Month: June 2008

He says he’s not the first person to put his life on the
block.

Australian philosophy student Nicael Holt, 24, offered his
life to the highest bidder last year to protest mass
consumerism.

American John Freyer started All My Life For Sale
(www.allmylifeforsale.com) in 2001 and sold everything he owned
on eBay, later visiting the people who bought his things.

Adam Burtle, a 20-year-old U.S. university student, offered
his soul for sale on eBay in 2001, with bidding hitting $400
before eBay called it off. Burtle admitted he was a bored geek.

Here is the story.  The current seller is Ian Usher, a lovelorn Australian:

From Sunday, June 22 for one week, Usher’s life is up for
sale on eBay with the package including his $420,000
(US$397,000) three-bedroom house in Perth, Western Australia, a
trial for his job at a rug store, his car, motorbike, clothes
and even friends.

Here is a previous MR post on an Australian life for sale.

Ryan Hahn asks:

In the case of microfinance, however, it seems to me the problem of limited liability is rearing its ugly head. Poor borrowers generally have little or no collateral, so they usually have little reason to avoid a strategic default.

It is a common myth that microfinance loans have no collateral.  I sooner worry that the process of collateralization is too thorough.  Remember that microfinance loans are made to small groups of five to ten people, typically neighbors.  If you don’t pay up, your associate has to.  The reality is that the person left holding the bag — who knows you well — will come seize your TV set or in some cases the process is a bit less pleasant.  Part of the efficiency of microfinance is simply the separation of the lending and the "thug" functions.  Banks can lend to high-risk individual borrowers without themselves resorting to the illegal intimidation practices of the village moneylender.  The dynamics of cooperative behavior in the village are not always pretty but overall it works better than the moneylender; if nothing else the person seizing the collateral knows that next time around he or she may be the non-payer.  For more detail, see my Wilson Quarterly article with Karol Boudreaux.

Guillermo Calvo writes:

Incentives to stockpile commodities stem from the combination of low
central bank interest rates (especially in the US) and the growth in
sovereign wealth funds. The latter, in my view, is the crucial factor.
Sovereign wealth funds have been created partly with the intent of
switching the composition of government wealth from highly liquid but
low-return assets to more risky but much more profitable investment
projects. Thus, their attempt to get rid of excess liquidity resembles
the econ 101 exercise in which the student is asked to trace the
effects of a portfolio switch away from money and into capital.  The answer is – of course – higher prices.

The piece is interesting throughout, hat tip to Mark Thoma.

Here is my piece for Forbes.com on the privatization of residential water supply in the Third World.  Excerpt:

And no, I don’t mean a water
concession with a price regulated by the government, I mean true
laissez faire in water supply. No price regulation, no rate of return
regulation, no government ownership of assets, no political pressure to
keep prices low. Water companies should be allowed to maximize their
profits, and because supplying water is nearly always a monopoly, they
should be allowed to make monopoly profits. I know the idea sounds
crazy–to an economist, water supply is a classic "natural"
monopoly–but on closer inspection the other alternatives might be
worse.

And more:

If complete deregulation
is too radical for you, consider the interesting compromise proposed by
the economist Jeffrey Sachs, currently heading the Earth Institute at Columbia University.
He suggests that the private company be allowed to charge high prices,
but only under the condition that it allocates a minimum amount of
water for everyone, either for free or at a much lower price. Basic
water needs would be met, and the company still might make a profit.

That said, I’m less worried about high prices than Sachs. Let’s say
the new water prices were so high as to capture all the benefits that
buyers would receive from the new supply of water. We can expect much
lower rates of diarrhea and other diseases, if only because the water
supplier can charge more for cleaner and safer water. The resulting
decline in disease means that children will die less frequently and
adults will be healthier and more energetic. Those long-term social
benefits are of enormous help to poor communities, even if high prices
take away many of the initial, upfront benefits of the new water
supply. In other words, we should consider radical privatization
precisely because water is a public good and because clean water is so
important for long-run economic growth.

Read the whole thing.