Sunday assorted links

by on February 21, 2016 at 1:13 pm in Uncategorized | Permalink

1 Ron Jeremias February 21, 2016 at 1:35 pm

Regarding the Tom Wainwright piece: I understand that the money we are spending on moving the supply schedule to the left might be better spent on moving the demand schedule to the left. But I don’t understand his argument that reductions in supply from South America will have little effect on the street price of cocaine in the United States. If the demand schedule is inelastic, as he says, then why wouldn’t a reduction in supply result in a significant increase in price? I don’t buy the argument that a doubling of the price of coca leaf, from $400 to $800,would only raise cocaine’s retail price from $150,000 to $150,400 per kilogram. Any significant reduction in total supply should lead to a significant increase in retail price. Am I wrong? Did I miss something?

2 BC February 21, 2016 at 4:14 pm

You are correct that, with an inelastic demand curve, almost all cost increases are passed along to the customer as a higher price. Wainright’s assertion is that the cost of coca leaf is a small fraction of the cost of cocaine. According to him, 1 $400 leaf of coca can produce 1 kg of cocaine worth $150k. So, if coca price rises to $800, then that additional $400 will be passed through into the cocaine price, as you suggest, but that still only raises the price to $150,400. He doesn’t say what accounts for the other $149,600 in cost, but I suspect it may be things like weapons, secure transportation and storage, bribes, and cost of capital and “entrepreneurial risk” when being a drug entrepreneur involves risk of death and imprisonment. Also, hazard pay for employees.

3 ChrisA February 22, 2016 at 12:15 am

He said “in regions where eradication has created a coca shortage, farmers don’t increase their prices as one might expect. It isn’t that crop eradication is having no effect; the problem is that its cost is forced onto Andean peasants, not drug cartels or their customers.” He also mention Wal-Mart as a monopolist buyer as an analogy. I don’t really follow this logic. I can think of only two reasons that a local shortage doesn’t raise prices, the first is that it is just that, a local shortage, so the buyers go elsewhere. The second reason is that the growers are effectively slaves of the buyers and therefore have no pricing power. But if this is the case, then there is no market and it is not an economic issue, it’s a slavery issue. The perhaps parallel with Wal-Mart is that it tries to keep prices flat by encouraging many suppliers so that it has ample supply and no-one supplier can hold it to ransom.

4 Nathan W February 22, 2016 at 8:17 pm

“Any significant reduction in total supply should lead to a significant increase in retail price.”

With a street price of $150k, they double the purchase price to $800 and achieve the same quantity supplied. They will supply as much coke as Americans demand. It’s not hard to grow plants.

5 Transaction February 21, 2016 at 1:40 pm

#2. Really only talks about TANF. What about the rest of the welfare program? Earned Income Tax Credits, Child Tax Credits, the Supplemental Nutrition Assistance Program, Medicaid, Housing Assistance, Supplemental Security Income, Pell Grants, Women, Infants and Children, other child nutrition programs, Head Start, the countless number of federal job training programs, the Low Income Home Energy Assistance Program, and Obamaphones?

Just as the notion that Obamacare constitutes health care reform is utterly farcical while ignoring all the other failed federal health programs, so too, the notion that revitalizing TANF would somehow “revitalize welfare” is ludicrous. Swap the whole bureaucratic mare’s nest for a simple guaranteed minimum income.

6 Alain February 21, 2016 at 4:09 pm

There is an interesting intersection between #2 and #3. Annie Lowrey writes so passionately about the poor. I would hope that she backs up all of that talk with a donation of her half of Ezra’s stake in Vox to the poor and needy that she clearly cares so deeply about.

7 Careless February 21, 2016 at 5:14 pm

Does Vox have any value aside from its url?

8 JWatts February 21, 2016 at 5:03 pm

From #2: “But our broken welfare program has left hundreds of thousands of people in extreme poverty, living on less than $2 a day per person.”

Ok, that’s an astonishing claim. She is saying that there are hundreds of thousands of American’s living on less than $730 per year.

9 prior_test1 February 22, 2016 at 1:24 am

Think of the children.

10 enoriverbend February 22, 2016 at 10:55 am

“Ok, that’s an astonishing claim. She is saying that there are hundreds of thousands of American’s living on less than $730 per year,:

There are… if you leave out 100% of the help that the poor are already getting from the government. And also leave out black market earnings.

11 JWatts February 22, 2016 at 12:04 pm

“There are… if you leave out 100% of the help that the poor are already getting from the government. ”

Ok, gotcha. That makes far more sense. And also indicates that the line is complete bullshit. It’s the equivalent of the Clinton quote:

“”We came out of the White House not only dead broke, but in debt.”

12 Jason Bayz February 21, 2016 at 1:56 pm

2. There was on interesting line:

“Recognize that the economy of 2016 is not the economy of 1996. There are not enough jobs, and too many of the ones we have are not enough to get out of poverty, let alone into the middle class.(…)”

But what about all those immigrants we need to “do the jobs Americans won’t do?”

13 HL February 21, 2016 at 2:08 pm
14 Alan February 22, 2016 at 6:30 am

And it is time for progressives to fix it, whether it would be popular or not.”….

Democracy be damned . It seems she is saying it is a moral imperative that she get her way. Oh, and I agree that our system under serves the poorest.

15 Mark February 22, 2016 at 11:43 am

And if we ever took a vote on that proposition, it would remain that way. It would be a political disaster for any candidate to propose significantly expanding income assistance to the poor. It’s critical to the status of the middle class that there be a visible, meaningful gap between it and the lower class. It isn’t pleasant to acknowledge but it’s the case. And, it’s not so clear that it’s wrong at least in a utilitarian sense. It may be useful as an incentive to get more production out of those with marginal skills.

16 Nathan W February 22, 2016 at 8:20 pm

Imprisoning sodomites used to be popular too.

Unpopularity is a valid argument against doing something, not against advocacy for doing that something.

17 rayward February 21, 2016 at 2:23 pm

3. Divorce laws (providing for equalization of marital assets and the higher income spouse providing for the lower income spouse) defy common sense and logic. Why should the spouse who generates the income to buy assets have to give half to the other spouse upon divorce and why should the spouse with the lower income who has been enjoying marital welfare be entitled to extend the welfare beyond the marriage? Indeed, wouldn’t it be more logical for the spouse with the lower income to repay the spouse with the higher income for the martial welfare the spouse with the lower income has enjoyed during the marriage. Today’s divorce laws are like the lottery: the spouse with the lower income in effect wins the lottery by marrying someone with a higher income.

18 Dan Lavatan February 21, 2016 at 3:06 pm

Right, I think problem is multi-faceted. For one thing, couples historically haven’t done a good job formally tracking compensation for work within the marriage, such as work maintaining facilities or providing day care that would otherwise have to be paid for externally. Couples would need to do a better job tracking this including some contractual obligations due to the substantial penalty incurred if one leaves paid employment.

There are also tax issues with income shifting. If there really are joint assets, who earns the (re)investment income on those assets? If there aren’t, there is motivation for one spouse with higher overall income to shift them to the lower earning spouse to reduce taxes as long as the marriage is together.

19 Alain February 21, 2016 at 4:03 pm

The laws on the books make tremendous sense at incomes near or even slightly above the national average. However as the income of the breadwinner increases the laws make less and less sense. The laws become absolutely absurd at the highest levels of income, an example being Harold Hamm and his 1 billion dollar divorce. Was raising children really worth 1B? It’s comical.

I’m not sure how the laws could be fixed at this point. But they are clearly insane.

20 Axa February 22, 2016 at 5:17 am

So, the law is almost perfect. High income people has education, lawyers and prenuptial agreements. Low and average income people have the law. Why modify the law because one guy had a 1B divorce?

21 Mark Thorson February 21, 2016 at 4:50 pm

Traditionally, the man had a career and the woman was a housewife. He made the money, so he had to support her after divorce. That’s an archaic anomaly in today’s society, and what will probably drive a stake through its heart is the advent of same-sex marriage. When two guys get divorced, what’s the logic behind one supporting the other?

22 Pensans February 21, 2016 at 7:59 pm

The immediate source of the standard for distribution of property upon divorce was not a theory of production or contribution. It was the merging of the legal personalities into the marital union. The asserted justice of equal division rested on the idea that the two were one and thus had equal claim to all assets on dissolution.

Of course, no theory of justice related to marriage survives both the rise of no-fault divorce and Obergefell. As a matter of law, marriage is no longer about the union of persons, permanent commitment nor about man and woman, children.

Since marriage today has less legal force than an ordinary contract and, Justice Kennedy tells us, represents no form of social life related to sexuality only will for companionship, it is not clear why marriage should have any form or effect whatsoever.

23 Mark Thorson February 21, 2016 at 9:37 pm

Related question is why does common-law marriage exist? Why should just living with someone create a claim on assets and income? Has any court enforced a same-sex common-law marriage claim?

24 Albigensian February 22, 2016 at 11:37 am

Common-law marriage in the USA is not a growth industry; presently there are only nine states which still recognize it.

But where it is recognized it generally requires more than “just living with someone”; typically it requires that the couple present themselves to the public as married (or otherwise express an intent to be married).

I’m unaware of any legal precedent in same-sex common law marriage. Since common-law marriage is based on (unwritten) common law and on (government recognition of) tradition, it’s less than obvious that it would extend to same-sex marriage.

Although I don’t doubt that state or federal courts might nonetheless find something disposative in the enamations from, and penumbras cast by, some (unspecified) constitutional text.

25 BC February 21, 2016 at 11:50 pm

On the other hand, some people think that laws should be used to equalize wealth and income even between two totally unrelated people that have never met each other. If income inequality is a concern for government generally, then why not inequality between two ex-spouses?

26 Cooper February 21, 2016 at 2:27 pm

3B. Today I learned I should only buy from women on eBay to get a better deal. Thanks science!

27 jim jones February 21, 2016 at 3:03 pm

6. Cameron achieved nothing with his EU ” renegotiation” because it was just political theatre.

28 BC February 21, 2016 at 3:42 pm

#5) What is Tyler getting at here? Carson’s percentage of supporters with college education is middle of the pack.

One thing that stands out is the high percentage of people with at least some college education. Even among Trump supporters, who are the least educated group, 79% have at least some college education and 42% have graduated from college. Nationwide, only about 59% of people have at least some college education and 32% have graduated []. The other candidates’ supporters are even more educated than Trump’s. “Extremely well educated” is not a label that I would have previously associated with South Carolina Republican primary voters.

29 Doug February 21, 2016 at 4:20 pm

Party members are more educated than independents. Voters are more educated than non-voters. Ergo primary voters, tend to be much more educated. Most high school dropouts couldn’t care less about politics.

It’s like mocking contemporary art, being a fan of Ayn Rand, or believing in loop quantum gravity. They’re definitely the philistine positions. But even having an opinion on those topics, probably means you’re on the right end of the bell curve.

30 Anon February 21, 2016 at 7:57 pm

Don’t dismiss Loop Quantum Gravity . It may still turn out to be the better explanation.

31 BC February 21, 2016 at 8:22 pm

What you say makes perfect sense, but it seems to cut against the stereotype of the southern, conservative hick which, judging from my facebook feed seems to be held by many in the bicoastal and northern industrial states. For example, look at this passage from slatestarcodex []:

“These tribes seem closely related to classes. ‘Blue Tribe’ is similar to Gentry; ‘Red Tribe’ is similar to Labor. I won’t say there’s a perfect 1:1 equivalence; for example, I know some union leaders who are very clearly in the Labor class but who wouldn’t be caught dead in the Red Tribe. But the resemblance is too close to miss.”

This seems to be a common view (especially among Blue Tribe). However, this SC data seems to indicate that Red Tribe consists mainly of Gentry too (and perhaps educated Labor). The tribes don’t seem to divide so much along class and education as perhaps they just hold some sincere, well thought out, differences of opinion on individualism vs. collectivism, the proper role of government, the nature of private property and wealth, and make different cultural and lifestyle signalling choices. Class may just not be a very useful way to classify Americans, at least when it comes to politics.

32 chuck martel February 22, 2016 at 10:17 am

Why do people keep misusing the term “tribe”?

33 anon February 21, 2016 at 4:50 pm

I agree that the whole progression tells a story. The more likely that you are a two marshmallow kid, the more likely you prefer two marshmallow candidates.

34 Laura S. February 21, 2016 at 3:55 pm

#2, another author lauding automatic stabilizers. The left prides itself on being data-driven, analytic, factual, but is attached to an out-of-date economic model (fiscal stimulus) because it has convenient implications for their policy preferences.

I bring this up because until authors and speakers start to realize that the errant clap-trap that is fiscal stimulus is distracting to their argument, the casual indoctrination that results from that clap-trap will haunt policy.

35 Ed February 21, 2016 at 3:59 pm

#4 Anyone got a copy of this article that’s not behind a paywall?

36 Doug February 21, 2016 at 4:20 pm

FWIW, to bypass WSJ’s paywall: just copy and paste the article headline into google in incognito mode.

37 Shane M February 21, 2016 at 4:15 pm

#3 ebay. As an ebay buyer and seller, while open to the results, I’m skeptical of the finding. The main reason being that I usually have no idea if I’m buying from a man or a woman, and doubt most buyers have any clue. Even if the user id may give a hint, if you email a question it may be the spouse or (for large sellers) a support staff that responds.

One hint of possible explanation is that the article said women tended to have “less selling experience.” When I buy on ebay I pay attention to the selling experience (“feedback”) and will prefer sellers with more experience as long as their feedback is in the low 99% or higher. Having a very low feedback score means I don’t consider you at all.

Another hint of what may be happening – the article said some items (barbies/purses) did better with women sellers than male sellers (Wii). So if buyers are in fact trying to determine the gender of the seller, perhaps women prefer buying from women, and men prefer to buy from men. Perhaps knowing the gender of both they buyer and seller is important in this equation. It would not surprise me if purchases for some items are dominated by women, and some are dominated by men.

Additionally, looking at items that someone has for sale, while giving an indication, might not be a good indication of the gender. Many ebay sellers go to yard sales and goodwill to pick through the valuable items. Nice Purses and some brands of shoes commonly found at goodwill and yardsales, and a male e-bayer can quickly become acquainted with what sells online. Go to any goodwill and you’ll likely find a male buyer sorting through primarily “female” items because he knows they’ll sell.

Anyhow, I’m open to the finding, but am skeptical. I find it likely something else may be going on than the suggestion that perhaps buyers value things owned by men more.

38 JayT February 22, 2016 at 6:31 pm

The fact that female sellers do better with stuff like barbies and purses makes me think that the best performing sellers most likely are the ones that know their product the best, regardless of gender because they will be more likely to have feedback pertaining to that item, and they will have better item descriptions.

39 jseliger February 21, 2016 at 4:30 pm

Divorce laws and the economic behavior of married couples

Have you seen Philip Greenspun’s book / website Real World Divorce? It covers some related topics (with unusual thoroughness).

40 Careless February 21, 2016 at 4:55 pm

The editor-in-chief of the new site will be Sean Fennessey, who previously worked as the deputy editor for Grantland, and as writer James Andrew Miller reported in Vanity Fair last May turned down Grantland’s editor-in-chief role after Simmons left ESPN

Note that Grantland was permanently shut down 5 months later. He chose wisely.

41 hgfalling February 22, 2016 at 2:32 pm

I’m not saying he didn’t choose wisely, but had he accepted, Grantland would still be going; even ESPN has said as much.

42 Floccina February 21, 2016 at 8:26 pm

#2 No mention of a BIG

Or Arnold Kling’s Flexdollars:

“The classic approach is the negative income tax. What I would suggest is a modification of the negative income tax, in which recipients are instead given flexdollars. These would be like vouchers or food stamps, in that they can be used only for “merit goods:” food, health care/insurance, housing, and education/training. One way to think of this is that it takes the food stamp concept and broadens it to include the other merit goods.”

43 Adrian Ratnapala February 22, 2016 at 1:56 am

Hmm, I can’t find any non-broken links to anything Kling wrote about the subject. Do you know what his rationale was? Why he believed that would be better than ordinary cash?

Of course, I can think of all kinds of standard answers, but libertarians usually dismiss those answers as overly paternalistic.

44 Floccina February 21, 2016 at 8:54 pm

#4 It is not something that Government has the tools to address. Legalize it all and let us who think it is a good idea to abstain to warn our family and friends of the dangers and help the users if they want help.

45 sam February 22, 2016 at 6:26 pm

#2: Mistaking the product for the customer.

The purpose of bread and circuses is not to feed and entertain the poor, but to keep Caesar in power.

Welfare recipients are no longer a politically competitive group. They are by definition poor, overwhelmingly single women (almost always mothers), and more likely than the population at large to be black. As voters, they’re not at risk of defecting to the Republicans.

It’s not worth it for the Democrats to risk political capital on them. Better to chase the swing voters (upscale single men, suburban moms)

One might say the same of the evangelicals, who show up every four years, thinking that this year Lucy is finally going to let them kick the football.

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