There are rumors of a fledgling Lawrence Economics Team. I am probably the wrong person to ask. Coach?
Category: Fishy fishy fishy fish
Fed Chair Breaking All the Rules?
This bit of amusement is brought to you by the University of Oklahoma’s Kevin Grier. Federal Reserve Chair Ben Bernanke opposes a congressional rule that would require the Fed to follow a policy rule.
“The Fed already has a rule,” Mr. Bernanke said during a panel discussion at the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy. “It’s committed to hitting a 2% inflation target and aiming for the natural rate of unemployment. These are rules.”
And here are the data showing 33 straight months of consumer prices rising at less than 2%:
iArbitrage Opportunities?
The limited release of the iPhone 6 has Jason Kottke wondering about international arbitrage, what he calls a “black market.” Check out the video.
He links us up to Bloomberg News report on international arbitrageur, Mr. Liu, who is a specialist in matching up international supply and demand:
While the device debuted today in the U.S., Hong Kong, Japan and Australia, there is no release date set for the world’s biggest smartphone market. That creates an opportunity for Liu, who promises two-day delivery of a 16-gigabyte iPhone 6 for 8,000 yuan ($1,303) — almost double the price on Apple’s Hong Kong website.
What a great quote:
“It’s going to be a while before the new iPhone comes to China officially, so if you want it now, you have to pay up… Give me a call if you want one.”
It’s not clear to me where the moral high ground is — why should citizens in western countries have preferential access to these new technologies? Is there really anything wrong with hooking our Chinese brethren up with a phone when they come out, rather than having them wait three months like the last iPhone release? Again, here’s Bloomberg:
The phones are multiband devices that will work anywhere. Yet anyone selling a device on China’s black market breaks at least two laws — the requirements to pay hefty import duties and to only use mobile phones sanctioned for sale by the government.
There it is.
NCAA Pick$
Slate has an ingenious interactive tool that fills in your NCAA bracket based on various criteria, including the schools’ academic rankings, distance to the area (nearer team wins), SAT scores (higher winning, inexplicably), and my personal favorite, dog friendliness.
But, as market economists, perhaps we should just let the market speak by looking at the most handsomely paid coaches! 
As you may know, the highest-paid state employee in most states is the head football coach at one of the public universities. Here in Wisconsin, however, Madison’s coach Bo Ryan has that distinction, which is good enough for the highest-paid coach in that region. I’m guessing that Michigan State University coach Tom Izzo is the highest-paid employee in Michigan.
Not surprisingly, these look a lot like many of the actual “expert” picks for much of the tournament, including Michigan State reaching the Final Four as a four seed.
Although I like the idea of picking based on coach salary — what better measure of quality than willingness to pay for a coach?! — one suspects we can actually measure performance, so I tend to lean on the Logistic Regression Markov Chain model to inform my picks.
The thing about the Cars movies is that they are geared to a specific audience and that audience does not include 12-year-old girls
The generally “meh” critical response to the recent release, Monsters U, prompted The Atlantic to post a piece on the “sad decline” of the Pixar dynasty. Using Rotten Tomatoes approval data, Christopher Orr charts the trend toward mediocrity(though, in this market, mediocrity might be the best you can ask for). At any rate, Pixar generally produces “kids” movies, and the folks at Slate.com took the novel approach of actually asking the kids what they thought.
Shockingly, it turns out that kids and the critics don’t always see eye-to-eye on movie ratings. The biggest divergence seems to be with A Bug’s Life, a charming tale of a bug’s life featuring the voices of Dave Foley, Kevin Spacey, and Denis Leary (what kid doesn’t love Denis Leary?). More than 90% of critics rated this one fresh, whilst the kids covered the screen with maters, with an approval rating in the mid-30s.
Ouch.
In a similar vein, the critics fell all over themselves praising Finding Nemo, whereas kids were split down the middle in their approval of this mother-killing fish tale.
The critics were not thrilled with Cars (just over 70% approval), but kids loved it even less (just under 50%). I’m not sure I believe those numbers, actually, given the pervasiveness of Cars stuff (though the little girl quoted in the post title does make a compelling point). I do believe the second set of numbers, however, regarding Cars 2. The critics panned this hyper-violent Bond-esquey schlock (40%), whereas more than 70% of kids gave it a fresh rating (12-year old girls notwithstanding). My boy walked out of the theater laughing about “all the guns”. Huh.
When you add it all up, the approval trend is going quite the opposite for Pixar’s appeal to kids compared to its appeal to critics, which probably has a lot to do with its “sad demise”.
Sea Changes
I’m looking at some eye-grabbing headlines in my RSS feed and it looks like my life could be in for some radical changes, from a new face for the academy to fewer outlets to indulge my passion for shopping at the mall to higher prices for my beloved coffee drinks:
Will Google kill the big box Store?
Will free MOOCs destroy higher education?
Will the internet destroy the news media?
How climate change could affect coffee… and wine
And, perhaps most tragically, the future is now:
American writing is now more emotional than British writing
Did anyone see that coming?
“Having a cheetah is a stupid idea”
That’s former California Governor Arnold Schwarzenegger in a recent Esquire interview.
In addition to that sage wisdom, the Governor gives some sound advice to those of you that are resolving to work harder in the next calendar year.
The Good Ol Summit Time
As summer marches on, the financial situation in Europe remains unresolved, some economists are arguing that a devaluation and subsequent inflation of the Euro is in order (see Kenneth Griffin and Anil Kashy here and Martin Feldstein here). The Grumpy Economist, University of Chicago’s John Cochrane, is skeptical and provides a helpful analogy:
Imagine that your brother in law had been drinking too much for 40 years, perpetually on and off the sauce, never really able to give it up. He went through a painful 12 step program and rehab, and finally quits the sauce for 10 years. He threw away all the liquor in the house. Then he loses his job. Is “one more big night out to soothe the pain, and then I’ll really really never do it again” at all a credible plan? That’s exactly what my normally sensible colleagues (see above) are advocating.
My guess is that most of our readership does not have brother-in-laws who have been drinking too much for 40 years, so I will give you something closer to home.
Back when I was in college I had a friend who tended to fall behind a bit in his classes, something like accumulating large piles of debt. At some point, of course, the debt would mount and he would reach a crisis situation, forcing him to face some unpleasant facts. He would then of course have to develop a plan to “restructure” the debt — for instance, does this sound familiar?, getting an extension on a paper, strategically dropping a class, deciding which course he could get by without studying, etc… And, remarkably, once the plan was in place, he would have some sort of celebration even prior to completing any of the work he had to do.
To my knowledge, he had no way of credibly committing to putting the plan in place. What I mean by that, of course, is that he generally didn’t put the plan in place.
I’m not sure whether he ever graduated, but I do know that he has been a very successful entrepreneur. I’m not sure exactly what that does for our analogy.
On a not entirely unrelated note, Kevin “Angus” Grier at the Kids Prefer Cheese blog provides some visual insight in the salubrious effects of European summits on financial markets.
It’s summit time!
Black Friday View from Briggs 2nd
I just looked out my window and saw a flock of seagulls (no, not that Flock of Seagulls) antagonizing one of the resident bald eagles.
I guess this isn’t all that unusual from the seagulls. Did you know:
Herring gulls dive-bomb predatory birds at a steep angle from above and behind, as they make a piercing shriek – “kaiow!”.
Some gulls also defecate or even vomit on the predator for good measure.
My emphasis, as if any was needed. Ick.
Click the pic for the full story and a bigger picture.
Via MR.
“English Too Easy for Hungarians”
That is the title of a WSJ blog piece that describes the latest efforts of the Hungarian government to save the country. I think they are finally on to something. English, they say, is so easy that one can hardly avoid learning it. So, why waste those precious early years on something trivial? Learn French instead, or some other proper language. It seems to me that there are several plausible reasons why they couldn’t go wrong with this policy. 1) The historical record is clear: Any country where English is spoken or was introduced as a language has suffered economically. 2) Clearly, wasting one’s younger years learning an easy language has a negative effect on one’s thinking. I can’t think of a single famous mathematician or scientist or philosopher whose native tongue was/is English. 3) Why learn English, when everybody in the world is doing it? In this new, globalized world, differentiation is the name of the game.
I couldn’t agree more that English is very easy. Not only do all native speakers achieve stunning eloquence by age 12, but even Hungarians master the language by… some age. At least the 10% of the population who speak it… sort of. As this video demonstrates, our (still relatively young) Prime Minister Viktor Orbán can spontaneously switch to English to respond to a question at a press conference. I am glad he didn’t waste his time perfecting his English, but focused on his pre-primeminister studies instead.
Russian used to be very popular compulsory in schools (even in my younger years). I am sure we could still find quite a few Russian teachers who were suddenly out of work 20 years ago. It’s a complicated language, requiring many hours of focused mental effort, and hardly anyone else in Europe speaks it (west of us…). Putting those Russian teachers back to work could be a win-win for everyone.
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.
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.
“Uncle Sam will save you from bad feng shui”
The “avuncular state” is one of this week’s topics in the Comparative Economics Systems course. Should the state take a more paternalistic role? The Economist covers the topic fairly regularly, and you can probably guess which side they are on. This week’s issue has an entertaining (and worrisome) piece in the Schumpeter blog on the “Licence Raj.” As the quote in the title of this post says, even interior designers must be licensed in Florida. Requiring licensing raises wages by about 15% in a profession, the article says.
While The Economist sees licensing requirements as a weight pulling down entrepreneurship, others see that 15% wage bump as a perfectly good reason to require licensing. In Germany, for instance, the traditional and highly developed apprenticeship system ensures that students who do not go on to university end up with respectable, satisfying work as licensed craftsmen and women, for a living wage.
Jimmy John Responds to Incentives
The founder and big pickle behind the Jimmy John’s enterprise is threatening to take his fixins and go elsewhere, this according to the Champaign News-Gazette. Mr. Jimmy John (Jimmy John Liautaud) is upset about the steep tax hikes enacted this past week by the Illinois state legislature — raising the personal income tax from 3 to 5 percent (67% increase) and corporate taxes from 7.3 to 9.5 percent (30% increase).
“My family and I are out of here.”
This story has some personal interest to me, as I was in Champaign when he opened up one of his first shops back in the late 1980s. I still recall one of my (more obnoxious) friends — impressed by the deliciousness of the Jimmy John’s sandwich — on the phone trying to bribe providing cash incentives for the workers to bring him an order outside of their regular delivery area. Not too many years later, Jimmy John’s has gone from a couple of sandwich shops in east central Illinois to a big corporate supporter of everything from NASCAR to University of Illinois athletics.
Friend, that’s a lot of sandwiches.
If he indeed packs up corporate shop and heads elsewhere, it will certainly impact the local economy in some fashion.
Here’s his take:
Some people may not realize how many travel to Champaign-Urbana as a result of Jimmy John’s being here – many of them for training.
(Jimmy John) said his business accounts for “350 motel nights a week in Champaign, 1,400 motel nights a month.”
“They eat at Cheddars,” get automotive service at Sullivan-Parkhill and “drink at Carlos (Nieto’s) bars.”
Jimmy John’s offices occupy 23,000 square feet on Fox Drive, and Liautaud said he had considered buying a 20,000-square-foot building just north of those offices. Those plans went out the window with the tax increase, he said.
As far as the national economy goes, it probably doesn’t matter where Jimmy John sets up shop, if Champaign doesn’t enjoy the benefits, someone else will. But, I wonder what sort of elasticity the legislative analysis used to estimate business leaving the state when they put these tax increases together?
Mazel tov!
If you don’t find abstract mathematics palatable, try this one. Thanks to George Hart, Chief of Content at The Museum of Mathematics, we finally have proof: it is possible to slice your bagel into two and produce two linked, unbroken halves of this delicacy of Jewish origin (its name comes from Yiddish “beygel”). The proof is constructive.
The layperson might take a quick look and say “Hey, that’s a Möbius strip shaped bagel!” Of course, it obviously isn’t, as it has a cream cheese side and a non-cream cheese side. But Mr. Hart does pose the Möbius bagel problem as a possible extension. My guess is that poor young George’s mathematical growth was seriously impeded by remarks such as “How many times have I told you not to play with your food?!” I definitely see an entrepreneurial opportunity here: just imagine how many math conferences would pay big bucks for catering that features Möbius bagels, dodecahedron-noodle soup, a spaghetti-knot challenge, and many Klein bottles of wine. I am soooo tagging this entry “Food for thought…”
[HT to Jeff Ely at Cheap Talk]
Econ 300 Final, Part 8
Off to Björklunden
The faculty and students are headed to the great whitish north for its (first annual) departmental retreat, featuring presentations from Economics of the Firm (my personal favorite), Game Theory, and Urban Economics courses. It’s not too late to sign up.
Speaking for the economics of the firm course, there will be presentations on:
*** why Lawrence outsources its food service (can’t we do this ourselves?)
*** why Lawrence has its own campus security (why not use a professional security company?)
*** why Lawrence has its own vehicles for student use (why not use Enterprise? They pick you up!)
*** why universities have endowments, and how reliant Lawrence is on its endowment (I’m not sure, and I don’t know… looks to be a good one)
If you can’t make it this weekend, we hope to see you Monday for tea!