David Gerard

Author: David Gerard

The Great Portland Flush

In our continuing series of thorny policy issues, here’s one from the great northwest.  The city of Portland flushed millions of gallons of treated drinking water because a man urinated in it.  Does that seem reasonable? Or is it a wee bit crazy?

Here’s the abbreviated story from the NYT.

Portland is disposing of eight million gallons of drinking water because a man was caught on camera urinating in a reservoir. Water from the city’s five open-air reservoirs goes directly to customers. A city official said he did not want to serve water with urine in it.

Critics call that an overreaction, saying animals routinely defecate and urinate in the reservoirs and sometimes die in them. Health officials say that urine is sterile in healthy people and that the urine was so diluted it posed little health risk.

Officials say it will cost the system’s customers less than $8,000 to treat it as sewage. The 21-year-old man caught on camera has not been charged.

I will spend the next year trying to figure out how to make this into a final exam question.

Old School Essay and Book Recommendation (Summer Reading, Part 3)

In a piece dear to the hearts of all my Econ 300 students, Master of rhetoric Deidre McCloskey lays out the case for teaching old school, Chicago economics.  Although I certainly beat the maximize! drum, the central intuition is certainly that profits drive economic activity in the long run. McCloskey traces the historical context back to Adam Smith:

The core of Smithian economics, further, is not Max U. It is entry and exit, and is Smith’s distinctive contribution to social science… He was the first to ask what happens in the long run when people respond to desired opportunities. Smith for example argues in detail that wage-plus-conditions will equalize among occupations, in the long run, by entry and exit. At any rate they will equalize unless schemes such as the English Laws of Settlement, or excessive apprenticeships, intervene. Capital, too, will find its own level, and its returns will be thereby equalized, he said at length, unless imperial protections intervene.

The essay is interesting throughout, and I certainly approve of her message on this point.

If you like the rhetoric of this piece, you might consider checking out some of McCloskey’s  other works, as she is indeed a prolific writer.  One recent add to my summer reading list is her update of The Rhetoric of Economics. In it, she argues that “economics is literary,” and that making a persuasive case is “done by human arguments, not godlike Proof.”

This is one of McCloskey’s continuing projects. This one began with her work in the 1980s, and continues to be discussed today. The preface to the second edition, in fact, begins with a discussion of why more people didn’t read past chapter 3 in the first edition.

Paul Romer Speaks on Charter Cities

Paul Romer has a vision of turning dystopias into engines of economic growth by establishing “Charter Cities” — new cities with a new set of rules.

How does this work?  Well, we’ve plowed this ground once.  But for those of you who didn’t wade through The Atlantic Monthly piece, “The Politically Correct Guide to Ending Poverty,” you can get condensed versions with Paul Romer’s TED talk or his interview at VoxEU.

Romer is an exceptional intellect and this is probably worth your 12 minutes.  Or 24 if you listen to both.

Why Go to College?

With reunion upon us, it is an excellent time to ask, “why go to college?”  Indeed.  To help us out with that question, Louis Menand has a provocative piece in a recent New Yorker examining the ins and outs of  this exact question.  As I got a few paragraphs into this one I started to wonder why this question gets discussed so rarely. It hardly seems self-evident, but I would guess it’s some combination of “expand your mindset,” “expand your skill set,” and “expand your wallet.”

Of course, Menand is a more eloquent writer than I am, and he posits two theories, with the first one going something like this:

College is, essentially, a four-year intelligence test. Students have to demonstrate intellectual ability over time and across a range of subjects. If they’re sloppy or inflexible or obnoxious—no matter how smart they might be in the I.Q. sense—those negatives will get picked up in their grades. As an added service, college also sorts people according to aptitude. It separates the math types from the poetry types. At the end of the process, graduates get a score, the G.P.A., that professional schools and employers can trust as a measure of intellectual capacity and productive potential. It’s important, therefore, that everyone is taking more or less the same test.

That seems like a riff on the “expand your wallet.”  The second has more to do with expanding horizons:

College exposes future citizens to material that enlightens and empowers them, whatever careers they end up choosing. In performing this function, college also socializes. It takes people with disparate backgrounds and beliefs and brings them into line with mainstream norms of reason and taste. Independence of mind is tolerated in college, and even honored, but students have to master the accepted ways of doing things before they are permitted to deviate. Ideally, we want everyone to go to college, because college gets everyone on the same page. It’s a way of producing a society of like-minded grownups.

At Lawrence, we recruit students based on our mission in the liberal arts, so I’m not sure if you could pigeonhole us into either of those categories.  But we certainly make the claim that we train people to think and communicate, which are not explicitly vocational skills, but do come in handy.

Menand is certainly sympathetic to our cause, here and elsewhere, and makes some interesting points about our students.  One is the results of the Collegiate Learning Assessment — a test designed to see if students learn anything in college:

The most interesting finding is that students majoring in liberal-arts fields—sciences, social sciences, and arts and humanities—do better on the C.L.A., and show greater improvement, than students majoring in non-liberal-arts fields such as business, education and social work, communications, engineering and computer science, and health.

Well, that’s reassuring.
Definitely worth a read if you are interested in higher education.

Come to think of it, he does speak kind of softly

Professor Parks Sets the Tone

There was plenty of excitement this past Sunday at the Lawrence University Commencement, and the Appleton Post-Crescent seems to have captured much of it in this nice little photo layout.

Obviously, you can’t tell the players without a scorecard, so that on your left is the faculty Marshall, Professor of Mathematics Alan Parks, wielding the ceremonial (at least let’s hope so) faculty mace.

Below we have one of our graduating seniors, Karl Hailperin, who distinguished himself as an enthusiastic student, an avid reader, a stalwart at EconTea, and an all around good guy.  He will definitely be missed.

Enjoy the photos!

Karl gets his due. Congratulations!

Summer Reading, Part 1

Now that Commencement has passed, we can get on with our summers.  For me, that means I can try to take a bite out of the big, tasty stack of books I have been accumulating over the past 9 months.

These are my picks:

Michael Lewis, The Big Short.  Almost anything by Lewis is fun to read.  I was plussed* by the series he did for Vanity Fair, and recommend those highly. Last year we read his classic, Moneyball.

Peter Drucker, Innovation & Entrepreneurship.  This summer’s Reading Group pick.

Tim Harford, Adapt: Why Success Always Starts with Failure. Harford writes beautifully (well, for a guy on the economics beat) and his explanations are generally lucid, convincing, and theoretically sound.  More on Harford here.

Daniel Okrent, Last Call.  Tyler Cowen calls this history of U.S. prohibition “a masterpiece.” I am interested in the causes and consequences of criminalization of drugs and alcohol, and I am guessing excerpts of this will end up on my political economy reading list. Perhaps a course on the subject?

Ron Howard and Clint Korver, Ethics (for the real world): Creating a Personal Code to Guide Decisions in Work and Life.  Howard is considered the father of decision science by many (and founder of the purple balls!). Korver is a successful entrepreneur and fellow Grinnell alum! I like this quote on “ethical dilemmas,” which they say is often fundamentally misunderstood:

“When we pick up just about any newspaper, we read about people caught in ‘ethical dilemmas.’ But nine times out of ten, they are not dilemmas at all. They are conflicts between prudential gain and ethical action. They are issues of temptation.” (p. 38).

Yup.

Philip Mirowski, Science Mart: Privatizing American Science. This looks like a clear winner. A historian I sometimes fraternize with is excited about this one, and I hear that “Mirowski is a wild man.” Let’s hope so. Expect to see this in Econ 450.

F.A. Hayek, The Road to Serfdom.  Following the Schumpeter Roundtable and Discovering Kirzner, we are picking up Hayek this fall as our department reading pick.

Jonathan Franzen, Freedom. Well, I am going to be on the beach for a week.

*It’s possible that “plussed” isn’t a word.  Perhaps it should be.

Professor Corry Picks Up Some Hardware

Goofier than you might think...

Assistant Professor of Mathematics and charter member of the I&E Reading Group, Scott Corry, won the Young Teacher Award for — you guessed it — his teaching excellence.  Provost Burrows awarded Corry with the honor at the 2011 Lawrence University commencement ceremonies this past Sunday.

Professor Corry exhibits the characteristics of a prototypical liberal arts teacher-scholar. In addition to being a gifted mathematician, he is a man of varied intellectual pursuits — a champion of the Freshman Studies program, an avid community reader, and probably a lot of other things he doesn’t tell me about.

For us down on Briggs 2nd, he has established himself as a pillar of our  I&E Reading Group, having plowed through the likes of Schumpeter, Kirzner, and now Drucker. We look forward to reading and discussion with him for years to come.

So a warm congratulations from your friends in the economics department!

And they’re off… 2011 Commencement

The flowing robes, the grace... striking

We say farewell to our seniors with a repost from last year.

In our continuing attempt to understand the world around us, today we will talk about the tradition of wearing cap & gowns for graduation ceremonies.

Well, the first thing you need to know is that this dates back nearly 1000 years, and the academy is a notoriously conservative place. In the words of F.M. Conrford, in his advice to young academics, “Nothing should ever be done for the first time.”* The corollary is that once we get started on something, it’s tough getting us to stop.

With that in mind, Slate.com tackles the regalia question for us:

Standard fashion around 1100 and 1200 A.D. dictated long, flowing robes and hoods for warmth; the greater a person’s wealth, the higher the quality of the fabrics. This attire went out of style around the Renaissance. But sumptuary laws, often designed to prevent people from dressing above their class, kept academics (who were relatively low in the social hierarchy) in simple, unostentatious robes through the 16th century. Thereafter, academics and students at many universities wore robes for tradition’s sake. At Oxford, robes were de rigueur until the 1960s and are still required at graduation and during exams.

And, of course, the Americans played along:

When American universities sprang up in the 17th and 18th centuries, they adopted many Oxbridge academic traditions, including robe-wearing… Continue reading And they’re off… 2011 Commencement

“No more gorillas in hysterical herds”

Separated at Birth?

On Sunday, former Senator Russ Feingold will pick up an honorary degree and deliver our Commencement speech as our seniors prepare to march off in glory. Feingold was a notoriously independent voice, as evidenced by his lone vote against the PATRIOT Act. Illustrating the odd second dimension of American politics, this week Tea Party hero, Rand Paul, nearly derailed the reauthorization of the PATRIOT Act by fundamentally siding with Senator Feingold’s position on the encroachment of federal power.

Indeed, the libertarian press shed a tear for Feingold, even comparing him to the incomparable Wisconsin icon, Robert LaFollette.

As H.L. Mencken wrote of the original LaFollette:

There is no ring in his nose. Nobody owns him. Nobody bosses him. Nobody even advises him. Right or wrong, he has stood on his own bottom, firmly and resolutely, since the day he was first heard of in politics, battling for his ideas in good weather and bad, facing great odds gladly, going against his followers as well as with his followers, taking his own line always and sticking to it with superb courage and resolution.

Suppose all Americans were like LaFollette? What a country it would be! No more depressing goose-stepping. No more gorillas in hysterical herds. No more trimming and trembling. Does it matter what his ideas are? Personally, I am against four-fifths of them, but what are the odds?…You may fancy them or you may dislike them, but you can’t get away from the fact that they are whooped by a man who, as politicians go among us, is almost miraculously frank, courageous, honest and first-rate.

So farewell to Feingold.

Indeed, I bet civil libertarians miss Senator Feingold on the floor, as he and Paul would have made for interesting bedfellow.  Here’s Lynne Kiesling at Knowledge Problem on some recent trends in security versus liberty tradeoffs.

On the Road with F. A. Hayek

This fall, Professor Galambos and I will be leading a group read of F.A. Hayek’s The Road to Serfdom. The course will be offered for one unit as DS 391 — On the Road with Hayek, and we will have a sign up and coordinate times at the beginning of fall term. I expect with this book we will probably meet eight of the ten weeks.

If you are the type that lets one-unit courses slide, you might consider picking up the book and giving it a once over this summer in preparation for fall term. I suggest you get the edition edited by historian of economic thought, Bruce Caldwell.

For those of you looking to kill an hour with a podcast, here’s Caldwell at EconTalk, talking about Hayek.

Here’s Hayek’s classic American Economic Review piece, “The Use of Knowledge in Society.”  And here.  And here’s Hayek’s Nobel lecture, “The Pretence of Knowledge.”

See you this fall.

UPDATE:  You can get an add course sheet outside of our offices.

Math 300 Final Exam Help

Question: Prove that any sequence of the word “buffalo” of length n>1 is a valid English language sentence.

Proof (via Brad DeLong’s comments)

First, let n be odd. We start with n=3: “Buffalo buffalo buffalo”; that is, some buffalo do buffalo buffalo, i.e., some buffalo are buffaloed by buffalo. But of course the buffalo who are buffaloing may themselves be buffaloed by buffalo, so just as some cats that watch mice are chased by dogs, or as we say, cats dogs chase watch mice, buffalo that buffalo buffalo themselves buffalo buffalo, and we can say that buffalo buffalo buffalo buffalo buffalo. Anytime we have the noun buffalo, we can add the relative clause “who are buffaloed by buffalo”, or better, instead of the noun phrase “buffalo who are buffaloed by buffalo”, we may say simply “buffalo that buffalo buffalo”, then add the rest of the sentence, yielding “Buffalo that buffalo buffalo buffalo buffalo”, or even better, “Buffalo buffalo buffalo buffalo buffalo”. To a sentence consisting of n (odd) occurrences of the word, we can produce a sentence of n+2 occurrences.

Thus for any odd n, a sequence of n occurrences is a sentence.

But just as a dog that chases cats is a dog that chases, buffalo that buffalo some buffalo are buffalo that buffalo, so from one of our sequences of an odd number of occurrences, we can lop off the final direct object, producing a sequence of an even number of occurrences that is a grammatical sentence. For any n>1, odd or even, a sequence of n occurrences of “buffalo” is a grammatical English sentence!

Q.E.D.

Rabbit Redux

The weekly This is Lawrence segment is up, featuring the Rabbit Pop-Up Gallery.

Our own Ranga Wimalasuriya has a speaking part in the video talking about his role on the financial end of the project, and humbly omitting his own artistic prowess. Of course, Ranga says he doesn’t read this blog, so be sure to tell him congratulations for me.

Check out the video, and the gallery. Both look great.

Weekend Football

The Warch Campus Center Cinema proudly presents the Saturday Champions League Final between FC Barcelona and Manchester United, beginning at 1 p.m. and ending in a 0-0 tie and penalty kicks around 3:30. Ah, that was a cheap shot. Even so, I do find the lulls whilst the players writhe around on the ground an excellent chance to catch up on my reading.

Is it already two years ago that Barca beat down and humiliated Man U?  Well, you can kick all that out the window when these two get together.

You can bring refreshments, but please don’t leave a Messi.

Hence the name “Excess Burden”

I will issue this notice, without comment, from the American Economic Association.

Job Openings for Economists has been published only electronically for the past decade. Starting with the August 2011 issue, the Association will resume publishing JOE in print format, in order to ensure compliance with Department of Labor regulations for obtaining work visas for non-citizen economists. Print issues will be distributed via the U.S. Postal System two to three weeks after they are published electronically.

Somehow the profession managed to slide by for 10 years without a print version, but now we’ll start printing them up again because, um… Right.  So, you’ll be getting that about a month after the job listing is posted just in case your internet connection is permanently disabled.

Okay, so I commented a little.

The True Costs of Electricity

In Econ 100 this week we talked about external costs (and benefits) and the equivalence of carrots (prices) and quantities (sticks) in terms of the possible “optimal” equilibrium outcomes.  The elephant in the room in these types of discussions is the measurement of the so-called external costs.  As if on cue,  environmental economics superstar and sometime Presidential advisor Michael Greenstone and his co-author Michael Looney have upped a paper with their estimates of these costs associated with electricity and energy.

Here’s their money chart.

The glaring purple associated with coal shows that the principal external costs are not from greenhouse gases, but from conventional criteria pollutants (e.g., NOx, PM). The external costs of coal, even new “clean coal,” are estimated to be higher than the actual operating costs.  Yikes.

It’s worth noting that both solar and wind have non-trivial carbon footprints, because the variability of supply requires ample natural gas plants to cover supply on days when the wind doesn’t blow and the sun doesn’t shine.  Certainly, developing battery storage technologies may well turn out to be the biggest environmental challenge of this next half century.

The results are probably worth quoting at length (after the break):    Continue reading The True Costs of Electricity

(Not so) Undercover Economist

The Undercover Economist, Tim Harford, is all over the internets these days.  He has just come out with a new book, Adapt: Why Success Always Starts with Failure — a meme no doubt familiar to the Pursuit of Innovation crowd.  Beginning Monday, you can hear an extended discussion about the book over at our favorite economics podcast,  Econtalk. I have penciled this one in on my summer reading list.

Harford also recently named his top five books that give unexpected lessons in economic principles, a list that included Klein & Bauman’s Cartoon Guide to Economics (my intro textbook!), Charles Perrow’s classic, Normal Accidents, and Cory Doctorow’s For the Win, a book that should “appeal to any enthusiastic player of MMO [Massively Multiplayer Online] games.”  Huh.

Undercover. Unexpected.  Un for the whole family.

Producers Still Hate Competition

Tyler Cowen at Marginal Revolution thinks this story might be a parody.   Here’s the gist:  a Berkeley store has decided to compete with its fellow merchants.

The relationship between the new management and the community seems to have got off on the wrong foot soon after Fujimoto left. Before long, the small local merchants were hearing reports from customers that Monterey Market was selling the same specialty products as they were, but at lower prices.

“We only have a 30% mark-up”, said Ng, adding that she doesn’t understand how Monterey Market can sell the same products so much more cheaply.

So, are they saying that Monterey Market can’t sell the same product?  Not at all.

Asked why Monterey Market should not have the right to pursue a business model that includes selling what it wants, Ng said:  ”Sure, but they don’t have to carry exactly the same products. It’s not that there was no competition before — we carried some of the same items — but we had matching pricing,” Ng said.

And the story doesn’t end there.

The decision by Monterey Market to stay open on Sundays, which it started to do in November last year, has also had a direct impact on sales, according to Ng and Rosales. In the days of Bill Fujimoto, opening hours used to be coordinated among the merchants, according to Ng.

Same products, lower prices, greater convenience.  Sounds like competition to me.  And producers still hate it.

Supply & Demand Mania Continues

Don Boudreaux has assigned a Pop Quiz over at his blog, Cafe Hayek.

1.  Which group of persons would most likely benefit from rent control (i.e., a price ceiling or price cap) imposed in the city of Washington, DC?

a. landlords in Washington, DC

b. persons seeking to rent apartments in Washington, DC

c. landlords in the DC suburbs without rent control

d. renters in the DC suburbs without rent control

2.  Suppose that engineers at BMW invent a new machine that dramatically increases BMW’s efficiency at producing automobiles and, thus, causes BMW’s production costs to significantly fall.  As a result, BMW expands its output and lowers its prices.  But also, BMW patents this new machine; only BMW can use it.  What is the most likely consequence of this particular invention on the prices that General Motors, Ford, Toyota, and other auto makers charge for the automobiles they produce?

a. no change in the price of non-BMW automobiles

b. the price of non-BMW automobiles will fall

c. the price of non-BMW automobiles will rise

d. there’s insufficient information to answer this question

3. In the 1970s, the federal government imposed price ceilings on oil.  The goal was to make fuels such as gasoline and heating oil more affordable.  One consequence was

a. consumers ended up getting less oil (and oil products, such as gasoline and fuel oil) than they would have gotten without the price ceiling

b. gasoline shortages

c. higher costs to consumers of acquiring oil and oil products

d. all of the above

For answers, either work on them, or go check out the Cafe Hayek blog.