Capitalism and women
Here’s a graph I put together for another purpose showing two United Nations development indicators, the gender development index which looks at life expectancy, literacy, and earned income with penalities when these are distributed unequally and the gender empowerment index which looks at the number of women with parliamentary seats, shares of women who are senior officials and managers, and female and male estimated earned income again corrected for gender inequality. The gender indices are graphed against the Economic Freedom Index which looks at the size of government, protection of property rights, marginal tax rates, mean tarrif rates, the ease of starting a new business and other such factors.
Both indicators increase strongly with economic freedom. Capitalism is good for women. Correlation doesn’t imply causation, of course, and causality, if it exists, could run from economic freedom to women’s development from women’s development to capitalism or a third factor could cause both – probably all three processes are involved to some extent. Nevertheless, at a minimum the graph indicates that capitalism and gender development are compatible contrary to many radicals. It’s interesting that no country with the high levels of economic freedom has a low score on either index. The graph actually underestimates the relationship between freedom and women’s development because there are many countries, Gambia for example, with incomplete data and we can be pretty sure that these countries have low economic freedom and low gender development.
Who would have guessed?
Who would have guessed that when taking drive-thru orders at a McDonald’s it’s more efficient to send the order not 25ft into the restaurant but 900 miles away to a call-in center which then relays the order via computer to the workers inside the restaurant making the food. To avoid errors, the system also takes a digital picture of the customer to accompany each order (the picture is destroyed once the order is complete). That’s the way it’s done at a Cape Giradeau, MO restaurant and at some dozen others which send their orders to a call center in Colorado.
The system has cut order time by 30 seconds, reduced errors by 50 percent and saved on labor. Who would have guessed that this system would work? Not me and I’d wager not most people, but Steven Bigari, a McDonald’s franchisee gave it a shot – an interesting illustration of why a decentralized, capitalist system furthers innovation. The system is now spreading – at some McDonald’s customers can call their order in from their table, pay by credit card, and have their order “delivered” minutes later.
It’s from small improvements like this that a productivity miracle is born.
Obesity now an illness
Medicare now considers obesity to be an illness. In other words, Jenny Craig could soon be receiving government funds to treat obese patients. Medicare and Medicaid are already busting the fiscal scales and with nearly 30 percent of Americans already obese and some 60 percent overweight this now adds another burden to the system.
More on the economics of obesity here and here. A short review of the economics of obesity written by myself can be found here.
Addendum: Thanks to Daniel Akst for adding more weight to my discussion.
Is your snapper scrod?
Did you get scrod when you bought snapper? (See Tyler’s post above). Use this.
Thanks to Jim Ward for the link.
The shape of song
This is pretty cool: The Shape of Song.
The diagrams in The Shape of Song display musical form as a sequence of translucent arches. Each arch connects two repeated, identical passages of a composition. By using repeated passages as signposts, the diagram illustrates the deep structure of the composition.
You can select a song from the list and view its shape — or upload your own MIDI file. The shape below is, of course, one of the tracks from Pachelbel’s Canon.
From J-Walk Blog.
Alas, the Law Conkers All
As a child, I lived in England for a year. There I learned to play the ancient and venerable game of conkers. A conker is the seed of a horse chestnut tree tied to a string. The basic rules of the game are elementary. The receiver dangles his conker steadily while the striker attempts to strike his opponent’s conker as hard as possible. A hit results in another turn for the striker; with a miss play passes to the receiver. As you might imagine, the striker sometimes misses so holding your own conker steadily in the face of a whizzing “sixer” can take some courage. Fingers may be bruised.
Sadly for young Britons, the playing of conkers is being banned by British schools under an onslaught of American-like lawsuits. Some say the lawsuits are brought on by the legalization in 2000 of contingent fees for lawyers. Others point to a long-term decline in the tradition of the stiff upper-lip.
In either case, it’s miserable. What’s next? Will young teens no longer be able to enjoy a shandy at the local pub?
Investment advice
Brad DeLong gives a correspondent some good investment advice. Here is the entry in full.
I don’t think I’m qualified to give investment advice, so I don’t. But if I did think I were qualified to give advice, I would say:
1. Large house–a bit larger than you think normal–financed by a fixed-rate mortgage. (Unless you are in New York, DC, SF, or LA, where things are weird right now.)
2. 401Ks–as much money as you can put into them and other tax-shielded vehicles.
3. Additional savings–automatic, and a few steps more than you are comfortable with: the future if very uncertain, and there may well come a point where you will want to have more money than you thought you might possibly need.
4. Vanguard, I say. Put your money in one of the equity-heavy Vanguard index funds, one that places a large share of its assets overseas. Vanguard’s fees are very low. You get all the risk-reducing benefits of diversification, and you get a high expected return. You can do better only if you are a professional investor–and only then if you are in the top fifth of professional investors.
5. For intellectual background… start with Burton Malkiel’s Random Walk Down Wall Street and Benjamin Graham’s The Intelligent Investor. For something more amusing, try Adam Smith [George Goodman’s] The Money Game. For something heavier, try Graham and Dodd’s Security Analysis.
My two bits: The reason for the house is that it is a forced savings plan with tax advantages. An obvious point but one overlooked by many (but not MR readers, I suspect) is that if your firm offers any kind of investment matching you must, must, must invest at least as much as the matching amount. Yes on Vanguard – Brad, in fact, is being generous to professional money managers (see here, for example). In addition to Malkiel’s A Random Walk Down Wall Street, I recommend Taleb’s Fooled by Randomness. Read these books so you will have the courage not to do dumb things.
Living on Pennies
Here is a heart-breaking series of stories about living in poverty in the third world. The Congo is so poor there are no jobs just “se debrouiller – French for getting by, or eking a living out of nothing.” Sweatshops in these countries would be a blessing but corruption, war and violence keep foreign investment away.
Even the corruption, however, is sadly understandable. The government has no money and so pays its workers with the opportunity to take bribes. And thus the country is trapped. The corruption tax prevents the people from starting businesses and accumulating capital, corruption can’t be fought without funds to pay workers but there are no funds because corruption prevents the earning of income.
But even a society living on the edge needs civil servants. Men with government seals, such as Pancrace Rwiyereka, a grandfatherly former schoolteacher who runs Goma’s Division of Work, engage in their own version of se debrouiller.
They don’t bring home an actual salary, but the majority still show up for work every day. A government job gives them the opportunity to demand money from businesses and members of the public. Their official jobs are a charade.
“Bribes are the answer,” said a mid-level government employee in the finance department. “Why do you think we would never give up our jobs or strike to get our salaries?”
Authorities require entrepreneurs importing goods to obtain stamps from at least six agencies: the main customs office, an immigration office, a health agency, a separate health office that certifies goods for consumption, the governor’s tax revenue office and a provincial office that collects money from truckers for nonexistent road rehabilitation.
Thanks to Marc Andreessen for the pointer.
Sex and violence
In the Company of Strangers examines economic institutions in light of what we know of man’s evolutionary history. The division of labor, for example, looks even more amazing when one contrasts it with man’s inclination to violence. If you are familiar with the material in say McMillan’s Reinventing the Bazaar and Pinker’s The Blank Slate much of this book will be familiar but the author, Paul Seabright, does have a knack for the apposite phrase or quotation. I’d never read Shakespeare so literally, for example, as Seabright does in this passage:
Killing an unrelated member of the same sex and species eliminates a sexual rival. This incidentally seems a likely explanation for the disturbing tendency of violence to be associated with a sexual thrill; it is not, regrettably, a pathological response of a sick minority …It is one that has been reinforced down the ages by a tendency on the part of females – far from universal, but sufficient to make a difference – to be drawn sexually to those who have displayed prowess in contests of force, as Shakespeare knew well he made Henry V rally his troops before Agincourt with the cry that:
…gentlemen in England now abed
Shall think themselves accurs’d they were not here,
And hold their manhoods cheap while any speaks
That fought with us on St. Crispin’s Day.
Kerry v. Bush on fiscal policy
Tyler’s earlier post (below), making the point that we should look to winning coalitions not promises to predict a candidate’s fiscal policy, is characteristically cogent (i.e. I agree!). Tyler is too easy on Bush, however, when he says “The high domestic spending of Bush I take as a sign of perceived political weakness (“we need to buy more allies”), rather than a reflection of Bush’s ideology.”
True, Bush did not seem to have much of a mandate in 2000, but he was quickly accepted by the American public, his popularity skyrocketed after 9/11 and he faced a Republican House and Senate. In fact, the Bush administration has been successful at promoting it’s agenda including the big tax shift, the Iraq war and the prescription drug plan. Remember that the drug plan was not something that Bush simply failed to veto, he actively bent Republican arms to get that bill passed. The issue has not been too little power but how the administration’s considerable power has been exercised.
Independence Day
A sign on the highway on the road to Toronto speaks volumes.
Remember, driving is a privilege not a right.
Despite the fact that I am Canadian, everytime I see this sign my stomach churns with anger and I must suppress a desire to turn back to the U.S. The sign is a reprimand from the rulers to the ruled reminding them of their place. I want to tear it from the ground but my fellow Canadians think my reaction odd. More Americans, I think, would understand and that I suppose is why I call America home.
Happy Independence Day.
Market in Everything
I think most of these are “art” but this market in everything makes for entertaining reading. Here are some of my favorites. For legal reasons, if you want the product, you will have to go to the website for the seller’s email.
Guilty? Innocent? It’s all the same to me. For a fee of 500 pounds a time I will lie to the police about your whereabouts, and for 2000, I will perjure myself in court, and swear a testimony to a fictitious scenario of your choice. Easiest to contact me in advance of crime, and establish the deal. Emergency alibis also available.
For a price, I will think of you and only you every time I commit acts of self-love during a time period. I will picture you in my mind, and pretend that all pleasurable touches come from your hands…I will breathe your name heavily. I will lust after you. I will dream of you. I will long for you. …During each time period, I vow to commit acts of self-love to orgasm, at the very least, once per day, no matter what.
Worried that the day to mark your passing is going to be an Eleanor Rigby type affair? Fear not, for 20% of your estate (or £1000, whichever the greater) plus travel and overnight accomodation expenses, I will pretend to have known you, deliver a stirring eulogy, and then get drunk at your wake.
I will sell you immortality for only £12 plus £2 booking fee. There is a full refund for dissatisfied customers.
Thanks the MetaFilter for the link.
Abortion Politics
The Wall Street Journal and the American Spectator have sunk to an embarassing low with the publication of an Levine, Trainor and Zimmerman (1996), find just this. LTZ estimate that restrictions on Medicaid funding of abortions reduced the number of abortions but the number of pregnancies fell even further so the number of births actually went down not up.
Putting things the other way, compensating behavior means that abortion liberalization will reduce the number of births by less than the number of abortions. Five states legalized abortion in 1970, prior to Roe v. Wade (Alaska, California, Hawaii, New York, and Washington). Levine, Staiger, Kane and Zimmerman (1999) estimate that births in these states fell by 5% more than in states that had not legalized abortion. Applying this number to today’s rates they estimate “a complete recriminalization of abortion would result in 320,000 additional births per year.” Since there are about 1.3 million abortions a year, only about a quarter of all abortions represent a net reduction in births.
The reduction in births, even though considerably smaller than than the number of abortions, is not distributed randomly across the population so abortion policy can have an impact on things like crime and teenage pregnancy but the number of Democrats and Republicans has got to be one of the least interesting consequences.
Hat tip to MemeFirst for alerting me to the article.
I will return
No, not another post on the return puzzle (and follow-up here) but a note to indicate that I will be on vacation so expect light blogging from me. The ever-productive Tyler will continue to stream great content to the world.
Returns again
Many thanks for all the good suggestions regarding the return puzzle. Here are just a few of the many ideas that I received. My apologies to those not mentioned by name.
Mark Garbowski stated one thesis very nicely:
Demand forced the Sears catalogue to offer easy returns because people were buying things they could not see or touch. Back in 1895, I suspect this was a pretty unusual experience. If you go to a small local shop and know the owner, you probably have a good opportunity to inspect the merchandise before purchase, but this was not possible with mail order. Generalizing, I would opine that the combination of a significant rural population spread over a vast geographic landmass, together with improved communication and transportation, allowed those rural people the ability to purchase (at least occasionally) high quality, exotic (meaning from far away) goods to a degree that was never before possible, and never duplicated in Europe. Before a consumer would send a check or hard cash in advance of receiving an item he or she had never seen or touched, it became necessary to develop a good return policy as insurance.
I suspect that the economies of scale you discuss allow the insurance to be economical, but did not drive its creation. I believe it is a demand side creation, but based on historical circumstances, and not current class or income circumstances. Once the demand side forced mail order retailers to offer it, consumers discovered how much they liked it and forced other retailers to follow suit, even though it was not as necessary.
Ian MacCleod and others mentioned that retail trade in Europe is organized more often on the boutique model than on mass retailing. Salespeople don’t turnover as often as in the U.S., they spend more time with the customer and they personally represent the product to a greater extent. As a result, returning a product can be seen as an affront.
Adam Shostack writes that the credit card companies often reward firms that offer easy return policies because it is less costly than handling a billing dispute. Credit card usage is much lower in Europe thus supporting the theory.
Tim Worstall points out that there are legal restrictions in much of Europe on things like “as is” sales. Similarly, there is a large wholesale market for “as is” items in the US but not in Europe. Both of these factors make offering easy returns more costly. Of course, these differences may be as much “caused by” as “causes of” differences in the return policy but its useful to remember that there is a whole web of practices involved with easy returns.