief structure that includes rules and concepts for political organization, rule making and civil governance. As such, Islam can be viewed as a political structure with ready made sets of solutions for political organization that extremists exploit by appealing to the religious structures that resonate with members of the broader faith, while seeking to obtain the broader objectives of power over people and their resources. The insurgents use Islam not so much as a religious structure but as a political structure in their quest for power.”
I'm not entirely sure how relevant this could be. It's certainly a lot better than completely ignoring the forces of religion in instances like Iraq, though the above points do not, on their own, really describe what exactly is going on.
Sunday, May 27, 2007
Message to Mahdi Army: No More Talking
http://www.nytimes.com/2007/05/27/world/middleeast/27iraq.html?th&emc=th
Al-Sadr is a destabilizing force in Iraq, and always has been. I'm quite glad to see that we're giving him a hurting.
Al-Sadr is a destabilizing force in Iraq, and always has been. I'm quite glad to see that we're giving him a hurting.
Democrats and Fox News
http://www.nytimes.com/2007/05/27/washington/27fox.html?_r=1&th&emc=th&oref=slogin
Yep, that does require a log-in, but you should be subscribed to the New York Times anyways. It's free and, if I read it despite a sometimes liberal bias, you should, too.
Anyways, this article talks about the little fiasco in the Democrat camp about the Democrat debate on Fox news, sponsored by the Congressional Black Caucus. Senators Edwards, Clinton, and Obama have decided not to appear in the debate, probably to appease their liberal base.
I must say that, while I understand their motives, I'm rather disappointed; Fox News, regardless of its right-ward tilt, is still a highly rated news agency, and a media outlet where liberal thought can reach a large number of people. The step that Edwards, Clinton, and Obama took (or Bush when he refused to speak to the NAACP) reflects a Balkanization of the media that could have negative effects in the future.
Yep, that does require a log-in, but you should be subscribed to the New York Times anyways. It's free and, if I read it despite a sometimes liberal bias, you should, too.
Anyways, this article talks about the little fiasco in the Democrat camp about the Democrat debate on Fox news, sponsored by the Congressional Black Caucus. Senators Edwards, Clinton, and Obama have decided not to appear in the debate, probably to appease their liberal base.
I must say that, while I understand their motives, I'm rather disappointed; Fox News, regardless of its right-ward tilt, is still a highly rated news agency, and a media outlet where liberal thought can reach a large number of people. The step that Edwards, Clinton, and Obama took (or Bush when he refused to speak to the NAACP) reflects a Balkanization of the media that could have negative effects in the future.
Wednesday, May 23, 2007
IQ and Wealth
http://biz.yahoo.com/fool/070518/117949647104.html
The great question about this article is…does the fact that the study controls for years of education completely invalidate the conclusion, since IQ strongly predicts years of education?
The key factor, of course, is whether or not they also controlled years of education when they measured income per person. If yes, then it means that IQ does indeed play a role for income, yet, for some reason, higher IQ people just spend more money and therefore don’t save more.
Nonetheless, the data still says SOMETHING. IQ differentials, even at the same level of education, should be generating higher levels of wealth, as small differences in IQ still imply greater intelligence, and therefore higher salaries and better decision-making skills.
So, why in the world is IQ NOT increasing wealth?The best argument that I can think of is that, at a given level of education, as your IQ goes up, so do your socially destructive habits; after all, if you were more stable, you’d have a higher level of education, wouldn’t you? The end effect is that you are more likely to get divorced, spend more, etc, and therefore your wealth will be negatively affected in the long-run.
The great question about this article is…does the fact that the study controls for years of education completely invalidate the conclusion, since IQ strongly predicts years of education?
The key factor, of course, is whether or not they also controlled years of education when they measured income per person. If yes, then it means that IQ does indeed play a role for income, yet, for some reason, higher IQ people just spend more money and therefore don’t save more.
Nonetheless, the data still says SOMETHING. IQ differentials, even at the same level of education, should be generating higher levels of wealth, as small differences in IQ still imply greater intelligence, and therefore higher salaries and better decision-making skills.
So, why in the world is IQ NOT increasing wealth?The best argument that I can think of is that, at a given level of education, as your IQ goes up, so do your socially destructive habits; after all, if you were more stable, you’d have a higher level of education, wouldn’t you? The end effect is that you are more likely to get divorced, spend more, etc, and therefore your wealth will be negatively affected in the long-run.
Lebanon and Fatah Al-Islam
http://www.nytimes.com/2007/05/23/world/middleeast/23lebanon.html?_r=1&th&emc=th&oref=slogin
http://www.france24.com/france24Public/en/news/world/20070523-Lebanon-Fatah-al-islam-palestinian-defence-minister-threat.html
As everyone is quite plainly aware of by now, Lebanon is, once again, on the receiving end of some pretty nasty violence. This time, it’s a small terrorist group known as Fatah Al-Islam, based inside a Palestinan refugee camp.
The problem is that these guys seem to be armed pretty gosh-darn well. They have night-vision goggles, strong weapons, good tactics, and maybe even anti-aircraft guns.
Is Al Qaeda behind this group? Well, it’s possible: http://counterterrorismblog.org/2007/05/fatah_alislam_alqaida_or_not_a.php#trackbacks
At the very least, they seem ideologically linked to Al Qaeda. My guess: A small, well-trained group of soldiers, conducting a bank robbery in Lebanon, operating in Iraq, controlling a refugee camp in Lebanon, with convicted terrorists from Europe. Sounds like they’re really only using Lebanon as a safe base to mount operations in Iraq, as opposed to trying to destabilize Lebanon.
Monday, May 21, 2007
Martha C. Nussbaum
http://aau.edu/aau/Nussbaum10.00.html
I spent a decent amount of time looking over the above link this morning, trying to wrestle out the valuable nuggets of information.
What seems most interesting is the possibility of combing other disciplines with economics to more properly understand standard of living (Some people also suggest that we could use fields like neuroscience and psychology to understand human decision making as well, but let's focus on standard of living for right now).
Many people have argued that the United States, while objectivley quite wealthy, actually has a lower standard of living than most European nations, because our people really aren't as happy; they just don't have access to the good things in life.
Of course, we know this just ain't true: http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000209864.pdf
Nonetheless, we should recognize that there are many things that make a good life besides a high rate of GDP growth. My training in psychology has taught me that most people are happy when they are:
1. Not poor
2. Healthy
3. Have meaningful social relationships
4. Have a place in society
Just because our current measures, for whatever reason, are excellent proxies for good standards of living (and are excellent measures for measuring our strength and influence in the world) does not mean that they will always be good measures of how happy our people are. To understand that, we need to work with other disciplines, specificially on the power structures of our society. That's what I get out of reading the link above. Nussbaum has experience with these power structures (though she specifically examines women and their status). Hence, she has a lot of knowledge to bring to us.
Power structure study will also enable us to better understand the structure of the economy as a whole; simply supply and demand graphs don't show the actual gears of the economy underneath the surface of the economy. Rather, they only explain how changes in price will make those gears respond. It is an awesome and powerful tool to understanding how people make decisions, but it leaves a lot of the picture.
What is disturbing, though, is how she seems to criticize interdisciplinary studies. She may be right: true knowledge takes a long time to develop and master. But if interdisciplinary study truly detracts from the quality of our findings, we have arrived at an interesting junction in human history: we have so much knowledge at our disposal that, in order to properly integrate it, we have to slow down the path of discovery.
Very interesting, no? Yet economics is a perfect example of this dichotomy
I spent a decent amount of time looking over the above link this morning, trying to wrestle out the valuable nuggets of information.
What seems most interesting is the possibility of combing other disciplines with economics to more properly understand standard of living (Some people also suggest that we could use fields like neuroscience and psychology to understand human decision making as well, but let's focus on standard of living for right now).
Many people have argued that the United States, while objectivley quite wealthy, actually has a lower standard of living than most European nations, because our people really aren't as happy; they just don't have access to the good things in life.
Of course, we know this just ain't true: http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000209864.pdf
Nonetheless, we should recognize that there are many things that make a good life besides a high rate of GDP growth. My training in psychology has taught me that most people are happy when they are:
1. Not poor
2. Healthy
3. Have meaningful social relationships
4. Have a place in society
Just because our current measures, for whatever reason, are excellent proxies for good standards of living (and are excellent measures for measuring our strength and influence in the world) does not mean that they will always be good measures of how happy our people are. To understand that, we need to work with other disciplines, specificially on the power structures of our society. That's what I get out of reading the link above. Nussbaum has experience with these power structures (though she specifically examines women and their status). Hence, she has a lot of knowledge to bring to us.
Power structure study will also enable us to better understand the structure of the economy as a whole; simply supply and demand graphs don't show the actual gears of the economy underneath the surface of the economy. Rather, they only explain how changes in price will make those gears respond. It is an awesome and powerful tool to understanding how people make decisions, but it leaves a lot of the picture.
What is disturbing, though, is how she seems to criticize interdisciplinary studies. She may be right: true knowledge takes a long time to develop and master. But if interdisciplinary study truly detracts from the quality of our findings, we have arrived at an interesting junction in human history: we have so much knowledge at our disposal that, in order to properly integrate it, we have to slow down the path of discovery.
Very interesting, no? Yet economics is a perfect example of this dichotomy
Mexican Drug War
http://www.chron.com/disp/story.mpl/world/4821006.html
I'm afraid I don't know what exactly is going on south of the border right now. Apparently drug lords are more powerful than I imagined, and the Mexican government has called out a sizable number (I have heard 24,000) federal troops to squash resistance.
Mexican internal politics were never my strong suite, but Americans should be aware that this is happening. Violence has a tendency to spill over the border; even if it doesn't it will affect the Mexican economy, which will in turn affect our own as well as tourists in Cancun.
I'm afraid I don't know what exactly is going on south of the border right now. Apparently drug lords are more powerful than I imagined, and the Mexican government has called out a sizable number (I have heard 24,000) federal troops to squash resistance.
Mexican internal politics were never my strong suite, but Americans should be aware that this is happening. Violence has a tendency to spill over the border; even if it doesn't it will affect the Mexican economy, which will in turn affect our own as well as tourists in Cancun.
The Bear wakes up
http://news.bbc.co.uk/2/hi/europe/6665145.stm
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/05/19/wruss119.xml&CMP=ILC-mostviewedbox
http://euobserver.com/9/23917
http://euobserver.com/24/24088
http://www.nytimes.com/2007/04/27/world/europe/27russia.html?ex=1179720000&en=683ac7070f8970db&ei=5070
Now, I don’t want to be a nay-sayer, but it seems relations between Russia and the West have fallen lately. Quite a shame, too, especially since they seem dead set on threatening the security of the relatively prosperous Baltic nations.
Oh well. The best way to make sure that nations play a positive role in the world is to assure them that they have more to gain from cooperation than from intimidation. This means a dedicated effort to keep block Russia’s external political moves, wherever they may be.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/05/19/wruss119.xml&CMP=ILC-mostviewedbox
http://euobserver.com/9/23917
http://euobserver.com/24/24088
http://www.nytimes.com/2007/04/27/world/europe/27russia.html?ex=1179720000&en=683ac7070f8970db&ei=5070
Now, I don’t want to be a nay-sayer, but it seems relations between Russia and the West have fallen lately. Quite a shame, too, especially since they seem dead set on threatening the security of the relatively prosperous Baltic nations.
Oh well. The best way to make sure that nations play a positive role in the world is to assure them that they have more to gain from cooperation than from intimidation. This means a dedicated effort to keep block Russia’s external political moves, wherever they may be.
Saturday, May 19, 2007
China criticizes West on Africa
http://www.ft.com/cms/s/26eb49fe-0414-11dc-a931-000b5df10621.html
Pot calling the kettle black! I seem to recall Ghana whining that China wasn’t following through on its promises a few years ago, though perhaps my memory is fuzzy.
Regardless, the move is disturbing. China has been effectively encircled by powerful states in Asia, and it’s best ally is Myanmar. However, Africa and its rich mineral wealth, a longtime battleground between the Great Powers of the world, is still up for grabs, and not very friendly to Western intervention.
My take is that China is being a little harsher on us than they might otherwise be, and is currently trying to further relations and make economic inroads into the continent. The US has been making economic inroads as well, in addition to geopolitical moves on the Horn and strengthening militaries in North Africa. In a few years, we’ll also have a new aircraft carrier and the ability to rapidly transport a small number of F-22s (that would be able to do a LOT of damage) and our African command center, which is a recent addition, will be fully experienced and likely possess its own special operations forces.
So, we’re both playing strong for Africa. The difference is that we have force projection coming soon, and they do not. So, China is going to have to play a LOT tougher than us to make friends in Africa, and they’re going to have to start very soon.
Pot calling the kettle black! I seem to recall Ghana whining that China wasn’t following through on its promises a few years ago, though perhaps my memory is fuzzy.
Regardless, the move is disturbing. China has been effectively encircled by powerful states in Asia, and it’s best ally is Myanmar. However, Africa and its rich mineral wealth, a longtime battleground between the Great Powers of the world, is still up for grabs, and not very friendly to Western intervention.
My take is that China is being a little harsher on us than they might otherwise be, and is currently trying to further relations and make economic inroads into the continent. The US has been making economic inroads as well, in addition to geopolitical moves on the Horn and strengthening militaries in North Africa. In a few years, we’ll also have a new aircraft carrier and the ability to rapidly transport a small number of F-22s (that would be able to do a LOT of damage) and our African command center, which is a recent addition, will be fully experienced and likely possess its own special operations forces.
So, we’re both playing strong for Africa. The difference is that we have force projection coming soon, and they do not. So, China is going to have to play a LOT tougher than us to make friends in Africa, and they’re going to have to start very soon.
Immigration Reform?
Wow. It’s not often that I’m absolutely floored by a bill in Congress, but this new “immigration reform” really does take the cake.
The problem isn’t that this bill isn’t going to accomplish anything positive. It’s that it really doesn’t seem to accomplish anything. If I may reference my own sociology paper on immigration, the level of illegal immigration to the United States seems to associated mostly with US economic growth and demand for labor; in other words, immigrants are going to keep coming because businesses will pay them for their labor.
So, if immigrant flows keep coming, what’s our response going to be? Apparently…more amnesty (except we can’t call it that, even though they only have to pay a small fine!) and more border control, neither of which has really worked in the past.
Color me ungrateful, but this bill seems to be a pile of useless paper.
What is positive, though, is the fact the new guest worker provision, which allows 400,000 guest workers to come to the United States legally; they also will be given visas based on their skill level and education as opposed to how many family members they have here. That much signifies a good trend in the United States; evaluating people based on their abilities and not their connections
The problem isn’t that this bill isn’t going to accomplish anything positive. It’s that it really doesn’t seem to accomplish anything. If I may reference my own sociology paper on immigration, the level of illegal immigration to the United States seems to associated mostly with US economic growth and demand for labor; in other words, immigrants are going to keep coming because businesses will pay them for their labor.
So, if immigrant flows keep coming, what’s our response going to be? Apparently…more amnesty (except we can’t call it that, even though they only have to pay a small fine!) and more border control, neither of which has really worked in the past.
Color me ungrateful, but this bill seems to be a pile of useless paper.
What is positive, though, is the fact the new guest worker provision, which allows 400,000 guest workers to come to the United States legally; they also will be given visas based on their skill level and education as opposed to how many family members they have here. That much signifies a good trend in the United States; evaluating people based on their abilities and not their connections
Thursday, May 17, 2007
Income Inequality
http://www.federalreserve.gov/boardDocs/Speeches/2007/20070206/default.htm
http://elsa.berkeley.edu/~saez/pikettyqje.pdf
So, one of the obvious political and economic issues of our day is the level of income inequality, which has been rising. The questions most people have are “why” and “what are the ramifications.”
There are two dominant theories right now. One describes income inequality as pretty benign: it reflects a greater of return on education.
The second is malignant: There has been a fall in taxes, allowing rich people to accumulate fortunes. CEOs can manipulate their pay and stock prices, unions have fallen, and outsourcing is taking a toll on wages. The rise in inequality is a very bad thing under this scenario, and not everyone is better off.
This argument, of course, is politicized. Most Republicans like to think that inequality is due to education and hard work, and Democrats are more likely to believe that CEOs are abusing the system.
In truth? It’s a little bit of both. The top 20% households as measured by income have been growing in share since the 1960s, but, within that segment of the population, households have been growing at different rates and at different times. The top .01%, in terms of total income, earned 50 times the median level of society in 1970. That same factor was 250 in 1998. On the other hand, a worker at the 90th percentile (we’re talking wages now, not total income) earned 3.7 times what the worker at the 10th percentile made in 1979. In 2006, that number was 4.7 times.
Obviously, different factors at work here.
Looking at the top 20% and top 10%, the story is pretty simple; the return to education has increased dramatically. In 1979, the median worker with a bachelor’s degree earned 38% more than a person with just a high school degree. That number was 75% on 2005. Numbers like this shouldn’t be too shocking too much to anyone; better educated workers are better able to take advantage of our dynamic economy and our growing level of technology. I’d also suggest that we’re more efficient in who we send to college; even though we’ve sent a lot more people to postsecondary education since the middle of the century, the average IQ of the college student has increased significantly. Since the two factors work together to increase wages, it’s not surprising to see their incomes rise.
It’s also important to note that our measures of inequality check for inequality of households. The fact that more women are working now implies greater inequality, as higher income households are more likely to have a well-educated father and well-educated mother.
But what the heck is going on at the VERY top? Their income share has risen dramatically, much more so than the rest of the population. Does this mean we’re returning an era of oligarchy?
Eh, not quite, but education doesn’t explain everything. Technology, however, does still a play a role.
For instance, technology enables actors and baseball players to be seen all around the world and quite easily; their services are now in much greater demand, and they can be paid higher wages. And I’d suggest American cultural imperialism has played a complementary role to that as well.
The other group at the top are, of course, the CEOs. This is the most profound change in the United States throughout the 20th century. Prior to the Great Depression, the top 1% made 70% of their income in dividends. The shocks of the Great Depression and World War II seemed to have completely destroyed many vast fortunes, and the capital income that the rich got was never the same. On the contrary, since then most of the top 1% has earned money by…well, by actually earning their money. In 1998, roughly half of their income came from labor, and another sizable chunk came from private business income. Dividends only composed about a quarter (compare this to France, where the rich still live off of dividends). Why has CEO pay risen?
Well, the top 1% (CEOs included) started having income share increases in the 1970s, about a decade after the rest of the top 20%. However, their income share rose much faster than the rest of the top 20%. In 1970, the top .1%, for example, had 1% of the wage share of the population. That was 2% in 1984, and has increased since then.
The reason corporate board pay has risen so much is a matter of much contention. In my opinion, the average corporate executive these days really does have it all; they posses a high level of education, put in many hours, typically have much experience, and are better connected socially. This productivity has been seen in the large increase in shareholder value since the 1970s, as well as in the numerous powerful corporations that have emerged over the past 30 years that have revolutionized the way we think about business; Wal-Mart and Microsoft are good examples.
However, does this explain the WHOLE story? Perhaps executive compensation has risen too dramatically to fully account for the new firms that been made that are, indeed, profitable. Marginal taxes, for instance, may play a role. The large reduction in taxes under Reagan may have made work more profitable for the rich, who then would work more and obviously make higher incomes. There is indeed a measured increase in the share of income for the top 1% after 1986, but this is probably due to the change in tax structure; before 1986, it made more sense to classify personal income as corporate income. It’s tough to say how much inequality rose in the Reagan years before that.
Another factor, as many on the left say, is corporate influence over their own pay, as well as social norms. Since I don’t know too much about influence over their own pay, I’ll save that for a future post.
The social norms basically suggest that no one has no idea how much executives should really be paid. Are they worth that much? It’s almost impossible to measure, but investors are willing to jump on the bandwagon simply because they don’t know any better. If true, it’s a big reason why executive pay has increased, and explains why executive pay doesn’t seem to be sensitive to things like oil shocks (which DO affect the wages of everyone else). .
So, do we have anything to worry about?
1. The higher income definitely enables the creation of an oligarchy. Tyler Cowan recently pointed out that the college premium is the same as it was in the Gilded Age. Although he was saying nothing about an oligarchy, I found it pretty interesting.
2. Consumption inequality is even more important than income inequality, and doesn’t appear to have been dramatically affected in recent years. Consumption inequality, of course, measures how much each household consumes as opposed to how much it makes. This is important because many households are at different stages of their lives; obviously, inequality exists if there are households that are run by the elderly and households that are run by people in the prime of their lives, even though the amount of goods that they have is more equal than the amount of income they make.
3. The increasing level of single mothers should disturb everyone.
4. There is still a lot of income mobility, mostly because the level of income is largely determined by what stage of life a household is in. For instance, between 1996 and 1999, slightly more than one-third of the population was impoverished for at least 2 consecutive months. Only 2% was impoverished the entire time. Indeed, even the super-rich .01% change every year as executives exercise stock options at different times. We may not all be in the top 10% now, but a lot of us will be at some point in our lives; with wise investments, we’ll be able to live well for a long time.
5. An important thing that I’m going to come back to; we should be worried about the fact that people don’t see opportunities. Part of what makes the top 1% so wealthy, in my opinion, is the fact that they recognize business opportunities more effectively than the rest of the population. Part of this is due to the fact that the top 1% has more connections and more experience. Part of this is also due to the fact that some people major in Gender studies and later join the private work force.
6. We should be confused that education is such a big problem because education reform is difficult to implement. We’re middle-of-the-road at best in k-12 education, and college education is getting quite expensive. Postgraduate education isn’t even considered by many.
7. One thing that is hopeful? Though implementation is tough, there is a lot of room for future growth in the United States. If we reformed education, if people became more perceptive of the business world, and if families in the US were more stable, economic growth would pick up considerably.
In the future:
-A post about unions will appear
-A post discussing solutions to inequality (or, rather, policies to make our economy grow faster)
-A lot more discussion on the gap in business knowledge and opportunity recognition
http://elsa.berkeley.edu/~saez/pikettyqje.pdf
So, one of the obvious political and economic issues of our day is the level of income inequality, which has been rising. The questions most people have are “why” and “what are the ramifications.”
There are two dominant theories right now. One describes income inequality as pretty benign: it reflects a greater of return on education.
The second is malignant: There has been a fall in taxes, allowing rich people to accumulate fortunes. CEOs can manipulate their pay and stock prices, unions have fallen, and outsourcing is taking a toll on wages. The rise in inequality is a very bad thing under this scenario, and not everyone is better off.
This argument, of course, is politicized. Most Republicans like to think that inequality is due to education and hard work, and Democrats are more likely to believe that CEOs are abusing the system.
In truth? It’s a little bit of both. The top 20% households as measured by income have been growing in share since the 1960s, but, within that segment of the population, households have been growing at different rates and at different times. The top .01%, in terms of total income, earned 50 times the median level of society in 1970. That same factor was 250 in 1998. On the other hand, a worker at the 90th percentile (we’re talking wages now, not total income) earned 3.7 times what the worker at the 10th percentile made in 1979. In 2006, that number was 4.7 times.
Obviously, different factors at work here.
Looking at the top 20% and top 10%, the story is pretty simple; the return to education has increased dramatically. In 1979, the median worker with a bachelor’s degree earned 38% more than a person with just a high school degree. That number was 75% on 2005. Numbers like this shouldn’t be too shocking too much to anyone; better educated workers are better able to take advantage of our dynamic economy and our growing level of technology. I’d also suggest that we’re more efficient in who we send to college; even though we’ve sent a lot more people to postsecondary education since the middle of the century, the average IQ of the college student has increased significantly. Since the two factors work together to increase wages, it’s not surprising to see their incomes rise.
It’s also important to note that our measures of inequality check for inequality of households. The fact that more women are working now implies greater inequality, as higher income households are more likely to have a well-educated father and well-educated mother.
But what the heck is going on at the VERY top? Their income share has risen dramatically, much more so than the rest of the population. Does this mean we’re returning an era of oligarchy?
Eh, not quite, but education doesn’t explain everything. Technology, however, does still a play a role.
For instance, technology enables actors and baseball players to be seen all around the world and quite easily; their services are now in much greater demand, and they can be paid higher wages. And I’d suggest American cultural imperialism has played a complementary role to that as well.
The other group at the top are, of course, the CEOs. This is the most profound change in the United States throughout the 20th century. Prior to the Great Depression, the top 1% made 70% of their income in dividends. The shocks of the Great Depression and World War II seemed to have completely destroyed many vast fortunes, and the capital income that the rich got was never the same. On the contrary, since then most of the top 1% has earned money by…well, by actually earning their money. In 1998, roughly half of their income came from labor, and another sizable chunk came from private business income. Dividends only composed about a quarter (compare this to France, where the rich still live off of dividends). Why has CEO pay risen?
Well, the top 1% (CEOs included) started having income share increases in the 1970s, about a decade after the rest of the top 20%. However, their income share rose much faster than the rest of the top 20%. In 1970, the top .1%, for example, had 1% of the wage share of the population. That was 2% in 1984, and has increased since then.
The reason corporate board pay has risen so much is a matter of much contention. In my opinion, the average corporate executive these days really does have it all; they posses a high level of education, put in many hours, typically have much experience, and are better connected socially. This productivity has been seen in the large increase in shareholder value since the 1970s, as well as in the numerous powerful corporations that have emerged over the past 30 years that have revolutionized the way we think about business; Wal-Mart and Microsoft are good examples.
However, does this explain the WHOLE story? Perhaps executive compensation has risen too dramatically to fully account for the new firms that been made that are, indeed, profitable. Marginal taxes, for instance, may play a role. The large reduction in taxes under Reagan may have made work more profitable for the rich, who then would work more and obviously make higher incomes. There is indeed a measured increase in the share of income for the top 1% after 1986, but this is probably due to the change in tax structure; before 1986, it made more sense to classify personal income as corporate income. It’s tough to say how much inequality rose in the Reagan years before that.
Another factor, as many on the left say, is corporate influence over their own pay, as well as social norms. Since I don’t know too much about influence over their own pay, I’ll save that for a future post.
The social norms basically suggest that no one has no idea how much executives should really be paid. Are they worth that much? It’s almost impossible to measure, but investors are willing to jump on the bandwagon simply because they don’t know any better. If true, it’s a big reason why executive pay has increased, and explains why executive pay doesn’t seem to be sensitive to things like oil shocks (which DO affect the wages of everyone else). .
So, do we have anything to worry about?
1. The higher income definitely enables the creation of an oligarchy. Tyler Cowan recently pointed out that the college premium is the same as it was in the Gilded Age. Although he was saying nothing about an oligarchy, I found it pretty interesting.
2. Consumption inequality is even more important than income inequality, and doesn’t appear to have been dramatically affected in recent years. Consumption inequality, of course, measures how much each household consumes as opposed to how much it makes. This is important because many households are at different stages of their lives; obviously, inequality exists if there are households that are run by the elderly and households that are run by people in the prime of their lives, even though the amount of goods that they have is more equal than the amount of income they make.
3. The increasing level of single mothers should disturb everyone.
4. There is still a lot of income mobility, mostly because the level of income is largely determined by what stage of life a household is in. For instance, between 1996 and 1999, slightly more than one-third of the population was impoverished for at least 2 consecutive months. Only 2% was impoverished the entire time. Indeed, even the super-rich .01% change every year as executives exercise stock options at different times. We may not all be in the top 10% now, but a lot of us will be at some point in our lives; with wise investments, we’ll be able to live well for a long time.
5. An important thing that I’m going to come back to; we should be worried about the fact that people don’t see opportunities. Part of what makes the top 1% so wealthy, in my opinion, is the fact that they recognize business opportunities more effectively than the rest of the population. Part of this is due to the fact that the top 1% has more connections and more experience. Part of this is also due to the fact that some people major in Gender studies and later join the private work force.
6. We should be confused that education is such a big problem because education reform is difficult to implement. We’re middle-of-the-road at best in k-12 education, and college education is getting quite expensive. Postgraduate education isn’t even considered by many.
7. One thing that is hopeful? Though implementation is tough, there is a lot of room for future growth in the United States. If we reformed education, if people became more perceptive of the business world, and if families in the US were more stable, economic growth would pick up considerably.
In the future:
-A post about unions will appear
-A post discussing solutions to inequality (or, rather, policies to make our economy grow faster)
-A lot more discussion on the gap in business knowledge and opportunity recognition
Monday, May 14, 2007
Iran and US to negotiate
Well, the United States and Iran are apparently going to set aside their differences (for at least a little while) so they can talk about Iraq. Surprisingly, we will NOT be talking about the various other issues at play here, such as the Iranian nuclear program or Iran's support for Hezbollah.
Also important: The talks are only going to be at ambassador at level, which means that this, while important in the sense that it is opening up the door, is unlikely to mean large, sweeping changes in Iraq anytime soon. (Not to mention the other problems Iran is causing in the area!)
This comes after some low-level Iranian and US officials "ran into each other" in Egypt a while ago (when people were wondering if Secretary Rice would have a similar "run-in" with her Iranian counterpart).
Personally, I think the strategic situation in the Middle East has changed somewhat, and that these talks can be a good idea. Hezbollah got worse than it gave in the recent battle, and is probably still licking its wounds, even if Hamas is crazy enough to renew rocket attacks against Israel. The attempt to overthrow the Lebanese government similarly failed, the Saudis are procuring more advanced weapons, and many Gulf States have gone to the IAEA to register their own nuclear programs.
In addition, Ahmadinejad is having big problems at home. Oil prices were lower than anticipated and a quiet US Treasury campaign has denied Iran supplies of hard currency. The end result? Iran is cash-strapped, both nationally and internationally. The economy is bad enough that recent elections turned against Ahmadinejad, and the Russians are quite annoyed that Iran has not made recent payments on its reactors.
The broad picture has gone against Iran, which was expecting aggressive confrontation; rather, they got an indirect assault and a proxy war, and is currently getting hit hard. The broader picture still is in Iran's favor, as they will get nuclear weapons within the next few years at the present rate, but the situatuon is much less bleak than it was, and therefore we don't have that much to lose by restricting the topic to Iraq.
On the contrary, we have everything to gain. By making concessions only within Iraq (which is ugly anyways) we can keep our hand steady outside of it.
I'll be watching. I'm expecting a few overtures and gestures, but, in the end, nothing will occur. By the end of the year, though, I expect more serious talks between the US and Iran.
Also important: The talks are only going to be at ambassador at level, which means that this, while important in the sense that it is opening up the door, is unlikely to mean large, sweeping changes in Iraq anytime soon. (Not to mention the other problems Iran is causing in the area!)
This comes after some low-level Iranian and US officials "ran into each other" in Egypt a while ago (when people were wondering if Secretary Rice would have a similar "run-in" with her Iranian counterpart).
Personally, I think the strategic situation in the Middle East has changed somewhat, and that these talks can be a good idea. Hezbollah got worse than it gave in the recent battle, and is probably still licking its wounds, even if Hamas is crazy enough to renew rocket attacks against Israel. The attempt to overthrow the Lebanese government similarly failed, the Saudis are procuring more advanced weapons, and many Gulf States have gone to the IAEA to register their own nuclear programs.
In addition, Ahmadinejad is having big problems at home. Oil prices were lower than anticipated and a quiet US Treasury campaign has denied Iran supplies of hard currency. The end result? Iran is cash-strapped, both nationally and internationally. The economy is bad enough that recent elections turned against Ahmadinejad, and the Russians are quite annoyed that Iran has not made recent payments on its reactors.
The broad picture has gone against Iran, which was expecting aggressive confrontation; rather, they got an indirect assault and a proxy war, and is currently getting hit hard. The broader picture still is in Iran's favor, as they will get nuclear weapons within the next few years at the present rate, but the situatuon is much less bleak than it was, and therefore we don't have that much to lose by restricting the topic to Iraq.
On the contrary, we have everything to gain. By making concessions only within Iraq (which is ugly anyways) we can keep our hand steady outside of it.
I'll be watching. I'm expecting a few overtures and gestures, but, in the end, nothing will occur. By the end of the year, though, I expect more serious talks between the US and Iran.
Sunday, May 13, 2007
Sex for Health Part II
The author is correct in his assumption that more sex can indeed bring down the growth of STDs in society:
I did some more math work, taking into account that that STD carriers theroetically have more sex, and the original author may indeed be correct (under one circumstance, anyways)
The number of new infection=p*c*f*i
p=probability infecfted sleeping with uninfected person
c=chance of it spreading per contact
f=frequency: number of times infected person has sex compared to uninfected
i=number of infected people
f and p are related inversely. If f increases, then p decreases...the more often infected people sleep (as a whole), the less likely an individual infected person sleeps with an uninfected person.
I modelled this with:
(x-i)/(f*i+(x-i))
where x is the total number of people in the population. x-i is the number of times uninfected people have sex per f times for an infected person.
IE, if there are 10 infected people and 30 uninfected, and the infected sleep 3 times for every 1 of the uninfected, then the probability of sleeping with an uninfected individual is 1/2 (40-10=30, divided by f*i=30+30=60)
This is the chance of any individual sleeping with an uninfected on any given time.
SOOOOO, putting it all together:
cfi(x-i)
divided by
fi+(x-i)
is the number of new infections
Put random numbers in for c, x, and i, and let f be favorable. As f increases, the number of infections increases. f=number of times infected people have sex/number of times uninfected people have sex.
So, the author is right: Holding ALL ELSE EQUAL, if uninfected people have more sex, the number of infections is wrong.
Yes, I was wrong
I did some more math work, taking into account that that STD carriers theroetically have more sex, and the original author may indeed be correct (under one circumstance, anyways)
The number of new infection=p*c*f*i
p=probability infecfted sleeping with uninfected person
c=chance of it spreading per contact
f=frequency: number of times infected person has sex compared to uninfected
i=number of infected people
f and p are related inversely. If f increases, then p decreases...the more often infected people sleep (as a whole), the less likely an individual infected person sleeps with an uninfected person.
I modelled this with:
(x-i)/(f*i+(x-i))
where x is the total number of people in the population. x-i is the number of times uninfected people have sex per f times for an infected person.
IE, if there are 10 infected people and 30 uninfected, and the infected sleep 3 times for every 1 of the uninfected, then the probability of sleeping with an uninfected individual is 1/2 (40-10=30, divided by f*i=30+30=60)
This is the chance of any individual sleeping with an uninfected on any given time.
SOOOOO, putting it all together:
cfi(x-i)
divided by
fi+(x-i)
is the number of new infections
Put random numbers in for c, x, and i, and let f be favorable. As f increases, the number of infections increases. f=number of times infected people have sex/number of times uninfected people have sex.
So, the author is right: Holding ALL ELSE EQUAL, if uninfected people have more sex, the number of infections is wrong.
Yes, I was wrong
Special Interest Groups and Democracy: A lack of knowledge
http://economistsview.typepad.com/economistsview/2007/05/bryan_caplan_sp.html
http://www.marginalrevolution.com/marginalrevolution/2007/05/democracy_is_th.html#comments
http://online.wsj.com/article/SB117893365787300771.html
The key question at hand: So many people think special interest groups have a strangle-hold on us, yet, in many, many cases, people support their economically ridiculous claims, such as support for tariffs or subsidies for farmers. Why in the world do they do that?
The important thing to realize from the comments in the above blogs is that the people aren't being irrational per se. Rather, they're simply ignorant. Most people really don't understand that by allowing comparative advantage to work we are really increasing our living standards. Most people do not understand that a trade deficit with China and India is not inherently bad. Most people do not understand that regulations and unions carry hefty drawbacks with them.
The reasons are for this are numerous, but I believe most of it comes from a basic misunderstanding of macroeconomics. Once upon a time, Y=C+I+G+NX was revolutionary. For many people, the idea would still be revolutionary. Hell, I never even heard of "IS-LM" until 6 months ago, and I'm a second year college student.
Most people do not have more than a vague understanding of how the economy actually operates. As such, it's not surprising when people come to erroneous conclusions.
What TYPE of erroneous conclusions do they arrive at that, though? Well, generally, people will fall back on credible social institutions to guide them, in the same way I fall back on my econ textbook. Social institutions about political issues (like the economy is treated, as opposed to a matter of science), rely, of course, on political history and the basic cultural values of the American people. This includes freedom but also , since the advent of Big Government, a respect for government can accomoplish and an expectation that government get something done. The institutions are often just as confused about economics as the people (how many Fox News anchors actually understand economics?), but, since they are in positions of respect, people do listen. And their models tend to rely on government intervention in some way or another.
Another factor to consider is "idea mutation." A social institution may give the idea, but people naturally process that idea into context, and then form policy propositions. The context part is important; I know a LOT of economics, but I can't relay the ideas to people, because they do NOT understand economics, and do not have the will to learn it. It's tough; my ideas may be better than General Motors, but General Motors has a better marketing campaign because it can easily be processed.
The processing part is important as well, especially for school-children. What happens in our history classes, when children are given only a brief paragraph about the Bay of Pigs, when scholars have written entire BOOKS about it? Children get insufficient details and make wild generalizations from them. Naturally, poor policy decisions are the result.
The context vs. processing distinction is fine...so fine that even I don't understand it. As a working definition at the moment, I'll define the context part as the ability to understand the argument in relation to what you already know. Processing involves the strategy people use to integrate the new knowledge into their knowledge-pool.
I think processing should be our primary target. Context doesn't matter so much; even if economists "dumb themselves down" so ordinary people understand them, it won't change the fact that people have incomplete understanding. We still treat people as intellectually inferior, we just have the more effective marketing strategy and happen to produce good results.
Instead, we should be given people MORE knowledge, particularly THEORY. People are not stupid; they have vague notions of how supply and demand operate. What they need are models that integrate knowledge, which will them to integrate past information and new information MUCH more easily. And they need empirical examples to back up said theory.
In essence, what we need is better basic education that serves as a foundation for people, instead of giving people more knowledge and allowing them to build on an already incorrect foundation.
Saturday, May 12, 2007
Back
After a long, nearly 1 month hiatus, MOAES is back. I've spent the last month handling personal issues and studying for a number of exams and finals, and I decided to not burden myself too much by trying to study things outside my curriuculum.
Anyways, it's back.
Anyways, it's back.
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