I saw a bumper sticker today saying "If you're not OUTRAGED, you're not paying attention". This was on a Toyota Prius, the official automobile of the "Let's Ignore Economics and Do The Right Thing" crowd. I remarked to my wife "I'm outraged, too, but probably not about the same thing. I just want more control over my life." She quipped "Oh, no, they want the same thing as you: more control over your life."
Thu, 31 Jan 2008
Sun, 27 Jan 2008
Starting the first of February, the Federal Government will be requiring proof of citizenship to enter the United States. I have a feeling that the idiots who enacted this law have never been to Northern New York, where I live. First, the vast majority of the northern border of New York State is (if you've ever seen a map) (which I doubt some of these idiots have) water. Thus, there are an infinite number of points one might use to enter the United States from Canada.
Okay, so only checking at border stations is completely useless. But let's say that they want to waste our time and their time getting people's names. What does a person's name tell you unless you know something about that person? Everybody knows about the stupid no-fly list, and all the false positives it generates for octogenarians and pre-pubescents.
The real problem is that the border checks won't be effective. In
order to catch all the
Can anybody say "papers, please?"
I thought we lived in a free country?
And indeed, we do. The Constitution has no language which permits the Federal Government to restrict entry into the United States. None. You can't even justify it under the Commerce Clause.
Call your U.S. Congressmen and Senators and demand that they stop violating the Constitution. The Constitution is just a piece of paper unless we hold their feet to the fire.
Thu, 24 Jan 2008
Understand that money is a thing, a commodity, and has use attributes. Go read the link if you don't understand that. So, what is a recession (we don't call depressions depressions ever since the Awful Depression -- we call them recessions, but they're still the same thing)? People prefer holding money rather than buying whatever is available to them.
Giving people more money, ala the "stimulus" being contemplated, won't change their minds about holding money. Consider that people usually don't hold their money in a mattress, but instead put it in a bank. Also consider that the US government IS COMPLETELY BROKE. They are constantly borrowing money. Consequently, any money they spend is being borrowed. So, when people decide that they want to hold onto their money, and put it in a bank, the bank will invest its short-term cash in U.S. Government investment vehicles, and .... the U.S. Government is contemplating borrowing that money and giving it back to people. What are they going to do with it? Yep, put it back in the bank.
There is only one word to describe this fucktard idea: FUCKTARDED. Pardonez-moi french, but call a spade a spade. Stupid is as stupid does.
Tue, 22 Jan 2008
So, why is it that, whenever we're asked for our credit card on some Internet commerce site, we're also asked for the type of the credit card? That makes no sense to me, because the first digit of the credit card reliably identifies it as an amex (3), visa(4), mastercard(5), or whatever. Are they asking us this information in order to eliminate fraud? And yet it can't be a secret amongst fraudsters to look at the first digit.
I speculate that the cost of the time wasted by everyone having to enter the type of the credit card exceeds the value of the fraud prevented. But notice who pays for those costs. The first cost is paid by the consumer. The second cost is paid by the credit-card company. Even if the cost is small, it still makes sense to push that cost off to the consumer.
Mon, 21 Jan 2008
I've twice before opined that the owners of creative works are overreaching: first on 30-sep-2005 as Copyright Natural Law and again on 20-May-2007 as It's a bargain, not a right. I've thought "Gosh, I'm such a smarty-pants for figuring this out." Well, it turns out that I've been preceded by a century and a half by Thomas Babbington Macaulay. He made a speech before the English Parliment when they were considering extending the length of coypright to 60 years. He convinced them, and they didn't do it.
This speech was published on Kuro5hin on 25-Apr-2002 as Macaulay on Copyright. It's a little hard to read, but please do so.
Sun, 20 Jan 2008
Earlier, I wrote about Centralization vs. Distribution which said more about the freedom of religion and markets than its title would indicate. Bill writes to point out that a person in favor of regulation would say "because I have my retirement savings tied up in those markets - what the Episcopalians do doesn't affect me."
I guess I wrote badly if I gave him the impression that I mean only stock markets. I mean "Freedom of trade" -- which is the freedom to buy and sell anything you want. But let's assume that I hadn't misled him, because his point is still worth addressing. People are now more or less indifferent to the religious leadings of other people, but consider what people would have thought back when they thought that it was important for everyone to pursue the correct form of worship of the creator. They wouldn't have been indifferent about Episcopalians' beliefs. They would have felt that being forced to adopt the Episcopalian form of worship would put their immortal soul in harm's way. Yet today, with freedom of religion, we don't care. Their form of worship is their problem. We can live and let live.
Bill goes on to ask about how unregulated markets deal with market manipulation, insider trading, and such. Well, first, understand that there is no such thing as an unregulated market. The operations of markets are always regulated one way or another. There may be legislation that addresses markets, but there are also immutable laws which control markets. Nobody will trade in a market unless they think they stand to gain from it. So the people running the market (who take a portion of every trade) have every interest in running a fair market.
But let's say that the marketplace has no NYSE rules, or NASDAQ rules, or ASE rules that the participants have to obey. Let's just say it's a raw market in buying and selling paper shares for cash in hand. Even then, the buyers and sellers will take into account the possibility of market manipulation and insider trading. It's likely that such a market would be fairly inefficient in the sense that transaction costs would be high and people would demand a high risk premium. Eventually traders would reinvent market rules.
Sat, 19 Jan 2008
The most difficult problem that people face is the problem of mistakes. The Apollo project showed both that through dint of enormous effort, it's possible to eliminate nearly all mistakes. Yet it also shows that it's not possible to eliminate all mistakes.
The field of religion is rife with mistakes. If you believe that there is only a single mechanism through which people were created, and if you believe that there was an intention behind the creation of people, then you are a religious person. That much is without mistake, largely through definitional means. Once you get beyond that, there is wild disagreement between believers, and yet only one of them can be without mistake. Everybody else who disagrees with them is wrong.
A few centuries ago, the accepted idea was that the solution to the problem of religious mistakes was for wise people to choose a religion for the entire country. Then, nobody would be at risk of losing their eternal soul. The trouble, of course, is that not everybody agreed that the wise people were also wise AND correct.
The wise people who founded the United States and wrote its Constitution decided to try something different. They would establish a country without an established religion. Some people might disagree, but I think that the majority of people agree (at least with their feet) that America is a great place to live.
Rather than being a country without any religious, as might be feared, America is a country with many religions, and without any religious fighting. Religions thrive when they are left without government intervention.
Now, why is it that so many people think that markets require government intervention? I contend, instead, that people will be better off if markets are left to themselves, just like religions.
There are 80,000 matatus on Kenyan roads, most of which are owned and operated by Kikuyu. I estimate (I sit a lot in the matatus and have ample time to analyze the business) that a matatu has an income of $100,000 per year: on average each Kenyan spends over $200 per year for matutu transportation. The conductor rents the vehicle for the day, including the driver, and pays for gas and other expenses keeping whatever is left over at the end of the day. So, he has to push and push to make sure that he doesn't actually lose money. The relationship between the conductor -- who is always trying to increase the price of the ride, stuff more people into the vehicle, and get the driver to go faster -- leads to amazing antagonism. There is no customer service, but customer dis-service. The riders continually believe that they are being abused and taken advantage of. This happens almost every time one gets into a matatu.
How can this be? Dave must be leaving something out. In a marketplace with many buyers and sellers, competition ought to extinguish such behavior. Yet it doesn't, according to Dave's description. Dave is a Quaker, and so I'm sure that he's relaying the facts as accurately as he can. So there must be something else happening, that he left out of his description.
Whenever you make a choice in a marketplace, you are presumably making the choice that pleases you the most (or minimizes your unease). If an outsider like myself looks at your market, and perceives that all your choices are bad, he (I) must conclude that something is preventing better choices from arising.
I don't know enough about Kenya to say what that thing might be. I can, however, speculate on possible causes.
- Licensing. The Kenyan government might restrict the number of matatus available to passengers. New York City does this by restricting the number of taxi medallions it issues. Last I heard, the price of a taxi medallion is $50,000. If you guess that the entire amount of this sum must be paid by taxicab passengers, you'd be right.
- Bus stops. Control the bus stops, and you control the bus industry. If a matatu is only allowed to pick up passengers at a bus stop, then whoever controls the bus stop also controls the rides that the passengers receive. Airports in the US typically only allow taxicabs to pick up passengers at taxi stands. Drivers who wish to pick up a fare at the airport must go wait in a line.
- Inefficient branding. Let's say that you wanted to charge a little more and provide better passenger service. How would you communicate this to your potential passengers? If the government doesn't protect branding (trademarks), then your competitors could just adopt your branding, and your prices, but provide poor customer service and save themselves money.
- Tribalism. As Dave says, nearly all matatus are owned by Kikuyus. Tribes may have a prohibition against price competition by fellow tribe members. Somebody who tries to out-do his fellow Kikuyu may find that in-tribe penalties are assessed.
- Poor incentives. It may be that the matatu owners have structured their businesses so that conductors and drivers are rewarded only for poor service. That would be a mistake, but cultures can drive mistakes, e.g. Germany's antisemitism for a century preceding Hitler.
- Ignorance. It may be that the matatu owners and conductors have simply not discovered that they can make more money and charge a higher price by providing better service (this is unlikely, but consider that every economic discovery had to be discovered, and rediscovered whenever forgotten.)
Wed, 16 Jan 2008
Imagine you are looking at colleges with your child. You come across one with a Department of Astrology / Astronomy. Curious, you go talk to one of the professors of Astrology / Astronomy. He got practically lost in stars, galaxies, nebulae, solar wind, the missing dark matter, etc. Fine enough, but then he started to tell you what the stars told you about yourself, your family, and your future.
You would probably back away down the hallway, and not be able to leave the campus soon enough.
Now imagine an economics department staffed with economics PhDs. Unfortunately for you, you aren't forewarned that some of the professors were cranks: labor economists, historical economists, and their ilk. You start talking to one about investment and productivity. He talks about interest and gains to labor because of investment. But then he starts to condemn speculation, and you know that this is the wrong college for your child.
This is the state of the art in economics today. Some of the people are simply cranks. Some of what they know is correct, and some of what they know is flamingly incorrect. They don't know the difference, and worse, their students won't know the difference either.