Assorted links

by on April 25, 2012 at 11:36 am in Uncategorized | Permalink

1. Eight things he learned reading The Economist.

2. Economist J. Barkley Rosser has a very unusual review of my recent book.

3. Wilkinson on Gray on Haidt, also read Gray on Haidt.

4. Markets in everything, the demand for concealed carry wear.

5. Economists on health care licensing, and on the other side stranded cities and an argument for airline reregulation.

Mark Thorson April 25, 2012 at 11:48 am

I don’t think linking to a .doc file is a good idea. Those things can be infected with malware, and not everybody can open them.

Dan Weber April 25, 2012 at 1:13 pm

I thought that’s what was so unusual about it!

I’m surely not going to open it.

Barkley Rosser April 25, 2012 at 3:27 pm

Very wise of you, Dan. It is full of simmering snail turds.

Rahul April 26, 2012 at 2:48 am

Out of curiosity, a lot of the material on your website seems to be .doc or .docx files; any reason you didn’t post them as the ubiquitous pdf format?

TallDave April 25, 2012 at 5:31 pm

As someone who opened the file, I can tell you there are worse things than malware.

Andrew' April 25, 2012 at 11:51 am

2. Didn’t your mama teach you better than that?

Barkley Rosser April 25, 2012 at 3:30 pm

My late mother is not to be held responsible for the misspellings contained in the review. They are due to my failure to proofread. I apologize deeply for offending her memory. She always proofread before sending anything.

Kitten April 25, 2012 at 11:53 am

2. don’t like that sort of satire. very rude indeed.

Barkley Rosser April 25, 2012 at 3:44 pm

Of course you are rignt, my dear Meow. When I was in debate in high school, after one of my presentation a judge declared me to be “coarse, crude, and impossibly rude.” You have my uncountably infinite number, for sure.

Barkley Rosser April 26, 2012 at 2:42 am

I remember now that the quote was “coarse, crude and uncommonly rude.” Getting old with memory loss, but it is a true fact, kitten, :-).

david April 25, 2012 at 11:55 am

Rosser’s satire runs a wee bit too long for effectiveness. The point seems to be that the assumptions of approximately equal competitiveness and demographic stylization in AEGTL is not necessarily justified, which is a fair criticism, if a little clumsily made.

Sohier April 25, 2012 at 1:47 pm

I did like this line from near the end: “One can only be so grateful that he has revealed what culinary ecstasies one can be paid to eat if one searches hard enough to wallow in total filth and utter degradation.”

Barkley Rosser April 25, 2012 at 3:47 pm

“assumptions…is” My my, your writing skills are as bad as mine. And who says that I was being critical, fair or otherwise?

Yog Sottoth April 25, 2012 at 12:00 pm

What a bizarre essay. Makes me wonder if Barkley Rosser suffers from some kind of psychosis.

Colin April 25, 2012 at 1:26 pm

Definitely the most eccentric professor I ever had. Nice guy though.

Barkley Rosser April 25, 2012 at 3:49 pm

That would be “metempsychosis” to you, hypernormal “Yog Sottoth.”

Unctuary April 26, 2012 at 9:33 am

LOL, in fairness you do come off kind of mentally ill here but the essay would probably be funny/make sense if we knew you a little better and your sense of humor. Way to dominate the message board btw. You’re like the Michael Jordan of trolls

Bob Knaus April 25, 2012 at 12:07 pm

#2 should pretty much wrap it up, right? No more references to your latest book?

Barkley Rosser April 25, 2012 at 3:53 pm

In a collection of extenuated whale bladders for sure, Bob.

Airman Spry Shark April 25, 2012 at 12:09 pm

5. The authors’ argument is built on the premise of air travel as a natural monopoly, drawing an analogy to railroads & freeways, but air routes themselves are not constructed; the cataloged economic woes of heartland cities can be attributed to their prior acclimation to an inefficient hub-and-spoke (hierarchical) network which is rapidly being obsolesced in favor of a more efficient (distributed) point-to-point one.

KLO April 25, 2012 at 1:54 pm

I think your critique is basically correct, but there are reasons that airlines do not open up new routes to cities with high airfares but low passenger volume. It is difficult to cost effectively add incremental capacity to low volume routes. Adding a route has a lot of expensive upfront costs regardless of the volume. Moreover, where volume is relatively light, one is tempted to use smaller planes, which are more expensive to run a per passenger basis. Of course, if you run larger planes and the demand is not there, you are guaranteed to lose more money than if you ran smaller planes. I don’t know the railroad industry all that well, but I imagine that it suffered from the same problem. There might be enough room for one railroad to make money, but add another and both go out of business.

Probably the larger problem is that economic activity has migrated to a smaller number of highly networked cities. St. Louis may have a larger population than it used to have, but it is far less economically significant. For airlines, this means lower volume and more price sensitivity, both of which work together to destroy profitability. It seems obvious that the increased centralization of economic activity itself has harmed the airline industry, as it is now much more likely that businesses will be located close to one another than before. While there are plenty of Fortune 500 and 1000 companies located in small towns that are “close to nothing,” I would guess that virtually all of these firms were founded years ago. The large firms of tomorrow that are being founded today are unlikely to grow up in Moline, Illinois or Netwon, Iowa.

Dave Hansen April 25, 2012 at 4:05 pm

Another major premise is that certain cities should keep existing. I’m not sure if we’re better off down the road by hobbling efficiency in the name of saving Cincinnati from not existing anymore as a large metropolitan area. If people don’t want to live there and private companies don’t have an incentive to be there (or provide means to get there), why do we want government to intervene? At first glance, the costs seem to outweigh the benefits.

Ed April 25, 2012 at 6:40 pm

I’d be more than happy to subsidize Cincinnati in order to keep Ohioans from flooding into my city looking for jobs. Also, there is something to be said for allowing people to put down roots and not to be constantly on the move to the next boomtown.

Ricardo April 26, 2012 at 1:57 am

There is no way around the benefits of agglomeration, though. A place like the New York metro area will always benefit enormously from being able to concentrate lots of industries and skilled people in an area. With flights to just about every other big city in the world, it will always have a huge advantage. The argument for spending resources to artificially give those same advantages to a place like Cincinnati is not clear.

Additionally, if airlines were to be re-regulated, how would these regulations apply to international flights? International connectivity is increasingly important and American carriers cannot be mandated to provide non-stop international flights to second- and third-tier U.S. cities while still staying competitive with non-U.S. carriers who would be under no such obligation.

Bender Bending Rodriguez April 26, 2012 at 6:53 pm

Practically speaking, you could lock foreign carriers out of landing slots in the NY metro area and *cough* politely mention *cough* that there are plenty of slots at the Cincinnati International Chili-dog stand/airport.

One might also grant cabotage rights to a foreign carrier that are contingent on a certain number of flights to an “underserved” metro area. Much like a hotel tax soaks out-of-towners, this would have the benefit of soaking shareholders in other countries.

TallDave April 25, 2012 at 12:16 pm

2. Um, well, okay then.

4. Ironically, all the “justice for Trayvon” violence is driving more demand for this kind of thing.

Andrew' April 25, 2012 at 12:21 pm

4. Not so ironic. The gun was the only thing that worked right. Reduce your odds of armed conflict by not chasing down young black football players. Have the gun anyway.

TallDave April 25, 2012 at 2:08 pm

Well, ironic in the sense that people are really, really angry Zimmerman defended himself with a gun.

Andre April 25, 2012 at 2:56 pm

You’ll get angry too when black people can chase white people down the street with guns and then claim self defense if they turn around and say something about it.

Andrew' April 25, 2012 at 3:15 pm

By “say something” you mean bash your head against the concrete? We really do speak different languages as it seems.

Andrew' April 25, 2012 at 3:45 pm

TallDave, to be precise, they aren’t angry Zimmerman defended himself with a gun, they are angry that he chased down a black athlete after notifying 911 and then pistol-whipped him for two minutes all the while with the 6’2″ youth screaming for help before dispatching him with a single shot, and that he was apparently so proud and brazen that he waited for his racist conspirators (the cops) to arrive.

TallDave April 25, 2012 at 5:29 pm

Actually Andre whites are on the receiving end of seven times more violence from blacks than vice versa.

What’s really funny, though, is that not only is Zimmerman not white, he actually has black ancestry.

The racists want to make this about race, but really this is a clash between the cultures of thuggery and decency.

TallDave April 25, 2012 at 5:32 pm

(My race, btw? American)

Nyongesa April 25, 2012 at 10:05 pm

So, “The racists want to make this about Race” whilst it’s really about “thuggery and decency”. Since it is the black community claiming racism, are they the true racists in your opinion, and, who’s the thug, and who’s the decent one in this particular situation?

TallDave April 25, 2012 at 10:18 pm

It is not “the black community” (which is what, exactly? is there a “white community?”) claiming racism, it is left-liberals and a few blacks who like to pretend they speak for all blacks (notably absent: whites who claim to speak for all whites).

The thugs are the ones committing burglaries, as Trayon reportedly had, and assaulting the neighborhood watch. The decent ones are those joining the neighborhood watch in response to homes are being broken into.

http://www.reuters.com/article/2012/04/25/us-usa-florida-shooting-zimmerman-idUSBRE83O18H20120425

Alex' April 25, 2012 at 11:27 pm

You don’t get to start a fight, use a gun when you start losing and claim self defense. Well, maybe, legally in Florida, you do.

Alex April 26, 2012 at 10:21 am

There’s no evidence Zimmerman started the fight, and many reasons to believe he did not, in addition to his own testimony.

You don’t get to commit burglaries and assault the neighborhood watch when they catch you casing the place because you’re a no_limits_nigga who swings on bus drivers and wears gangsta bling, and expect that nothing’s going to happen to you. Getting shot is just part and parcel of the thug life.

The real tragedy here isn’t that Trayvon was shot, it’s that his family and community failed him so badly he ended up in a situation where he probably deserved to get shot.

TallDave April 26, 2012 at 10:21 am

Oops not sure what happened to the name there.

josh April 26, 2012 at 2:10 pm

Chasing down? Really? Still?

Colin April 25, 2012 at 12:19 pm

So many things wrong with the argument for airline re-regulation that it’s hard to know where to begin. In the anecdote about Chiquita the authors fail to note that the NC government offered the company at least $22 million to relocate while Ohio only offered $6-7 million for them to stay. Also bizarre to see the left engage in hand-wringing over the lack of profitabiliity in the industry as a whole — the concern over corporate well-being rings hollow. As for all the kvetching about terrible food, service, etc. — hey, if you want all those things, upgrade to first class. You get what you pay for. I’m willing to forgo some conveniences for cheaper fares, but to each their own.

Anon April 25, 2012 at 12:31 pm

Yes, if cities are being so gutted by having an airline leave, why don’t they pony up cash to incentivize the airline to stay?

TallDave April 25, 2012 at 2:10 pm

Some days my #1 wish is a global ban on corporate handouts by governments. This is nothing more than naked rentseeking.

hutch April 25, 2012 at 12:56 pm

#5. could this problem be at least partly attributable restrictions on foreign ownership (or whatever it is) of routes? i don’t know. but there are lots more than three major airlines in the world, right?

Doc Merlin April 25, 2012 at 1:19 pm

There are more than 3 major airlines /in the US/.

Doc Merlin April 25, 2012 at 1:19 pm

Not for lack of trying on part of the cities though. Many cities tried to get rid of competing airlines. (Look up DFW’s issues with Southwest Airlines.)

Roy April 25, 2012 at 5:24 pm

Exactly, many of these cities handed control of their airports to incumbent airlines who then used their power to shut out competition.

When I lived in Minneapolis in the 90s, MSP had some of the highest fares in the country, Northwest had almost 90% of the landing slots and was vigorous in keeping it that way. When a local charter airline, Sun Country, began regular service they were relentlessly persecuted, Northwest and the Airport board went after them viciosly, preventing them from erecting a hangar, barring them from the main terminal and preventing transfer of luggage, they were also very proud of protecting Minnesotans from Southwest’s inferior service. The only reason anything changed at all was when Northwest provoked a strike with its workers and left Minneapolis without air service for a month. But they still let Northwest run the airport board.

If Minnesota is now suffering because Northwest merged with Delta, I would suggest the main reason for this is too much regulation. The barriers to entry in the airline industry are not about equipment, they are about heavily regulated landing slots. Slots controlled by the major airlines.

Doc Merlin April 25, 2012 at 10:42 pm

“The barriers to entry in the airline industry are not about equipment, they are about heavily regulated landing slots. Slots controlled by the major airlines.”
+1

Collin April 25, 2012 at 1:34 pm

Tyler, It seems fair that you or Alex write up a follow up on the airline deregulation. I know Matt knock it around a bit but since you were alive at the time, your take might be a very unique way of looking at deregulation. I am fasciinated by the Nixon/Carter/Reagan deregulation lately as way to improve the economy:
1) This was deregulation done relatively right (there has been issues but no major failures at Year 34) and I like to hear some solutions for these stranded cities.
2) This was pushed by Democratics, as Jimmy Carter made it a minor issue of election of 1976, and I think it might a road that libertarians can win some support from the Democrats in the West.

It seemed like consumer led deregulation got holted by the California screw up on the power companies and what could be done there as well.

CR

pmp April 25, 2012 at 2:03 pm

Rosser is an associate of B. deLong.

Barkley Rosser April 25, 2012 at 3:51 pm

This is shocking!!! Which of the usual suspects do you recommend that I associate with next, pmp?

James Clary April 25, 2012 at 2:41 pm

The airline regulation article-

• He admits that high fuel prices played a role in changes (10% of airline costs in 1999 to 30-40% of airline costs in 2012). He (I know it is he and she, but it is easier this way) seems to ignore that high variable costs were going to have a very significant change in how the business treated redundant routes and hubs versus high capital costs and high labor costs the industry faced
• He says that the airlines did not cover the cost of capital during the best of times. Well they did cover the cost of capital during the best of times (the 90′s) and invested significantly in new plane capacity and new routes. This is what makes comparing the size of the routes in 2000 and now particularly ridiculous.
• Wall street tycoons have made billions, he repeats a similar point on page four, and does not indicate which tycoons, how they made their billions (gosh thats a really big number) or why I should even care that they made billions. This is a populist red haring not a real point
• Short haul service can’t work because of high variable costs of flying short routes (taking off is expensive) then explain the rise of southwest during the 70′s in just texas where it could avoid regulation, and then its expansion across the country which relies on multiple short routes.
• Mentions that there are high fixed costs with airports and so airlines don’t fly enough to spread out those fixed costs (would argue for airlines owning the airport or being charged a market rate for them, rather than regions ‘subsidizing’ them)
• Uses the postal system as an example of good regulation, not sure it is the one I would use
• His whole discussion of railroads is problematic, and he uses a political source from 1878 to support his arguments, a few thoughts
o He admits there was a railroad bubble (there had been a canal bubble in the 1810-30s too) yet says the reason that the companies went bankrupt was a lack of regulation. This would mean instead that people who ha invested in overbuilt railroads would continue to get a guaranteed rate of return. I will also note that the initial development of NY’s subway system was also a result of that type of bubble investment
o He indicates that after the 1872 bust that there was extensive monopoly power an uses high railroad prices as an example of this (this was a familiar populist cry throughout this period). The problem is that it is dead wrong. Relative to the price of agricultural goods, the costs of railroad transportation fell throughout this period
o It also ignores how now ‘deregulated’ freight in america is a model of how railroad freight should be done (I admit that saying the industry is truly deregulated is very problematic)
• Invokes the idea of “Public right to transit” which was realized in the 1930′s and applied to the airline industry. This does not seem to be a public rite when a majority had not experienced a flight on an airline till the 1970s. Not a major point, but I hate when people come up with rights that have never been guaranteed.
• Real air prices have fallen more slowly since the repeal of CAB
o I do not have time to pull data on this, though he uses a 1990 study from the Economic Policy Institute to back this up.
o I would say that he does mention that airline technology significantly improved in the beginning of the 70′s.
o I would also say that high inflation (till the idea came up to index union contracts to inflation at the end of the decade) really enable businesses to work around high fixed labor costs
o
• On the whole I hate his basic premise of efficiencies that technocrats have that free markets could never achieve.
• He mentions that airlines need to merge to achieve economies of scale (while critizing a lack of antitrust regulation during the Regan administration) which would argue that the industries had not achieved those economies in the seventies when they were more players (the same basic number as had existed in the 30′s). I also would not call airlines a natural monopoly
• ” Airline revenue per passenger mile has declined from an inflation-adjusted 33.3 cents in 1974, to 13 cents in the first half of 2010. In 1974 the cheapest round-trip New York-Los Angeles flight (in inflation-adjusted dollars) that regulators would allow: $1,442. Today one can fly that same route for $268. That is why the number of travelers has gone way up.” This was from a business week article about deregulation- http://www.businessweek.com/bwdaily/dnflash/content/jan2011/db20110120_138711.htm
• Completely misses the impact of teleconfrences, webex, etc.
• Many commenters in the article pointed out basic facts that were reported in the article were false, particularly with respect with the number and cost of flights to DC from Pittsburgh (cities that are 4 hours away from one another)

Nik April 25, 2012 at 3:58 pm

Just one point I’d quibble with, is that the round trip cost between NYC and L.A. is exactly the kind of flight that has benefitted from the deregulation. I would bet that a large chunk of that cost decrease is due to deregulation.

Also, I’ll mention a cost that has not yet been discussed, the importance of multi-flight locations in terms of breakdowns / weather issues. Having multiple flights on one route allows airlines to re-distribute those passengers more quickly, and also means they’re more likely to have a spare plane on hand. SWAir has saved a ton of money by only flying one type of aircraft, in that it can stock fewer parts, train repairmen quicker, and it often has a spare plane on hand for a broken one.

Lastly, former hubs have been hit the hardest, because their previous prices were subsidized by thru-traffic, and they’re now more likely to be monopolized by the former airline due to said previously cheap flights.

Rahul April 26, 2012 at 2:57 am

The risk with flying a single type is if a technical issue crops up the FAA sometimes grounds a whole fleet or requires a retrofit of a component or a test for fatigue etc. With a single type fleet that spells disaster. Admittedly this is a rare occurance but it has happened before.

Rich Berger April 25, 2012 at 3:03 pm

3. Is there really anything to evolutionary psychology?

JWatts April 25, 2012 at 8:14 pm

You mean besides a life time as a college professor, grant money, paid trips to conferences, tenure and a good retirement plan?

josh April 26, 2012 at 2:14 pm

Certainly, there is no less to ev. psych. than there is to economics.

Varun April 25, 2012 at 3:18 pm

Re: 1 and the first point there -

How does one set monetary policy in a world where your currency’s value is based on the cost of printing money? I was trying to figure out what the impact on the economy is if you tried to continue inflation by printing currency (without increasing the denomination) at this point…

Daniel Klein April 25, 2012 at 3:20 pm

On #3, Will Wilkinson’s review of Gray on Haidt: I’ve read quite a bit of Gray, and I confess to enjoying Wilkinson’s treatment. Bravo Will.

Brandon T. April 25, 2012 at 3:22 pm

I suspect Tyler really enjoyed #2; I would, too.

Barkley Rosser April 25, 2012 at 4:37 pm

However, according to the theory of negative pricing, Tyler only links to things he does not enjoy. After all, everybody knows that Tailor Coward is being paid off by the gangsta chefs of Hell’s Kitchen.

Brandon T. April 25, 2012 at 6:20 pm

Perhaps it’s the case that Tyler sometimes suffers from moderate to severe bouts of contrarianism. You’d agree that these can be forgiven, since they keep things lively. With so many things to deflate, who can blame him for (gleefully) wielding his pin?

David Wright April 25, 2012 at 4:49 pm

I heart Barkely Rosser. Wish he still hung out in the comments as much as he used to.

Willitts April 25, 2012 at 5:52 pm

4. This story is two decades old.

When Congress passed the high capacity magazine ban in the early 90s, incentives shifted to a new old market – small, concealable weapons.

Six shot revolvers, which were almost killed off by 15-20 round semiautomatics, came back into popularity. The .38 special revolvers got beefed up to handle .357 magnum rounds in a compact frame.

Manufacturers also produced lines of single-stacked 10-round (the new max) semi autos that were highly concealable. Before the law, most small autos were .22, .25, .32, and .380 caliber. After the law, manufacturers created lines of midget 9mm, .40 cal, and .45 cal. The two shot derringer in .45 cal even made a comeback.

Some of the midget weapons, such as the Glock, would accommodate larger capacity magazines that would stick out of the bottom of the small hand grip. You could put a 40-round magazine in a weapon with a two inch barrel!

Along with the lines of new, small weapons came a large variety of accessories. These included ankle holsters, pancake holsters, pocket holsters. There was even a wallet holster. There were also commercial lines of pants, jackets, fanny packs, and briefcases that had quick action compartments and prevented “printing” – the clear sign of a weapon hiding under clothing.

Even after the high capacity magazine ban ended, the new lines of concealable weapons continued to hold market share. Their light weight, convenience, relatively high capacity, and concealability made them very popular in right to carry states.

The so-called “assault weapons ban” which only banned new manufacture of weapons that LOOKED like actual assault weapons were replaced by weapons designed without the cosmetic features that made them “assault” weapons under the law. The caliber and rates of fire were unaffected. Since older magazines were grandfathered by the law, nothing prevented you from sticking a 30-round magazine into a brand new non-assault rifle.

Again, laws designed for a specific purpose had unintended consequences that subverted the intentions of the boneheads who passed the laws.

Kenneth W. Regan April 25, 2012 at 7:19 pm

I could mention that J. Berkeley Rousseau is the eponymous scion of the mythematical legation who proved a stronger form of Goodal’s First Incompetence Theorem. But the problem is that on a high-volume page this stuff is likely to show up in Goggle searches :-).

—Kent Reagan.

Barkley Rosser April 25, 2012 at 7:25 pm

Of course you realize that only chimpanzees, and bonobo ones at that, properly appreciate Goodal’s First Incompetence Theorem.

Kenneth W. Regan April 25, 2012 at 7:38 pm

Man, that was a quick comeback :-), especially apt (aped?) since I deliberately stepped away from reffing (NFL commissioner) Roger Goodell.

Floccina April 26, 2012 at 10:18 am

Barkley Rosser comments here are even better that the review. BTW Barkley I am still shorting gold partly on your recommendation (only a very small bet though) I hope you are right on gold.

Barkley Rosser April 26, 2012 at 11:35 pm

Well, it has come down from its $1900+/oz peak. I do not see it going over $2000, but it looks like some of the Asian central banks may be putting a floor on it around $1500. Hard to say.

Thelonious_Nick April 26, 2012 at 12:10 pm

5. One thing I notice about Cincy, St. Louis, Memphis, and Pittsburgh is that they’re all cities that are far less important economically than they used to be (even before their recent airline problems). Could be the relative fortunes of those mid-sized heartland cities explain the phenomenon better than deregulation.

Anecdotally from my recent experience:
- My wife’s family is from OK and we’re delighted at the recent start of a daily non-stop flight between Tulsa and DC.
- I am traveling to Omaha this summer to see family and was surprised to find a direct flight between Omaha and DC.

The article itself mentions how well Charlotte’s airport is doing. I wonder how airports in, say, Midland, TX; Bentonville, AR; or Minot, N.D. are faring?

Euripides April 26, 2012 at 1:36 pm

#2
I don’t get Barkeley’s “review.” I think his comparative advantage is in posting about DSGE and heterodox econ, he should go back to doing that.

Barkley Rosser April 26, 2012 at 1:48 pm

Sophocles has a better sense of humor than you do, Euripides.

Comments on this entry are closed.

Previous post:

Next post: