Market Power

The NOAA Announces the Birth of a New El Nino

Story here.

WSJ Poll of Economists on the Need for Another Stimulus

Most surveyed said "no."

Edward Lazear on Whether We Need Another Stimulus

Prof. Lazear says "no," and argues that the stimulus really wasn't much about stimulating the economy anyways.  If it were, he argues, then the spending should have been made up front, not written into future budgets. 

It seems to me that the stimuli being pushed right now and those recently passed are using the recession as an excuse to grow government  As they say, never let a crisis go to waste.

Lucian Bebchuk on the Fall of the Toxic Assets Plan

Harvard professor Lucian Bebchuk in the WSJ today:  The Fall of the Toxic Assets Plan. Money quote:  "In the meantime, it must be recognized that the curtailing of the PIPP program doesn’t imply that the toxic assets problem has largely gone away; it has been merely swept under the carpet."

Why the Big Ten is So Lame in Football

Dave Matter quantifies the talent shortage at Big 10 schools by using recruiting rankings. 

Dave also makes a good point that recruiting rankings mostly show who is being recruited the most heavily, not who the best players are going to be.  But it's important to remember that during the recruitment process, a player's ability to play is a random variable with a mean and a variance.  Recruiting interest is going to correlate positively with the player's ability to play, even if it doesn't explain all deviations from the mean fully.

Feature on SCSU's Banaian and MacDonald

Fellow economist and MnSCU economists King Banaian (every other letter's an A) and Rich MacDonald's work on the St. Cloud Area Quarterly Business Report is detailed here.

Prices and Waiting Times - Alternative Rationing Systems

Prices are one way to ration scarce goods.  If the price system is not allowed to ration goods, some substitute system will take its place.  One of those substitutes is waiting times.

A couple of interesting facts:

Average US emergency room wait time:  4.05 hours

Average Canada emergency room wait time:  8.9 to 23 hours

I confess the numbers are not apples-apples, but they are certainly in the ballpark and highly illustrative.   Have any commenters seen a direct comparison?

Update: OK, the numbers are more apples-apples than I thought.  The US 4 hour number is total time from coming in the door to leaving or getting a bed, the same as the Canadian numbers.  The CNN report linked above got their data from here.

Under the waiting time rationing system, those who get the goods are those most willing and able to wait.  Under the price system, those most willing and able to pay the price get the good.  It is not at all clear to me that the waiting time system is ethically superior to the price system.

Eldest Turns 9 Today

Happy Birthday, Eldest!

No, he's not driving anywhere.

Iowa Chops Cease Operations for the Short Term, At Least

Here is a Des Moines Register article on the Iowa Chops, an American Hockey League team that, despite the construction of a publicly-supported arena, are ceasing operations (at least temporarily) because of mounting losses.

Dude, Where's My Job? A Quarter of the Teenage Labor Force is Unemployed

From the NY Times.

Numbers provide the backdrop to the story — not just the grimly familiar national unemployment rate, 9.5 percent in June, but the even scarier, less publicized unemployment figure for 16- to 19-year-olds, which has hit 24 percent, up from 16.1 percent two years ago. Internships available to college students have fallen 21 percent since last year, according to the National Association of Colleges and Employers. Across the country, there are countless tales like that of Morgan Henderson, a student at the University of San Francisco, who, along with friends, planned a big road trip to Las Vegas this summer. With so few of the friends finding jobs, they downgraded plans to a road trip to Reno, then to no road trip at all. They’re spending time watching DVDs at one another’s houses.

HT Instapundit.  Yes, the business cycle matters.  But don't forget that the national minimum wage, the price floor set on the wages of the lowest skilled of the low-skilled labor force, has increased in July the last two years and is set to increase again this month.

"I Got You Under My Skin" Air New Zealand Videos

A video from Air New Zealand featuring employees body painted to look like pilots, stewardesses, and stewards.  You tell me if it's NSFW :-) HT to Ming Lo.

Update: Here's an even better one (also from Ming).  The link now goes to video with audio.

Black Markets in Everything - Currency Edition

From Yahoo!

Facing real world debts, a trusted figure in a popular online game stole money from the virtual bank he ran and exchanged it for cash through the black market.

It happened in EVE Online, where more than 300,000 subscribers pay $15 a month to play. They gain wealth through hard work, manipulating the market, or killing rivals in a distant future where humans have colonized the stars in an online game similar to World of Warcraft and Second Life.

EBank, EVE's largest player-run financial institution which has thousands of depositors, is at the center of the scandal.

"Basically this character was one of the people that been running EBank for a while. He took a bunch of (virtual) money out of the bank, and traded it away for real money," said Ned Coker, of the Icelandic company CCP, which developed the game.

The CEO of EBank, a 27-year-old Australian tech worker who identified himself only as Richard and used the online name Ricdic, embezzled about 200 billion interstellar kredits, the game's virtual currency.

He broke the rules of the game by exchanging the stolen virtual funds for $6,300 Australian ($5,100) with players who preferred to buy virtual money rather than earn it playing the game.

HT to Ming Lo. That is absolutely fascinating.  Had the guy not thrown the game out of equilibrium, no-one would have been the wiser.  But he played an out-of-equilibrium strategy that per-se proved to be his undoing.

What Will Obama Do? Impose Restrictions on Chinese Tires or Favor Tire Consumers?

From the WaPo:

A majority of the U.S. International Trade Commission recommended on Monday that President Barack Obama impose additional duties for three years on imports of low-cost Chinese tires the panel says are harming U.S. industry.

In a case seen as a test of how the Obama administration will cope with Chinese trade issues, four members of the six-member commission recommended that Obama impose additional duties of 55 percent in the first year, 45 percent in the second year, and 35 percent in the third year on imports of passenger vehicle and light truck tires from China.

"In our opinion, these tariff levels would remedy the market disruption that we have found to exist," the four said in a statement. The complaint was brought by the United Steelworkers union, which said a surge of Chinese tire imports have cost thousands of U.S. jobs.

Two other members of the commission disagreed, saying Obama should take no "trade-restricting" action because this would do more harm than good.

"This is an industry in which the trend toward gradual downsizing appears likely to continue regardless of the commission's action today," the two dissenters said in a statement. But they joined the majority in urging that the Obama administration provide aid to displaced tire workers under the U.S. Trade Adjustment Assistance program.

Greg Mankiw notes:

Larry Summers once said of Barack Obama, "When I’ve heard him talk about economic issues—with the exception of NAFTA, where I just hope he doesn’t believe what he says—he seems intelligent and serious. I wouldn’t say I’m bowled over by the brilliance of anything I’ve heard, but everything has a kind of thoughtfulness to it that’s sort of impressive." That is, even the president's chief economic adviser was discomfited by his campaign rhetoric concerning international trade.

This Chinese tire case may be one indication of the president's true feelings about trade. So let's wait and see what happens.

I have nothing to add to this at this time, but I'm not holding my breath.

Are Porn and Rape Substitutes or Complements?

Tim Worstall has an interesting look at the question.  Here is the abstract of the paper he cites in the article as evidence of the substitute theory.

The incidence of rape in the United States has declined 85% in the past 25 years while access to pornography has become freely available to teenagers and adults. The Nixon and Reagan Commissions tried to show that exposure to pornographic materials produced social violence. The reverse may be true: that pornography has reduced social violence.

According to the substitute theory as laid out by Worstall, men have a finite bound to the number of times they can get sexually excited.  If they release that excitement with porn, they are less likely to seek out other ways of releasing that excitement, of which porn is one way.  And remember this... they are get tired after sex and need to rest.

HT to Glenn Reynolds

A Clear Example of a Shortage - Tickets to Michael Jackson's Service

When the price of a good is below its equilibrium price, a shortage ensues.  You think that's the case with tickets to Michael Jackson's memorial service?  Ya, you betcha!

More than half a million fans from around the world applied for 17,500 free tickets to Michael Jackson's public memorial service next week, organizers said on Friday as a massive security operation got underway.

The life and music of the self-proclaimed "king of pop," who died of sudden cardiac arrest last Thursday, will be celebrated on Tuesday at the Staples Center, a basketball arena in downtown Los Angeles.

Officials on Friday unveiled an ambitious online lottery that will allow fans to attend either the televised service at the arena or watch the proceedings on a big screen at the nearby Nokia Theater.

Why not charge for these tickets and give the money to some charity or help settle Mr. Jackson's debts?  It should have been a-priori clear that $0 was too low of a price to charge for tickets to this service.  Somebody is going to profit off of this service and it might as well have been someone closer to Mr. Jackson's camp.

Facebook Explores Economies of Scope - Is it Trying to Become Twitter?

According to USA Today, Facebook is trying to become more like Twitter by changing its privacy controls.  It is hoped that the changes will allow Facebook users to share information more quickly and with more people.

Quick thought:  I don't think it's necessary that Facebook be the be-all, end-all of social networking sites.  But if there are economies of scope with social networking more power to them.

Understanding Marginal Product in Team Sports

Marginal product is the additional "output," however measured, when some input is added to the production process, holding all other inputs constant in their usage. "Uncle John" at Tigerboard has a post that indicates he understands the meaning of marginal product in team sports:

I have to say this about the Bird and Lebron posts. If you had a team with 4 players and added Bird and had those same 4 players and added Lebron. Birds team would win more games. I'm not talking about Larry and Lebron playing 1 on 1. I think the same about Magic and Michael. Lebron has a lot to prove.

I will not add anything to that, except to say that I have no opinion on the subject of who's better: Bird or Lebron.

NCAA Violation Gamble

Ironman comments on Mizzou's ranking regarding potential NCAA busts.

Phil Miller is happy that Mizzou ranks low in a new poll based on the likelihood of the school's athletic programs being sanctioned for NCAA rule violations, which is based on odds set by online gambling site BetUS.com. We wonder if the NCAA itself is behind the poll, given that it would provide an financial incentive for members of a cheating athletic department to bet that their schools would get caught cheating, which they could then ensure happens. Phil thinks they'll just continue pursuing the traditional approach of jumping ship to another ethically-challenged athletic program before their old school officially gets caught....

Just to clarify:  I'd rather not see Mizzou ranked anywhere the top 25 of those most likely to violate NCAA rules.  But given the expanse of its rulebook, I doubt that no violation is even possible.

Teaching Pro Football Players About the Economics of the NFL

DeMaurice Smith, the new head of the NFLPA, is educating NFL players about the business side of the game.  I'll take a stab at a few questions without doing going to Google or any other source. 

“How many people here know the National Football League is a non-profit?” DeMaurice Smith, the longtime Washington, D.C., lawyer asks 75 members of the Seattle Seahawks. No hands rise.

The NFL is a governing entity consists of the 32 teams.  The league governing body per-se may be non-profit, but the teams themselves are very much for-profit entitities.

“How many people here know that the NFL has a special antitrust exemption granted to them by Congress?” Again, no hands.

Here I believe he is referring to the Sports Broadcasting Act of 1961 that allows the league as a whole to act as one in negotiating broadcasting rights.  In other words, congress allows the NFL to act as a monopoly in negotiating these rights.  Otherwise, the individual teams would negotiate their own broadcasting rights, as happens in the three other major US sports.  In the absence of the restriction, teams would compete against one-another for the relatively scarce amount of broadcast time,.  Media providers would pay lower rights fees and fans would also get access to more games. 

OK, I said I would use any other source.  But allow me this:  as a comparison point, see the SCOTUS decision that said the NCAA could not act as a monopoly seller of college football media rights.

“We all understand the difference between a strike and a lockout?” Silence and blank stares.

Both are threat points used when labor negotiations have reached an impasse.  The main difference is that strikes are imposed by the union and lockouts are imposed by the employer.  Both are designed to impose costs on the other party even though they also impose costs on those who use them.

The Story of Thriller and Off the Wall

Like many people, I am sick of the macabre media coverage of Michael Jackson's death.  I am much more interested in the late Jackson's immense talent and the effect he had on the music and dance scene.  In keeping with that theme, here is a WSJ story about the making of his two greatest albums, Off the Wall and Thriller.

Matt Hoch: No to Mizzou, Yes to Iowa

Little Matt Hoch of Harlan, Ia, all 6'5" and 230 pounds of him, has decided to not join his older brother Dan on the Mizzou football team.  Instead, he will attend the University of Iowa.

Wal Mart Backs Mandated Employer Health Insurance

Wal Mart backs political plans for mandated employer-paid health care insurance.  A few quick thoughts:

1. The article notes that this may be Wal Mart management realizing that the federal government is going to do something regarding health care, and this may be a "choose between two evils" kind of support.  Perhaps they'd rather pay for employee health insurance than have a public option.
2. Wal Mart is known for supporting the minimum wage because it hamstrings its competitors.  Mandated employer health care (Wal Mart already provides health care insurance to its employees) also has a negative effect on competitors, especially smaller ones.
3. This can also be seen as a way for Wal Mart to fight off unionization attempts.

My sense is that #2 is the dominant reason for Wal Mart's backing. 

Note also that if employers are forced to pay for health insurance, employees, on average, are probably going to see lower earmnings than otherwise.  This is because mandated health insurance contributions would substitute for other types of compensation, such as earnings, contributions to retirement funds, or some other mode of pay. 

The only way this would not happen is if the provision of health insurance made employees more productive.  If such provision did improve employee productivity and if employees preferred this type of compensation than other types of compensation, then the question is why must employer-paid insurance be mandated by government?  Wouldn't employers have an incentive to pay for health insurance voluntarily and wouldn't employees accept this type of compensation voluntarily?

Reviving Baseball in Inner Cities

Reviving Baseball in Inner Cities.  "We’re telling kids you don’t have to quit basketball, but you can add baseball."

PSL's at Berkeley

So no, Berkeley hasn't exactly been a football factory the last half-century. But that hasn't hurt the self-esteem at Cal, where the university is asking fans to pay $225,000 -- yes, $225,000! -- for personal seat licenses.

...Across the bay, Stanford ticket director Rich Muschell couldn't help but take a shot at his school's archrival. "They're asking $225,000?" he told the Chronicle. "And they give us crap for being elitists."

LOL.  Story here (via Newmark's Door).

Food and Fun on the Shores of Gitche Gumme

If you've never been to the Lake Superior area, you should take a trip there sometime in the summer.  I've never been to the south shore, the drive up the north shore from Duluth up into Canada presents some of the most breathtaking scenery I've ever seen.

Oh, and there's good food up there too.

Early Commits in College Football

Early commitments in college football are non-binding and always have to be taken with a grain of salt.  16-18 year old boys can and will change their minds all the time.  While I have no data at my hand, my impression is that most kids who commit early stay with that commitment.  But others, such as Missouri's Blaine Gabbert, who originally signed with Nebraska but later switched to Mizzou, illustrate that commitments can be broken.

According to the KC Star, some players are committing earlier these days, which has some folks worried.

What is to prevent a high school star from accepting even a nonbinding college offer and then, as a form of insurance against injury, passing up his senior season of prep ball while concentrating on private coaching in preparation for college ball?

That already is happening in other sports (Jeremy Tyler in basketball and Bryce Harper in baseball), although those are examples of kids opting out of high school to get ready for the pros. Here we are talking about a kid getting ready for college ball, where there are academic requirements already in place for incoming players.  If the kid (and his family) feels that private coaching is the best way to go, is it the NCAA's duty to force kids to finish high school per-se even if he can get all his ducks in order in some other manner (i.e. get a GED)?

Sony Walkman: Tool of the Dinosaurs

A teenager has traded in his iPod for a Walkman, a first-generation walkman. 

It took me three days to figure out that there was another side to the tape. That was not the only naive mistake that I made; I mistook the metal/normal switch on the Walkman for a genre-specific equaliser, but later I discovered that it was in fact used to switch between two different types of cassette.

We weren't sophisticated like that back in the old days.  When I was young, we had to walk to school, uphill both ways, and we could only put approximately 2 full albums on a tape.  Egads!  But give the kids some credit:  he figured out how to make it shuffle:

Another notable feature that the iPod has and the Walkman doesn't is "shuffle", where the player selects random tracks to play. Its a function that, on the face of it, the Walkman lacks. But I managed to create an impromptu shuffle feature simply by holding down "rewind" and releasing it randomly - effective, if a little laboured.

HT Instapundit. I can't remember if I had a first-generation Walkman, but I remember getting one for Christmas way back in the day.  I fondly remember listening to Loverboy's Everybody's Working for the Weekend.  But don't tell anyone about the Loverboy.  It's our little secret.

Testing Email

I'm testing another way to post to Typepad: via email. Here's what's on my night stand. Yes, that is the current Sports Illustrated with Joe Mauer on the cover.

Posting from my Blackberry

Since I've started blogging again, It's unwieldly and good for, perhaps quick messages.*

*That's the original message, and I'm going to leave it like that.  Egads.  I better check with the grammar police before I post from my BlackBerry.  Either that or get more practice.

Bureaucracies and Health - The Right to Have a Drug

One man's fight with ALS and his quest to get a drug to fight it.

Insurance companies typically do not pay for drugs that are part of a not-quite-finished scientific process. But even affluent families like the Thompsons find themselves pleading simply for the right to buy a drug, with institutions and individuals that often seem to them to have no logic — and sometimes no heart.

Doctors worry about instilling false hope and doing unnecessary harm. Companies fear damaging a drug’s chance of winning approval from the Food and Drug Administration if a patient suffers a bad reaction. The F.D.A. itself does not want patients to bypass clinical trials, which require that some participants receive a placebo to determine reliably whether a drug works.

HT Art Diamond

Mizzou Ranked, But Not Like You Think

Mizzou is ranked 21st, but in a poll where the lower the rank, the better the rank.

But the Tigers’ recent success is proving to be the gift that keeps on giving. In a less prestigious poll, the streak endures. According to odds set last week by BetUS.com, an online gambling site, MU is No. 21 among schools most likely to be the next caught having committted an NCAA violation. The opening line is 18-1.

USA Wrestling to Pay More for Medal Winners

As we economists often say:  "people respond to incentives."

In an effort to keep the sport’s top athletes from jumping to potentially lucrative MMA (mixed martial arts - Phil) careers after a disappointing three-medal haul in Beijing, wrestlers in 2012 will receive $250,000 for gold, $50,000 for silver and $25,000 for bronze. The payout also increased for world championships medals, with prizes of $50,000, $25,000 and $15,000.

Former Husker Trev Alberts Hired to be AD at Univ. Nebraska, Omaha

Trev Alberts made his name terrorizing opposing quarterbacks while a defensive end of the Nebraska Cornhuskers.  Now he's going to be leading the University of Nebraska-Omaha's athletic department.  I can't vouch for his ability to run an athletic department, but no doubt a major reason for his hire is his name. 

I realize I'm about 2 months late on blogging about his return to one of my alma-maters, but better late than never, I guess.

More on Obamacare

Greg Mankiw responding to Paul Krugman:

In my view, these comments are just off point. The Obama administration says it wants a public insurance plan that will compete on a level playing field with private plans (that is, without taxpayer subsidies). Is there any cogent economic analysis that suggests that such a policy addresses problems of adverse selection and moral hazard? None that I know. If it has to stand on its own financially, the public plan has no special advantage in addressing these issues.

In any event, it is not like the only alternatives available to us are a government-run health insurance plan or unregulated laissez faire. The most intriguing proposal in the current policy debate is the Wyden-Bennett bill (see this David Brooks column or this letter from CBO on the proposed legislation). That seems to be the best hope for truly bipartisan healthcare reform. At this point, given the legislative strategy of Congressional leadership, the hope is slim at best.

Also note Mankiw's comments on the substance, or lack thereof, of public debate on important topics.

Public Insurance Option

Greg Mankiw on the public health insurance option:  "Even if one accepts the president’s broader goals of wider access to health care and cost containment, his economic logic regarding the public option is hard to follow. Consumer choice and honest competition are indeed the foundation of a successful market system, but they are usually achieved without a public provider. We don’t need government-run grocery stores or government-run gas stations to ensure that Americans can buy food and fuel at reasonable prices."

I doubt that anything but public monopoly (in selling insurance to citizens)-monopsony (in paying healtch care providers) will be the long-term result of Obama's desired legisltation, if passed.  Neither will make this a better country for our children.

Link via JC Bradbury

Minimizing Costs - Theory and Reality

Law of supply:  the price of a product and its quanitity supplied are positively-related*.  The higher the price, the more incentive people have to offer a product for sale.  HT Glenn Reynolds

As King recently noted, it's easy to hold some factors constant when building economic models.  So in a theoretical world, it is relatively easy to hold, say, health care quality constant when wondering how minimizing health care costs (macroecnomically) would affect things.  In the real world... not so much.  But maybe Obama really wants to force people into dentistry.

*Backwards-bending individual labor supply curve noted.

Why Cap and Trade is Politically Preferred to a Carbon Tax

"First identified by Gordon Tullock in 1975, the transitional gains trap is now commonly taught in introductory economics courses. Tullock’s insight argues strongly for a carbon tax and against cap-and-trade as a means to restrict carbon usage."  A carbon tax is unlikely to pass because of three little letters:  T-A-X.  These days, it's near political suicide to impose higher taxes.  That's why some politicians raise "fees", etc.  Hell, a politician is probably more likely to get re-elected if he runs away to Argentina to sob than he is if he votes to raise taxes.

Ozzie Being Ozzie

"Ozzie being Ozzie."  We're not as stupid as you think we are, Mr. Guillen.  After all, we're not Sox fans.

What Goes on in the Clubhouse Stays in the Clubhouse, Unless It's the Cubs' Clubhouse

It was allegedly a White Sox employee who broke the news that Lou Piniella and Milton Bradley had a spat inside the clubhouse on Friday.  Since what goes on in the clubhouse is supposed to stay in the clubhouse, Sox manager Ozzie Guillen said he'd fire anyone caught doing that.  To that I say "horse hockey."  He might light a match to light that employee's victory cigar, but Guillen wouldn't fire someone for that breach of clubhouse etiquette when it comes at the Cubs' expense.

Mizzou - First Round University

Mizzou had at least one player drafted in the first round of the NBA draft (DeMarre Carroll to the Memphis Grizzlies), the MLB draft (Kyle Gibson to the Minnesota Twins), and NFL (Jeremy Maclin to the Eagles and Ziggy Hood to my Steelers).  That's just another welcome sign that the sleeping giant may have finally awoken for good.

Mark DeRosa Goes to the Dark Side

"I wonder how our fans feel about that one?"  Well, Mr. Sean Marshall, this fan merely shook his head and said "great" when he found out that former (popular and productive) Cub Mark DeRosa sold his soul to the devil and became a, gag, Cardinal.  As if watching his replacement in the line-up, switch hitting Milton Bradley, metastastize isn't punishment enough this season.

MJ, the Blazer

"Jackson Popularized Celebrity Ads."  Not only was he famous for blazing his hair during a shoot for a Pepsi ad, his making that ad blazed trails for other celebrity pitches for popular products.

Michael Jackson was a Heck of a Dancer

"The Dancing:  That Precision, Grace - and a Wicked Groove."  Although I respected it, I was never a fan of his music.  But the dude was the best pop dancer of his time.  Not even MC Hammer could touch him.

Michael Jackson Ticket Refunds

"Ticket refunds on a massive scale."  Now that Michael Jackson is dead, AEG Live has to give refunds to buyers of tickets, 1 million of them, to Jackson's tour that he was preparing for when he died.  According to the article, though, some fans are likely to keep their tickets as souvenirs.

RIP Farrah Fawcett - Farewell

Here are three wonderful videos (all via Ann Althouse) of Farrah Fawcett, who died today of cancer at the age of 62 (only to be overshadowed by the death of Michael Jackson, another pop icon of the 70's (and also  the 80's).

and her appearance on The Dating Game.