23 October 2011

Of Trees Falling in a Remote Forest

and Libertarian candidates doing well politically.

Herman Cain may not be a dyed-in-the-wool Libertarian, but he is at least receptive to those ideal and the second-most such candidate in the field of contenders for the Republican nomination. He is also the far and away leader in a University of Iowa poll among likely voters(Romney is 2nd, Paul 3rd).

Ron Paul just raised >$2.5 million in 24 hours and is polling well across the country. Even some of the Occupy Wall Street types have embraced the logic behind "End the Fed."

And what are we concentrating on? How a couple of empty haircuts are treating each other.

18 October 2011

Whither Jobs?

Reason magazine has a good article up on what government action can be done to create jobs. It is a brief survey of writers, economists, professors and entrepreneurs and, Reason being a Libertarian joint, the answers all revolve around reducing government interference in the market place of employment (the lone exception being Bruce Bartlett whose snit over being unceremoniously dumped by conservatives after crapping on George W. Bush, a well-deserved crapping I might add, has led him to degenerate into a card-carrying, left-wing disciple of Lord Keynes).

My favorite contribution is from the inimitable Mike Munger from Duke University:

Separate Jobs from Health Care

Michael Munger

I win drinks in bars sometimes by betting on the answers to two questions. First, what nation in the world “lost” the most jobs between 1990 and 2005? Second, what nation in the world leads in the value of manufacturing products?

The answers are the U.S. and China, but not in that order. China lost by far the most manufacturing jobs between 1990 and 2005, and the U.S. still leads the next largest manufacturing economy by a full 25 percent.

Think about it: In 1990, a “factory” in China was a large shed with 1,200 workers with sewing machines, sitting beside a pile of patterns, cloth, and scraps. Today that factory is 100 times as productive, but it only has 30 employees tending modern and lightning fast machines.

The same thing has happened in the U.S., in industry after industry. As we increased our output, we “lost” jobs to increased productivity. We didn’t ship those jobs to China; China lost even more jobs than we did.

The difference is that China more than replaced its lost jobs with new jobs, in new industries. Until recently, the U.S. has always been able to do that, too. What has changed?

The problem is both obvious and hard to see: It’s health care costs. The U.S. has produced quite a few new service sector jobs, jobs at the lower end of the pay scale, jobs that don’t usually come with health benefits.

But those “good” jobs, the ones that the president is looking for? Health care costs have driven a wedge between what employers pay and what they get in terms of productivity. Wages for workers in many industries have been flat, or nearly flat, in real terms since 1990. But total compensation, especially health care costs on the best jobs, has increased at a rate of more than 3 percent per year on average.

Employers paying more, workers seeing no increase in take-home pay: a constantly increasing wedge being driven into job growth. More than all of our productivity growth has been sucked into the voracious maw of health care costs. Until we break the connection between jobs and health care, there is no way for the U.S. to begin to recover job growth.

Unfortunately, the fiasco of health care reform in 2009 made this problem worse, not better. The new law created a complex, expensive system with no cost controls. And since insurance cannot cost less than the care it covers, this implicit but very real tax on job creation is hamstringing the recovery.

* * * * *

Professor Munger is a frequent guest on the EconTalk podcast with Russ Roberts. The EconTalk podcast is a tremendous source of information. My favorite is the discussion on price gouging, about which I've written previously.

Two days in and I've broken my new non-posting past 11pm rule twice.

17 October 2011

More on the Occupiers

A couple quick points regarding some of the demands or whatever they are of the Occupiers:

The top 1% of earners in this country pay >38% of federal income taxes; almost 50% of others pay no federal income tax.

The American economy is not a closed system. Yes, the top 1% are taking in a higher percentage of GDP. But GDP growth over the last 40 years has out-paced population growth. The pie has grown at a faster clip than the number of people at the party, as it were.

Also, since the economy isn't a closed system, person A making $500 million/year doesn't "cost" me, you or anyone else one red cent. His wages, my wages and yours are based on the marginal product of our respective labor. Steve Jobs' $7billion estate didn't take money from anyone else.

The system is not perfect and life is not fair. Our country was established to create a more perfect union, the founders knew that it would never be perfect. They also established a government that was to promote the general welfare. A capitalist system where young people protesting the evils of capitalism while carrying iPhones and dressed in the heighth of hipster fashions and other benefits of said capitalism is exactly what this country is about.

The video below shows what some of the protesters in Oakland feel about the evils of capitalism and their utter disregard for property rights. I am not a fan of the ominous music piped through the background nor of the sketchy editing and I have no idea what Tea Party Television is (I am not a fan of the tea party movement, though I may agree with some of their beliefs).

But then, when it comes to their own property, some of the protesters do seem to have an appreciation for property rights. I guess it's OK so long as what is being taken is being taken from other people.

I have a new rule about not writing or posting after 11:00pm and I've instantly broken it. If there are any significant errors in grammar or reasoning, please either excuse me or let me know nicely.

08 October 2011

Don't Hate the Player(s)

On the morrow of the Philadelphia Phillies being eliminated from the 2011 Major League Baseball playoffs I have been reading on facebook and elsewhere that the team was eliminated because the players didn't do "their job." Some have implied, while others have said explicitly, that based on how well the players are paid, this alleged failure is made worse. Incidental to this argument is that since the players are paid so handsomely, the cost of attending a baseball game (or any professional sporting event) has become prohibitive to the "common fan." The syllogism runs thus: the players demand a lot of money (to play a kids game!); the owners need to generate that money from somewhere; ticket prices are high, therefore the players are responsible for the high ticket prices. Ancillary to this is that thus they should perform at a level that brings the most pleasure to the fans (the high cost of attending an event should provide maximum utility).*

This is so common a refrain that it is almost cliché. It also has everything precisely backwards.

Major League Baseball consists of 30 teams, each has a pool of 40 players that can be available to fill a game-day roster of 25 positions. So at any given time, there are 1200 major leaguers, 750 of whom can play at any given time.** Supply of the number of teams, the number of players and the number of opportunities to watch baseball are limited.

The Phillies have a current streak of over 200 straight sell-outs at Citizens Bank Park, where a standing-room only ticket costs $17. The fact that there is tremendous demand for access to their games is what allows the team to charge what it does for seats (for a very formal and technical treatment of the elasticity of demand for major league baseball tickets, see here). Other factors include the per capita income of the Philadelphia area, the age of the stadium (and its amenities) and the team’s performance.

What does not determine the price to attend a game is what the Phillies have to pay the players. True, the Phillies need to field a good team to generate fan interest, and attendance, and I don’t deny that at the very margin there is a feedback loop. But the players salaries, league-wide, are a consequence of the interest the American people have in baseball and the fact that we will pay $25 to park far away from a ballpark, $40/seat, $5/hot dog or watch three minutes of commercials between every half-inning and two minutes between each pitching change, not a determinant.

Of course I wish the Phillies won last night. But they didn’t. And that has nothing to do with what they are paid.

I hope to get more into the economics of sports here, mostly for selfish reasons but also because it proves most of the truths about economics in general, is easy for most people to grasp and a lot more interesting than monetary theory and Keynesian rubbish.

Anyone interested in a great history of baseball, with a focus on the relationship between the owners and the players, should read The Lords of the Realm by John Helyar. I read this before the 1994 season and my interest in the business of sports has been piqued since.

*this is my blog, so I get to frame the syllogisms. I know this is a very rough sketch, but I was up late last night watching baseball so cut me some slack. Make comments and I will address any valid concerns there or in a later post.

**regular season, of course; rosters are expanded during the playoffs, but salaries are paid over the course of the regular season and based on the sample of work provided by any particular player over that span, so I’m sticking with this

06 October 2011

A Brilliant Observation

on the passing of Steve Jobs by Kevin Williamson at National Review. Money quote:

Once you figure out why your cell phone gets better and cheaper every year but
your public schools get more expensive and less effective, you can apply that
model to answer a great many questions about public policy.

03 October 2011

We Few, We Happy Few...

We Band of Idiots.

The great unwashed marching or whatever it is they are doing in New York isn't the only protest being staged against "the man" right now. There was a group staging "Occupy DC" in Washington over the weekend. They are college students. And they want student loans forgiven, their free lunch as it were, not having learned that TANSTAAFL.

Video below, but some highlights. First of all, if the young woman who speaks from about 2:21 to 4:24 is a student at Harvard, the admissions staff should be expunged. This isn't because she holds political beliefs with which I disagree. I have no problem with that. The problem is that she's a fucking idiot who cannot form a sentence. I watched it twice and am amazed the lass had the whole breath/blink/heartbeat thing down. Maybe she's just rockin' the Harvard gear as an aspiration.

But my favorite part, the part that lies at the core of progressive socialist thought not just in early 21st century America but through the entire history of socialism, is this:


Student: Well, I mean, I obviously believe that my ideas are persuasive enough and beneficial enough to society that people should subscribe to them [at the conclusions of their own reason [sic]] and their own sense of right and wrong but frankly some people don’t, and yet…

Q: And at the end of the day you’ll use force against those people

Student: I believe that it is the role of the government to use force

Q: So you won’t do it yourself you’ll hire someone else to do it basically?

Student: That’s what a government is.

This is Paul Krugman saying that if you don't agree with the ideal of Progressivism and the idea that government is merely a large insurance company with an army, you are wrong. Your opinion isn't merely different than his, it is wrong. This is Thomas Friedman saying that he would prefer to be ruled by "enlightened autocrats, like they have in China." This is the complete abandonment of reason and persuasion. Think like us, or die.

Because Socialism and Progressivism are the abandonment of reason and logic. They work on emotion, not reality.

And if these kids are this stupid after attending college, why on earth would taxpayers want to forgive their loans? They should be paying extra interest.