Dim Sum for the Mind
Here are twenty five questions from the NYTimes ranging from What is Gravity, Really? to Are Men Necessary? Each question comes with a brief explanation and some discussion.
Deficit Disorder to get Attention?
Bruce Bartlett predicts that Howard Dean will run as a fiscal conservative on the Robert Rubin model. He quotes from Rubin’s new book
“The view over the next few years that fiscal discipline was being restored contributed to lower interest rates and increased confidence, and that led to more spending and investment, which in turn led to job creation, lower unemployment rates and increased productivity.”
and writes:
There I think you have the Democrats’ 2004 economic playbook. We are going to hear it over and over again. Howard Dean is already preparing to run as a fiscal conservative. With Rubin at his side, once he gets the Democratic nomination, he is going to get support from some of those ordinarily expected to support the Republican candidate.
The fact that Dean, the presumptive Democratic nominee, plans to forego matching funds means he will have to go to Wall Street and the business community for campaign contributions, which will reinforce the need for him to make fiscal responsibility a key issue. With his left-wing base secured by Iraq and Bush hatred, they will say nothing critical of Dean’s move to the right on fiscal policy.
No Ice
This will make setting up a hotel on the Moon much more difficult. I am bummed.
Man vs Machine II
Regarding this week’s man vs machine chess match. Tyler writes:
I was surprised to see Kasparov favored. Once he lost to Deep Blue, the last big match (Kramnik vs. Deep Fritz) was a draw. I know it is not as simple as Moore’s Law, but hey, don’t these machines improve their game more rapidly than the human players do?
Indeed, they do. Deep Blue was a very expensive, very fast computer specialized for chess and capable of examining some 200 million positions per second. Fritz is no slouch but it is being run on a more or less ordinary four processor Xeon computer capable of analyzing 3 million moves a second. Fritz is thus about 70 times less powerful than Deep Blue. Yet because of improvements in algorithms, Fritz is almost certainly the better player. So the computer players have improved tremendously over the past 6 years – so much so that the computer side is no longer bothering to field its best against the weak humans!
Addendum: Here’s a graph, from Jeff Sonas, of the top computer player ratings versus the top human player. Although, it is true, as Sonas argues, that the best programs do not beat the very best human players but only draw consistently it may simply be inherent in chess that it is impossible or near impossible to beat someone who is playing at the very highest level (similarly it’s impossible for even a mediocre human player to lose in tic-tac-toe.) We should not conclude from this that the computers aren’t improving. Thanks to Nathan Stocker for the link.
Industrial Organization Puzzle
In IO theory we teach our students that price discrimination requires monopoly power and monopoly power allows the firm to make above-normal profits. So why don’t the industries that practice a lot of price discrimination seem especially profitable? Airlines, movie theatres, universities – all classic examples of users of price discrimination yet none seem especially profitable. There are examples of profitable industries that use price discrimination, pharmaceuticals for example, but there are also profitable firms that don’t use a lot of price discrimination. If we graphed use of price discrimination against profits would we find a positive slope across the economy as a whole? I doubt it, yet this is what the theory would seem to predict. Send me your thoughts.
Free Martha!
Professor Bainbridge writes that Martha is innocent of insider trading. He ought to know, as he wrote the book on insider trading law.
Shoes: Made in China
Sunday I found a very cool pair of shoes for my 5 year old for just $14.99. Made in China, of course. When I got to the checkout counter the clerk told me I could have a second pair for half-off. Wow! Note to President Bush, Don’t you step on my (kids) blue suede shoes.
Oenophiles love global warming?
According to a report in Scientific American:
Gregory Jones of Southern Oregon University and his colleagues analyzed data from 27 of the top wine-producing regions worldwide from the last 50 years… The scientists studied Sotheby’s vintage rating…and compared the trends to climate records. Overall, they found an average temperature increase of two degrees Celsius for the wine regions and higher vintage ratings for their products. “There were no negative impacts,” Jones notes.
Armchair economics makes me suspicious. The “top wine-producing regions” should be located in places where the weather is optimal for grape growing. If higher temperatures are better, why weren’t the top wine regions located further to the South to begin with? Higher temperatures could make previously inhospitable areas good for wine-making and even raise wine quality on net but the best regions ought to be made worse by climate change. I suspect the authors did not control well for other factors that are improving wine.
Roosevelt and the Great Depression
I was amused to see Conrad Black writing with shock:
Jim Powell of the Cato Institute (cited approvingly in a recent column by Robert L. Bartley) argues in a new book that FDR actually prolonged the Depression!
Of course, Powell is correct. Imagine, increasing the power of unions to strike and raise wages during a time of mass strikes and mass unemployment. Imagine thinking that cartelizing whole industries thereby raising prices and reducing output could improve the economy. Not everything Roosevelt did was counterproductive – he did end prohibition (although in order to raise taxes) – but plenty was and worst of all was the uncertainty created by Roosevelt’s vicious attacks on business. (See, for example, the work of Bob Higgs especially this important paper and historian Gary Dean Best’s overlooked classic Pride, Prejudice and Politics.) Business investment failed to recover because business people legitimately feared a regime change like that which had occured in Germany and Italy. Sound extreme? Roosevelt himself threatened/promised this in his first inaugural:
…if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good… I assume unhesitatingly the leadership of this great army of our people dedicated to a disciplined attack upon our common problems….in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for… the power that would be given to me if we were in fact invaded by a foreign foe.
Microsoft hires bounty hunters
Microsoft has put up “two $250,000 rewards, a total of $500,000, for information that leads to the arrest of the writers of two nasty computer worms — the Blaster worm and SoBig.” I am all for this as those guys sure wasted some of my time. As regular readers will know, I am also a fan of bounty hunters (see my earlier post; and my econometric paper – finding that bounty hunters reduce failure to appear rates and bring back fugitives much more succesfully than the public police).
Capitalist Eggs
Our new colleague, Russ Roberts, author of the economic romance (really!), An Invisible Heart, gave a talk on economic growth where he briefly mentioned the staggering improvements in egg production over the past century. Here are some facts.
Last year the United States produced 86.7 billion eggs.
An early 20th century hen – or a third world hen today – laid perhaps an egg or two a week. Today’s hens lay approximately 5 eggs a week.
Prior to World War II a hen-house might hold 400 hens. Today, a typical hen-house, contains 150,000 hens.
Today’s “hen-houses” are really high-tech factories. The eggs are collected automatically on conveyor belts, graded by robots according to external factors like shape, color, size and also internal factors like consistency and yolk size. See here for a pictorial power-point presentation of the process.
Most amazingly, did you know that from the time it leaves the hen to the time it reaches your table an egg is unlikely to have been touched by human hands!
Addendum: I do not claim that capitalism is good for the chickens.
Matrix: Revolutions
In a word, disappointing. Not only didn’t they answer the interesting questions raised by 1 and 2 they didn’t even try. Moreover, most of the zowee special effects were in 2. As my also disappointed colleague Bryan Caplan put it, they did backwards induction but we didn’t.
The problem with democracy
No matter who you vote for the government always gets in.
US Sperm Exports Explode; Canadians Upset
The US is a world leader in sperm exports primarily because sperm banks in the U.S. are run on a for-profit basis. As a result, US sperm is reckoned to be of high quality (we always knew this didn’t we?) particulary because the US version comes with a background on the vitals of the donor. Denmark also exports a lot of sperm because of high standards and demand for that blond, blue-eyed look.
Exports to Canada have increased in recent years because of a scandal involving poorly screened Canadian sperm. Canadians also import a lot of US eggs. The Canadian government, however, is apparently miffed as a new law is being readied that would forbid donations involving a paid donor. The law would not only make paid donation illegal in Canada it would make it illegal to use any paid-for sperm. Canadian couples seeking fertility options will suffer and who will benefit? I cannot think that this law is anything but spiteful and ridiculous. Is paying for sperm an original sin? As with other areas of Canadian medicine (see Tyler’s posts here and here), the rich will now travel to the United States for treatment.
Aside: The Canadian Health Official quoted here is ignorant or disengeneous when she says “We don’t buy or sell blood, or organs or tissues.” In fact, Canada also imports a lot of US blood plasma. Plasma takes longer to donate than straight blood and as a result altruistic donation rates are low and much of the world relies on paid-for US plasma for its life-saving properties. Similarly, donating eggs is not nearly as much fun as donating sperm so altruistic donation of Canadian eggs is unlikely to make-up for restrictions on the import of paid-for US eggs.
Thanks to Eric Crampton for the seminal email.
Crony Statism
Johan Norberg provides some depressing information about the situation in Russia.
Russian President Vladimir Putin’s chief of staff, Alexander Voloshin, is said to have resigned. This is another sign that the so called power clan, “siloviki”, with its base in the FSB (former KGB) is strengthening its grips on power, and that both the liberal economists and the allies with former President Yeltsin are losing out. This is bad news for Russia. It all began with the brutal arrest of the oil magnate Mikhail Khodorkovsky this Saturday. The difference between Khodorkovsky and other oligarchs is not that he is more corrupt or unscrupulous, on the contrary, his oil company Yukos is renowned for being relatively transparent and law-abiding for a Russian company. The difference is that he has challenged Putin by supporting democratic forces, like the parties Yabloko and SPS. Before the arrest FSB also made a raid on Yabloko’s headquarters and stole their servers with their planning for the parliamentary election on December 7th. First the destruction of the free media in Russia and now this. It is no longer possible to call Putin’s Russia a democracy. It is more like a “democtorship” (“demokratur”), as the Swedish novelist Vilhelm Moberg once called a dictatorship with democratic rituals….
Addendum: More on the rise of the siloviki.