Assorted links

by on August 4, 2011 at 11:49 am in Uncategorized | Permalink

1. Netflix revenue vs. Blockbuster revenue, graph, sorry folks it is in nominal terms!

2. Is government about the supply of public goods?

3. “It is a science fair project, but it turned out very well for me.”  And he has a blog, good post on the Apollo program.

4. Dominic Lawson on chess.

5. How is China doing as an innovator?

6. Profitable biases of NBA referees; interesting hypothesis, although I am not convinced the referees are the active factor.

1 Anon Poster August 4, 2011 at 11:56 am

The Blockbuster one is pretty off-base — revenue was ~$3.5B in 2010. So Blockbuster’s costs certainly hurt, but it still was (and probably is) generating a lot of money.

2 celestus August 4, 2011 at 11:57 am

#1. The sum of Blockbuster and Netflix revenue is 1/3 of what it was 7 years ago. Stagnation, I tell you!

3 Paul August 4, 2011 at 11:57 am

Tyler: Speaking of China I thought that this piece over at Economix (http://economix.blogs.nytimes.com/2011/08/04/moving-china-up-the-value-chain/) was an interesting perspective. I’d be curious to hear your thoughts.

4 Scoop August 4, 2011 at 12:12 pm

Netflix/Blockbuster. A software idea for anyone looking to make some money and a question for Tyler about the benefits of technology:

It would be pretty easy to program a PowerPoint add-on that would see charts that combined time and money and automatically adjust for inflation. It would make all charts that covered more than a few years dramatically more accurate and give people a far better idea of actual trends and it would save a lot of effort for people who manually adjust prices for their charts. But no measure of wellbeing that I’m aware of would indicate that life had improved for anyone and, thus, another technical improvement in life goes unthanked. Or does Tyler think this would be another non-benefit of the computer age?

5 M. Dutton August 4, 2011 at 5:09 pm

Presumably someone would pay to have this add on.

6 Rich August 4, 2011 at 12:13 pm

#3 – this argument (from the economist) makes no sense. First, the author asserts that, inter alia, roads and parks are _not_ public goods. Then the author shows a picture of traffic and a picture of a crowded beach to “prove” that adding additional people to the mix can make a public good worse. Either these things are public goods or not, but you can’t argue both sides of the coin consistently.

7 Jens Fiederer August 4, 2011 at 12:38 pm

You beat me to it.

8 iamreddave August 4, 2011 at 12:16 pm

Tyler is now getting blamed for the end of the Flynn effect 🙂

“Since we’ve made progress on these problems, one might suppose that the Flynn effect would start to fade, at least in developed nations. (All the low hanging fruit is gone, as Tyler Cowen might say.)”
http://www.wired.com/wiredscience/2011/08/are-smart-people-getting-smarter/

9 BB August 4, 2011 at 12:19 pm

Markets in everything, Brad DeLong edition Redux:

I renew my wager. But now it’s 200 bucks.

I say no De Long post on or comment about Tyler’s #1 above. Any takers?

(Thanks to the folks who politely declined yesterday’s wager. What kind of odds to I need to give you?)

10 M. Dutton August 4, 2011 at 5:10 pm

Do you accept bitcoin?

11 Brett August 4, 2011 at 12:19 pm
12 Brett August 4, 2011 at 12:20 pm

Crap, I messed up the link. I meant to end it after “calculator”, but forgot to close it.

13 Ryan P August 4, 2011 at 12:25 pm

#2 — well, it’s at least good to hear that Steinglass realizes the phrase “public good” does not actually apply to anything the government provides or anything he wishes it to provide (though he seems to be mistaken on some: it’s not clear to me that police are entirely rival or excludable). Now if someone could only explain to him** why that’s not merely a semantic statement …

** Or the Economist’s editorial board, for that matter: http://www.economist.com/node/18836370

14 Matt August 4, 2011 at 12:35 pm

Yes, I agree. If national security is the quintessential public good, I don’t see how the “municipal security” provided by police is that far off, even though technically when a police officer is intervening to prevent some crime against my property that means you are deprived of his surveillance of yours.

Things like libraries, museums and pools also seem close enough. So saying over-crowding in museums means that governments don’t provide public goods seems like a fairly shallow observation. But all this is besides the point becasue government spending really isn’t on museums and pools, it’s on defense and mainly pure wealth transfers (and debt service which is an artefact of one of the preceding two, the answer of which one depending on whether you are on the left or right).

15 Ryan P August 4, 2011 at 2:37 pm

Healthcare & (if you’re counting state spending) education are big too — neither of those are public goods by any reasonable stretch. Note also that the real money on pure wealth transfers is from young to old (as opposed to rich to poor), which doesn’t quite sound like a stirring defense.

Wait, why are libraries, museums, and pools “close enough” to public goods?

16 Matt August 4, 2011 at 5:42 pm

people sometimes use the term “mixed public goods” or “semipublic” goods to describe goods that share some of the features of public goods but also are characterized by congestion externalities or some exclusion technologies (e.g. tollbooths). think of the difference between the books in your house and the books in a public library in terms of excludability and rivalrousness. for one, libraries have very few grounds to legally exclude people from entering them and reading a book for a few hours. At the museum my ability to look at the painting doesn’t usually reduce yours in any practical way unless under certain circumstances there’s literally not enough room, as in the picture used in the link. As I described it above, not even a police force provides a “pure public good.” You say: “t’s not clear to me that police are entirely rival or excludable.” Neither are roads and pools.

In contrast to these “mixed” public goods, direct transfers like writing SSI checks to old people or paying for their medicine are qualitatively different government services.

17 Ryan P August 4, 2011 at 6:04 pm

That they do not, in point of fact, exclude people from public libraries, pools, or roads, has absolutely nothing to do with whether those things are excludable. No, they don’t exclude people, but yes, they could. Those are excludable goods. Yes, there’s such a thing as a near public good or a mixed public good, but those aren’t examples of them.

What often gets lost, even by otherwise solid economists, is that there’s a point to calling something nonexcludable behind the inherent beauty of the term (kidding!). The point is to implicitly argue that it’s just not feasible (in a physical sense, not a legal or political one) to exclude people from a service, and so the market cannot provide it, and so there’s at least the beginnings of an argument for public provision. When someone says the books in a public library are non-excludable, nothing of the sort is true and so the term is just being misused.

18 Ryan P August 4, 2011 at 6:07 pm

I would also argue that we shouldn’t make an equivalence between making writing SSI checks and paying for medicine. The first really is a pure transfer similar to a lump sum payment. The latter isn’t anything of the kind

19 Ryan P August 4, 2011 at 12:30 pm

Or just explain exactly what “rival” means — as Rich points out, the pictures Steinglass posts to prove that more people make public goods worse are all pictures of these he previously acknowledged aren’t public goods

20 Matt August 4, 2011 at 6:43 pm

“Law enforcement, streets, libraries, museums, and education are commonly misclassified as public goods, but they are technically classified in economic terms as quasi-public goods because excludability is possible, but they do still fit some of the characteristics of public goods.” Wikipedia, citing- Economics, Principles, Problems, and Policies, McConnell, Brue, & Flynn, McGraw-Hill 19th Edition, 2012, pp 104 . A brief google search provides countless other authorities for the same proposition, but I’ll leave that to you.

You mistakenly repeat the definition of a pure public good in your attempt to refute the concept of mixed public goods. You seem very convinced of your definition that to be a mixed public good requires the phsyical/logical impossibility of exclusion or rivalrousness. Under this definition, Lighthouses are neither public goods nor mixed public goods (so then purely private goods?), because congestion in a waterway is a physical means of exclusion.

Your conviction and rush to meaningless or incorrect distinctions is weird in light of your earlier musing, which argued that any good that is not purely private is public or quasi-public. You wrote: ““public good” does not actually apply to anything the government provides or anything he wishes it to provide (though he seems to be mistaken on some: it’s not clear to me that police are entirely rival or excludable).”

Further to your final point, we also shouldn’t make an equivalence between paying for medicine in Florida and paying for it in Maine. The former requires air conditioning while the latter doesn’t require anything of the kind. See how fun that is?

21 Ryan P August 4, 2011 at 8:04 pm

Again, I’m not claiming that being sort of non-rival or sort of non-excludable means something is a pure private good. I’m saying that if something is purely rival and purely excludable (like, say, a book), then it’s not a public good or a mixed public good. That’s neither a meaningless or incorrect distinction. The point of the distinction ought to be clear: if something is completely rival & excludable, it’s not really clear why you’d think the gov’t ought to provide it. (Feel free to say why you think books are nonrival or nonexcludable. We can take condescension as read, so just go ahead with the straightforward argument.)

I’m sorry, I thought the reason I was distinguishing between cash redistribution and gov’t purchase of private goods for certain groups would’ve been obvious. It’s because the first sounds like someone trying to achieve some redistributive goal or other in the most efficient way possible. The second just sounds like some combination of meddlesome preference or economic illiteracy. Is that a clear and important enough distinction for you?

(“Wikipedia is the best thing ever. Anyone in the world can write anything they want on any subject, so you know you are getting the best possible information.”)

22 Jack August 4, 2011 at 12:34 pm

#1: inflation since 2004 has been low, so the graph is not misleading. Deflating the values would not change the picture much.

23 clayton August 4, 2011 at 12:43 pm

I can’t believe you’re still on that about nominal vs. real. Are you really, as an economist, going to say that one should analyze future government spending on a nominal basis, rather than on a real basis?

In no business scenario that I have ever been in, has a decision about future revenue streams ever not involved discounting those revenue streams to present value (unless the time period was very short).

24 Cliff August 4, 2011 at 12:49 pm

Discounting is not about inflation.

25 txslr August 4, 2011 at 1:08 pm

Part of it is.

26 clayton August 4, 2011 at 2:23 pm

Part of it is. It’s about discounting by a firm’s weighted average cost of capital. This rate can be deconstructed thusly:

r= risk-free rate + inflation + risk premium

Inflation is part of every interest rate.

27 Andrew' August 4, 2011 at 3:09 pm

This is a blog. And we aren’t interested in what they guy who said we would have to default by hook or crook is interested in.

28 Seth August 4, 2011 at 12:58 pm

Nice Blockbuster, Netflix chart. Good illustration of creative destruction. However, I recently made a purchase at Blockbuster and still have a Blockbuster Online account, so I don’t think their revenue is $0. Also, there seems to be a good number of RedBox locations, so I believe that revenue should be added in as well.

29 Nicoli August 4, 2011 at 1:06 pm

@ Netflix

It would be interesting to see a total number of employees chart too for each organization.

30 joshua the postlibertarian August 4, 2011 at 1:17 pm

Yes. I’m not sure if it’s supposed to be TGS because presumably Netflix employs fewer people, or if we’re supposed to celebrate because now more labor has been freed up to pursue more endeavors!

31 Andrew' August 4, 2011 at 2:59 pm

Both.

32 Dan August 4, 2011 at 1:58 pm

1. It’s okay to use nominal dollars when a graph in nominal dollars looks almost the same as how the graph would look with real dollars. So no need to apologize for the nominal dollars in this graph! The Netflix vs. Blockbuster graph is not misleading, since all the main conclusions implied by the nominal graph would also be implied by the real graph.

33 Andrew Edwards August 4, 2011 at 2:01 pm

Right. It would be different if something were, say, going up in nominal but down in real terms.

34 Andrew' August 4, 2011 at 3:00 pm

It’s about to get real in the Whole Foods parking lot.

35 Andrew' August 4, 2011 at 2:04 pm

5. Why do Chinese speaking English often end their sentences with “this is true.”?

36 Andrew' August 4, 2011 at 2:29 pm

2. The government’s liabilities and obligations are nominal.

37 Tony August 4, 2011 at 3:11 pm

Re: nominal vs. real, a while back I was trying to get a movie blog to talk about box office numbers in real dollars, but they didn’t bite. I guess “Harry Potter made half as much in real dollars as Gone with the Wind” (or whatever) isn’t quite the sexy headline they’re going for.

38 clayton August 4, 2011 at 3:26 pm

You mean journalists would use nominal instead of real dollars to retain sexiness in their non-points. Why would economists do it, then?

39 TGGP August 6, 2011 at 5:54 pm

The article on China quotes someone from the Monitor Group. They still show their faces of that Libya business?

And speaking of retracted papers, check out Retraction Watch.

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