Author Archive

Paying people to carry to term

March 26, 2007

The texas legislature is back in session and you know what that means.  District lines being redrawn?  Babies kissed?  Steak dinners?  No? Well at least there are some interesting laws being passed and proposed.  Check this one out.  Lets hear some opinions.;_ylt=An_3gyEfoUwnTV6Sr3qjMzMSH9EA



February 6, 2007

Just goes to support my belief that criminals make their decision using a much shorter time horizon.

Role of Government

January 31, 2007

What is the role of government.  As I said earlier, I say to provide services/goods for the country that the country will not provide when left alone.  (Which includes safety brought about by helmets for example).  I know Eli disagrees, and Stew.  What do people think?  This is another way to see how libertarian you are I think.

Safety Regulations

January 31, 2007

That little libertarian questionnaire made me think again about the oh so interesting question of safety regulation.  The first inclination of a good small government economist is to say “thats ridiculous of course they should have no regulations on safety”.  This is an area though where I think we may need some regulation (though it could be state, local, or even company regulation if the company is brave enough). 

We’ll use the safety helmet requirement for example.  If there is no requirement then there will likely be a machismo factor, or a coordination failure.  “I don’t need a helmet” in other words it maximizes individual utility to not be the only one wearing a helmet, though they’d like to.  There is a factor of worrying about being made fun of for wearing it.  “hey helmet boy, afraid a wrench is going to fall on your head”, the risk of this is high enough to outweigh the benefit of wearing the helmet.  Every worker you can think of having this internal struggle, thus we have an equilibrium where few to none wear helmets.  Regulation can serve to correct the coordination problem with very little inaction costs.  Few refuse to wear it cause they won’t be made fun of for wearing it, and their utility is better for they have no fear of being mocked and they get the utility of better expected safety.  An improvement I’d say.  “They could just self regulate right, agree all together to wear helmets” no that is the reason it is a coordination failure problem. chances are no one has the incentive to initiate the self-regulation.  Imagine the taunting “little poor jimmy wants us all to wear a helmet, throw your wrench at him”.  Poor Jimmy.  I think the role of govt is to do for society what society would like to be done, but can’t do on its own.  This is one of the few times I’m for regulation.  There are actually papers written on this exact subject.  If any is HIGHLY interested (your utility of knowing the paper is greater than the hassle for me to dig through my old labor papers) Ill look it up for you. 

Bayesian updating malfunctions

January 30, 2007

I think my Bayesian updating isn’t working right due to the cold weather.  I experience day after day of sub freezing weather and then the next day get up and see sun and think, its going to be warmer today.  Every additional cold day is making me think the next is more likely going to be warm.  I need an adjustment.

Military Recruitment

January 30, 2007

Thanks to my buddy Lauren for this link (you can see her in the video clip)

Eventually they get to the point that the marines desire to have more recruits than currently they are getting.  ABC talks about them having to lower their standards.  Not once was it mentioned that they could increase the wages they offer, or give a bigger bonus in order to attract more people.  That would be silly.

Burning Money

January 25, 2007

So I was thinking about Steven Landsburg’s argument (from Chapter 7 of the Armchair Economist) that Burning a dollar bill decreases the price level and helps everyone who holds money except the one who’s bill was burned.  I’m not sure I agree.

A) I first wanted to claim that when the value of all other non-burned dollars become more valuable the relative usable value to dollar holders doesn’t increase as much as the $1 decrease the burner experienced.  Allow me to explain. There are plenty of dollars that still have value but that no-one holds.  These are the “lost” dollars of the world.  Waiting to be found, similar to the dollar that Landsburg says “would be as good as burned” if he let it blow away.  In all reality it isn’t burned. It still holds $1 worth of value to the lucky soul who finds it.  If you imagine that scattered throughout this orb we inhabit there are thousands if not millions of dollars “lost” to potential dollar holders.  Every-time a dollar is burned, the relative value of these dollars all increase, and the relative value of usable held dollars in the world has decreased.  Thus the value to SOCIETY has actually decreased not remained the same. 

B) Second why would everyone else’s value increase really?  To the world this dollar has just been saved byLandsburg, to be spent another day.   The world expects it to still have value, the same as the world has expectations of a probable expected future use for all the “lost” bills I mentioned in part A).  Thus the price level will not decrease to the extent Landsburg claims.  Thus the world is “worse” off by the burning of a dollar.  Unless of course it is broadcast to the world so that everyone would know that it had really been destroyed.  But in that case we have to think if the opportunity cost of broadcasting to the world the burning of a dollar bill outweighs the value to the world of watching.

America and our speaking and writing

January 22, 2007

It is rather amazing when you think about how we’ve progressed as a society, culture, and nation.  What is even more amazing is our language, which we often refer to as “English” which is really morphed into American.  We’ve all had someone criticize our oral speaking. “Don’t say um so much”.  Good points.  What needs to be looked at as well is how often we writeand say other words that are vacuous, boring, and just plane nondescript.  Try to take note, if you will,  how much you and others use and misuse the following non-um words.  I thank Deirdre McCloskey for her advice in Economical Writing (sections 25 and 26) for the advice for these suggestions.  Check out her book for a lot of valuable suggestions.

Is: I used it no fewer than 4 times in the above paragraph.  How boring and uninteresting IS this word?

Very: Very has become so overused, every thing in this world is very.  It has gotten to the point in this time in society where I think we tend to just totally overlook it anytime we see the word.

Kind of, Sort of:  Wishy wishy washy.  We need to be confident in our statements or not make them.  If we think something is ugly we should say it, not try to fool people by saying “kind of”.  No one is fooled so we shouldn’t waste our breath or keystrokes with them.

Interesting:  We say things are interesting so much that, similar to very, we ignore it when we see or hear it.  If anything, if we read or hear that a movie is interesting or a person is interesting, we think actually the exact opposite.  I’m not going to be thinking the movie will be interesting, I’m going to be thinking it will be boring.

I could go on and on, just think about it.  Check out McCloskey’s book, VERY good.

Differences in unemployment between states

January 17, 2007

Sometimes it is good to take a look at your country at a more divided level than at the most aggregated level. Let’s take a look at unemployment rates of various states (thanks to the BLS for the data). Hawaii, Utah, and our very own Virginia have the lowest unemployment rates (Oct 2006) at 2.1, 2.5, and 2.9% respectively. The highest unemployment rates are residing in South Carolina, Mississippi, and Michigan at 6.6, 6.7, and 6.9% respectively. That’s more than a 4% gap between them.

Does this tell us a little something about labor mobility and transaction costs? It is understandable that the unemployment in Hawaii would be low as we’d imagine that more jobs are created over time and due to the high costs of relocating to Hawaii they may tend to be filled by the locally unemployed instead of the nationally unemployed. Seems like a possible explanation. But why Utah? 2.5% nestled between Colorado (28) at 4.4% and Nevada (22) at 4.2%. West Virginia (41) is sitting at 5.1% unemployed while VA is sitting at 2.9%

Now can we explain this by costly relocation expenses? Probably not, Alaska is 48th with 6.4% unemployed, not too easy to move there, but then again, the increase in number of jobs is probably less prevalent in Alaska than Hawaii. Alaska also has its governmental problems of paying people to live there. In terms of unemployment fighting, maybe not the best solution. Perhaps people are more willing to relocate due relative reduction in transportation costs due to the promise of future subsidized living in Alaska. I haven’t heard much about this program in a while, so I’m not positive about the details or whether or not it still exists. Just throwing around some ideas.

Georgia (34) (while not a peach in its own right, excuse the pun) is below South Carolina by nearly 2%, While Alabama (6) is sitting at a pretty 3.2% unemployment rate, a good 3.5% below Mississippi’s astounding 6.7% unemployment rate. While I don’t have all the answers I attribute the unemployment rate differences between adjacent states to a few things here are 5 of the many factors (not relayed in order of importance.)

  1. Transaction (relocation) costs.
  2. Asymmetric information—Unemployed in Birmingham don’t know they can go to Birmingham for a job.
  3. Family—A kind of transaction cost, or at least expected transaction costs. A family oriented unemployed person in Birmingham knows that moving to Jackson while affordable means having to drive 3 or 4 hours whenever he/she wants to see their parents. This additional costs may outweigh the benefits of finding a job faster in a market more favorable for job-seekers.
  4. Government regulations and legislation—Policies and Laws like the Alaska pay to live here may have direct or indirect impacts on the unemployment rate. The size of welfare and unemployment checks could make a big difference. I’ve personally heard stories of people who were collecting unemployment checks from states with higher payouts (based on costs-of-living) while living and looking for work in states that are cheaper. Thus the unemployed have relocated but are still on the pay-rolls of the state that pays more, in order to take advantage of higher checks. This skews the distribution of rates across the country.
  5. Make-up of the unemployed—Who are the people that are unemployed? DC’s 3% higher unemployment than Virginia may be explained by the make up of those unemployed. All the displaced government workers between political regimes, who are looking for new jobs but want to stay in the political realm may not be willing to relocate.
  6. Illegal Immigration—A topic that surely contributes to the unemployment rate, but merits its whole own discussion.

Comments or other explanations?