In Case You Were Wondering

Category: In Case You Were Wondering

Ask Him if the Cubs will Ever Win the Series

Überwriter Michael Lewis has written extensively about the potential economic impacts of an earthquake in Japan, “How a Tokyo Earthquake Could Devastate Wall Street and the Global Economy.”  Interesting thing about this is that he wrote the piece back in 1989!!!

My eyes aren’t quite good enough to make out that copy online, unfortunately, so I’ll wait for some younger eyes to give me the summary.

On the plus side, the global economic situation is far different that it was back then.  Indeed, back then we had an MIT economist telling us that if we didn’t start following Japan’s lead that the US was in for a meteoric drop.  Instead, it was Japan’s economy that was in for a lost decade, not the US.  But, on the minus side, that our economic situation is different doesn’t mean that our financial institutions are any less vulnerable — again, see Lewis on this point.

He’s a prolific writer, that’s for sure.

In another sign that the world has changed, Gilbert Gottfried was fired as the voice of the Aflac duck for telling tasteless jokes about the disaster on his Twitter feed.  Isn’t that sort of like firing Big Bird for being tall and having feathers?

I saw the Lewis tip at Kottke and the Gottfried bit at Slate.

Civil(?) Servants, and a handbook for aliens

I recently picked up again one of my favorite books, How to be an Alien by George Mikes. (It’s online, without the wonderful illustrations, here. If you look for it online, don’t be fooled by the inferior “Penguin Readers” version, which is… well, for aliens.)

Mikes was a Hungarian writer who moved to England in 1938. One of the chapters, on Civil Servants, immediately reminded me of some of our discussions in the Schumpeter Roundtable. In Capitalism, Socialism and Democracy (CSD), Schumpeter sometimes idolizes those experts who know how to run things rationally. Contrast that with these words from Mikes: Continue reading Civil(?) Servants, and a handbook for aliens

Investment Advice from a Pro

Hoard nickels.

US five cent coins contain over 7 cents worth of raw material as of this afternoon, mostly copper and of course, nickel. If there is inflation, the prices of metal will increase, and the coin will have 8, 9, 10 cents worth of metal. Pre-1965 dimes contain over $2.42 of metal today, while pre-1965 quarters have over $6 worth of metal.

There is an old saying, “Don’t take any wooden nickels,” which seems ridiculous on the face of it, because why would a “nickel” be made of wood?

Perhaps that was the point.

And you might just need that Kindle…

GQ gives us a rather grim preview of the upcoming movie season:

[L]et’s look ahead to what’s on the menu for this year: four adaptations of comic books. One prequel to an adaptation of a comic book. One sequel to a sequel to a movie based on a toy. One sequel to a sequel to a sequel to a movie based on an amusement-park ride. One prequel to a remake. Two sequels to cartoons. One sequel to a comedy. An adaptation of a children’s book. An adaptation of a Saturday-morning cartoon. One sequel with a 4 in the title. Two sequels with a 5 in the title. One sequel that, if it were inclined to use numbers, would have to have a 7 1/2 in the title.

Ouch.

Via Kottke.

The Levee Appears to be Drying Up

Today I give to you a couple of visual snapshots of the recorded music industry, along with a lesson on the importance of adjusting for inflation &/or population growth.

Here are the raw numbers that caused something of a hubbub.  Ask yourself — where is the industry at its peak?

So, there are several technology transitions going on here, culminating in a sorry state of affairs for the supply side of the music industry.  One implication is that the introduction of cassette tapes had no real discernible impact on industry revenues, even though people rampantly started taping one anothers vinyl at that point.  (I actually have several boxes of tapes that I recorded from record rentals from That’s Rentertainment.)   Interesting that the Record Labels only began shaking them down when the compact disk market took off).  A second implication is that CDs marked the real heyday for the record labels.

With that in mind, let’s look at these same numbers adjusted for inflation and put in per capita terms:

Completely different picture, isn’t it?

This seems to suggest that (non-prerecorded) cassettes cannibalized vinyl revenues, and it was only the introduction of the superior CD format that resuscitated the industry.

In IO, we are talking about the big challenge of the “New Economy” is often not in creating value, but in capturing it.  Do you think the total value of recorded music is 35% of what it was 15 years ago?  Or, is it more likely that consumer surplus has gone through the roof?  I don’t have any way of answering that question, but I have my doubts about the former proposition.

As per usual, I nicked this from O&M.  And their comment section pointed me to a really excellent analysis of all of this at Business Insider, where I now subscribe to their Chart of the Day!

Economists in Love

Looking for a last-minute gift for that special someone (or would-be someone) in your life? Well, Pilgrim, it’s your lucky day. Spousonomics — “using economics to master love, marriage, and the dirty dishes” —  has hit the shelves, and with it a barrage of Valentine’s-related articles accompanying its release. Wow, check out this saucy Bloomberg headline.  Or this WSJ graphic.

Yes, it’s true, economists often find themselves partnered up, and not just at consulting firms (Who can forget this classic quote?).  And, what better way to get past the “animal spirits” stage of the relationship than this handy guide?  Check it out if you need to get that special someone up to speed on benefit-cost analysis, why sunk costs are sunk, and the wonders of marginal analysis.

You might also pick up a box of chocolates just in case.

Local Sports Team in Contest of Interest

Steely McBeam

The pride of the Fox Valley, the Green Bay Packers, will be mixing it up with my former hometown heroes, the Pittsburgh Steelers, at the Super Bowl.  The game will take place, weather permitting, this Sunday in balmy Dallas, Texas.

Although the contest itself is predominantly of interest to denizens of northeastern Wisconsin and southwestern Pennsylvania, many from across the nation and around the world will tune in for antics of the mascots (pictured), the often-irreverent commercials, the many wagering opportunities, or simply as an excuse to feast on some tasty snacks (despite some unexpected side effects).  Yum.

This year, we are also treated to some added intrigue by a number of touching personal-interest stories.  Or if you aren’t into Olympics-coverage style tearjerkers, perhaps you’d like to see how some famous movie directors have portrayed the Big Game.

Econ majors might be interested in some of the simple economics of the Super Bowl (summary here), such as secondary-market ticket prices (more than you think) and estimated economic impacts (less than you think).  You might also be interested to know that Green Bay punter Tim Masthay abandoned a lucrative career as an economics tutor at the University of Kentucky, where “he picked up anywhere from three to six hours a day as a tutor, helping student athletes … with economics and finance courses. That paid $10 an hour.”

$10 an hour?  Not bad.

I'll just have the salad

My allegiances here are more with the black-and-gold than the green-and-gold.  Indeed, earlier this year communications director Rick Peterson introduced me as “a big Steelers fan,” so there you have it.  I also made a friendly wager with Professor John Brandenberger on the outcome of the game (even spotting him the three points that the Packers were favored by at the time of the bet).   I have a feeling I’m going to be buying over at Lombardi’s.

Though my heart is with the Steelers, I’m guessing that the general spirit of the community and quality of the celebratory culinary fare will be better with a Packers win.

You Can’t Cut the Internet ‘Signal’

There seems to be a very tumultuous situation in Egypt. In the face of mass protests being labeled “Angry Friday,” Jeff at the Cheap Talk blog and Tyler Cowen at Marginal Revolution assess the strategic implications for both protesters and for the government.

Here’s Jeff:

The decision to get out and protest is a strategic one.  It’s privately costly and it pays off only if there is a critical mass of others who make the same commitment.  It can be very costly if that critical mass doesn’t materialize.

Communications networks affect coordination.  Before committing yourself you can talk to others, check Facebook and Twitter, and try to gauge the momentum of the protest.  These media aggregate private information about the rewards to a protest but its important to remember that this cuts two ways.

If it looks underwhelming you stay home, go to work, etc.  And therefore so does everybody who gets similar information as you.  All of you benefit from avoiding protesting when the protest is likely to be unsuccessful.  What’s more, in these cases even the regime benefits from enabling private communication, because the protest loses steam. Continue reading You Can’t Cut the Internet ‘Signal’

The Principals are Your Pals

I’m a bit behind on both my reading and on updating this blog, so I wanted to point to a series of fascinating articles at David Warsh’s Economic Principals blog.  The first resulted from his trip to Denver for the American Economic Association meetings in early January, where he sensed a possible resurgence of interest in the history of economic ideas.  This possibly rings true for those of us plodding through Capitalism, Socialism, and Democracy this term.

Warsh followed up this dispatch from the AEA meetings with a most interesting piece on how the big brains of the profession are thinking about technological innovation and climate change. The piece starts with another dispatch from Denver, and traces its way back through the cold war to the RAND Corporation (and one of my heroes, Armen Alchian) and beyond.  The piece touches on the contributions of Kenneth Arrow and Richard Nelson, now are both familiar names to anyone interested in the economics of innovation.

And if that’s not enough, this week’s column looks at Paul Samuelson and hedge funds, another hat tip to the history of thought that includes David Ricardo’s Waterloo.  If nothing else, the blog seems to get its principals right.

I also continue to recommend Warsh’s Knowledge and the Wealth of Nations: A Story of Economic Discovery — an excellent pick for the summer reading list.

Capitalism and Friedman

Yesterday was the 50th anniversary of John F. Kennedy’s inaugural address that exhorted Americans to “Ask not what your country can do for you — ask what you can do for your country.” Although the expression is iconic and emblematic of the selfless nature of public service, not everyone was impressed.  Indeed, free-market champion Milton Friedman opens his libertarian polemic, Capitalism and Freedom, with this:

IN A MUCH QUOTED PASSAGE in his inaugural address, President Kennedy said, “Ask not what your country can do for you — ask what you can do for your country.” It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society. The paternalistic “what your country can do for you” implies that government is the patron, the citizen the ward, a view that is at odds with the free man’s belief in his own responsibility for his own destiny. The organismic, “what you can do for your country” implies that government is the master or the deity, the citizen, the servant or the votary. To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served. He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.

The free man will ask neither what his country can do for him nor what he can do for his country. He will ask rather “What can I and my compatriots do through government” to help us discharge our individual responsibilities, to achieve our several goals and purposes, and above all, to protect our freedom? And he will accompany this question with another: How can we keep the government we create from becoming a Frankenstein that will destroy the very freedom we establish it to protect? Freedom is a rare and delicate plant. Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.

Well, that’s a take I didn’t hear in my civics classes.

I was reminded of this in a recent discussion of theory of advocacy revolving around Schumpeter and Marx, where Friedman’s name came up.  Schumpeter fleshes out the implications of science and ideology in his brilliant 1948 address to the American Economics Association, “Science and Ideology.”

LU Symphony Responds to Incentives

Our resident (American) football fan, Professor Galambos, has alerted me to this important change in the demand schedule for Sunday’s orchestral performance:

Players Exchange Views of the Rossini Selection

To accommodate both music lovers and Packer Backers, (Lawrence University Symphony Orchestra Director, David Becker), has moved up the time of the Sunday, Jan. 23 Lawrence Symphony Orchestra concert to 12:30 p.m. in the Lawrence Memorial Chapel.  The concert was originally scheduled for 3 p.m.  The Green Bay Packers play the Chicago Bears in the NFC championship game at 2 p.m. on Sunday.

In keeping with the spirit of the day, people attending the concert are encouraged to wear their green and gold Packers gear.

Click the image for a taste of symphonic goodness.

Our Annual Scrooge Endorsement

From last year: an oldie, but goodie.:

Before The Accidental Theorist, before Freakonomics, there was The Armchair Economist, and that’s Steven Landsburg.

In this Slate piece, Landsburg makes the case that Scrooge wasn’t such a bad guy, and that savings, in fact, might just be more virtuous than spending. To wit:

In this whole world, there is nobody more generous than the miser–the man who could deplete the world’s resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide.

If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer–because you produced a dollar’s worth of goods and didn’t consume them.

You will know you’ve arrived as an economist when you can annoy your brethren by expounding on the virtues of Scrooge over the holiday season. For more pithy advice from Landsburg, we’ll be using his text in Economics 300 next fall.

See you there.

You might also want to check out the links at the O&M blog, including the fabulous Santa on leadership.

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.

From George Hart

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]

The Strangest Man?

All right, who said it?

I am not interested in literature, I do not go to the theatre, and I do not listen to music. I am occupied only with theories.

Is that Professor Galamobos talking about what he did on his sabbatical leave? His advice to students taking Econ 300 during winter term?  Professor Brandenberger talking about how LU professors used to be back in the day? Our new mantra for the Math-Econ major?

Not at all.

It’s Nobel Prize winning physicist, Paul Dirac, describing the work ethic that led him to international superstardom, if only he would have desired such a thing.  I picked up Graham Framelo’s biography of Dirac this past summer, and I would definitely recommend it as a good read for break, or a gift to that bookworm in the family.

Here’s a short review:

Continue reading The Strangest Man?

Grading Criteria FAQ

For those of you finishing up a final paper or a thesis this term, be sure to check out the full requirements, including the snake wrestling.  This part often confuses students, but we don’t believe there is “one” way to measure academic performance:

Q: Would someone who wrote a bad thesis and defeated a large snake get the same grade as someone who wrote a good thesis and defeated a small snake?

A: Yes.


Grand Challenges in Economics Research

The National Science Foundation solicited the views of a number of leading (?) economists on what the grand challenges of economic science are for the next decade. Some of the responses are available here–you may not understand much of what these white papers are about without serious background in economics, but I still encourage you to take a look and see where the hottest stuff in economics might be when you are in grad school, if you choose that route. After a quick glance, it does seem to me that many of these white papers are about the authors advancing their agendas rather than visionary perspectives that live up to the “grand” in the challenge. These are certainly no Hilbert’s ten problems for economics. Another thing that occurred to me: of the fifty or so authors of these white papers, only three or four are women. Therein lies another grand challenge for economics, I think.

[HT to Noam Nisan at the Algorithmic Game Theory Blog]

More on My Favorites

I was perusing Kottke.org — a “weblog about the liberal arts 2.0” — last night and noticed how much great stuff he has on innovation & entrepreneurship.

He gives us a taste of an upcoming movie about Linotype:

Linotype: The Film is a feature-length documentary film centered around the Linotype typecasting machine invented by Ottmar Mergenthaler. Called the “Eighth Wonder of the World” by Thomas Edison, the Linotype revolutionized printing and society, but very few people know about the inventor or his fascinating machine…. The Linotype completely transformed the communication of information similarly to how the internet is now changing it all again.

He also has a piece on how the U.S. Navy is developing antennae made of seawater. And he’s got a piece on the Hadron Collider generating a mini big bang:

The collisions obtained were able to generate the highest temperatures and densities ever produced in an experiment. “This process took place in a safe, controlled environment, generating incredibly hot and dense sub-atomic fireballs with temperatures of over ten trillion degrees, a million times hotter than the centre of the Sun.

That’s pretty hot.

Moral (Among Other) Hazards

Continuing on with our Halloween theme, here’s an old story just posted at Marginal Revolution that  illustrates the basic problems of moral hazard.

L.W. Burdeshaw, an insurance agent in Chipley, told the St. Petersburg Times in 1982 that his list of policyholders included the following: a man who sawed off his left hand at work, a man who shot off his foot while protecting chickens, a man who lost his hand while trying to shoot a hawk, a man who somehow lost two limbs in an accident involving a rifle and a tractor, and a man who bought a policy and then, less than 12 hours later, shot off his foot while aiming at a squirrel.

“There was another man who took out insurance with 28 or 38 companies,” said Murray Armstrong, an insurance official for Liberty National. “He was a farmer and ordinarily drove around the farm in his stick shift pickup. This day – the day of the accident – he drove his wife’s automatic transmission car and he lost his left foot. If he’d been driving his pickup, he’d have had to use that foot for the clutch. He also had a tourniquet in his pocket. We asked why he had it and he said, ‘Snakes. In case of snake bite.’ He’d taken out so much insurance he was paying premiums that cost more than his income. He wasn’t poor, either. Middle class. He collected more than $1-million from all the companies. It was hard to make a jury believe a man would shoot off his foot.”

It’s not often that I come across source material like this that I will use every single time a topic comes up in class.  I tested it out on Econ 300 today and I daresay the image is a lasting one.